Family wealth can be a double-edged sword. With few financial burdens or limitations, one can live a very comfortable life, use the family wealth and connections to create almost any career of life path, and make the world a better place through philanthropy and impact.

But there is a dark side, particularly to inherited wealth: guilt and shame at ‘unearned privilege’ (I don’t like the term, but it works for this), how the wealth was created which may not sit comfortably with contemporary environmental thinking, and the challenges of finding purpose. Wealth can also be an amplifier and source of family conflict.

Most often, family members deal with a mix of these feelings.

In the Tale of the Two Wolves, the grandfather uses a metaphor of two wolves fighting within him to explain inner conflict to his grandson. When his grandson asks which wolf wins, the grandfather answers that whichever wolf he chooses to feed is the one that wins.

To paraphrase Henry Ford, whether you think family wealth is a positive for you or a negative, you are right.

Consider This: What are your family’s narratives about wealth? Have these ever been discussed or articulated? How are they different across generations?

Further reading: https://www.shreveporttimes.com/story/money/2022/08/05/your-wealth-culture-why-matters/10239286002/, https://www.ft.com/content/26806bc4-ff1b-4c7c-b4b0-168486c64ab8

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement #nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Tale of the Two Wolves appeared first on David Werdiger.

source https://davidwerdiger.com/2023/08/tale-two-wolves/

The leadership transition from Queen Elizabeth II to King Charles III has been a fascinating insight into the preparation and execution of a succession plan. Within minutes of the announcement of her passing, the media was flooded with coverage, clearly well prepared in advance. Established protocols, known to insiders, were quickly put into place. Everyone was ready for this, yet when the moment came there was an outpouring of grief for one of the most widely venerated leaders of our time. The Queen is dead. Long live the King.

Queen Elizabeth ruled for 70 years – about three generations. We can reasonably expect King Charles to rule for about one generation. Looking way into the future, William could ascend to the crown sometime in his 60s (perhaps 10 years younger than his father), and then rule for about one generation.

Elizabeth’s reign was exceptional because she had to take on the role aged just 26. The ‘normal’ path is to become monarch from late middle-age until death, but these are hardly one’s best years to offer in service to the Commonwealth. The system does not have a notion of ‘Emeritus Monarch’ which would allow a shift in role at say age 75-80 so that the rising generation can take their place. Could such a thing ever happen?

In families, we can think of adult life in three stages: rising leader, leader and elder. The elder stage is very important as it allows leaders to evolve into a new role in their later years, and gets the best out of family members while they are in their prime. When an elder passes, the transition can be seamless.

Consider This: Does your family support and facilitate leaders to step away from active roles and become family elders? Are the skills of aspiring leaders being put to good use in support of the family?

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Transition QE2 -> C3 appeared first on David Werdiger.

source https://davidwerdiger.com/2023/08/transition-queen-charles/

You join a family through birth or marriage, and leave it through death or divorce. But if by divorce, it may not be possible to fully “leave”, and the process itself can be traumatic for a wide stakeholder group.

A significant focus of estate planning for families is about ensuring that the family assets are “protected” in the event of a divorce. But how about the time until a couple divorces, i.e. the time they are actually married? That time is anything from a day until forever, and yet so much about marriage and married-ins in wealthy families is fixated on a possible future scenario.

As much as we want to engineer a “clean separation” in the case of a divorce, we should seek to facilitate a “clean togetherness” for the duration of the marriage. Children-in-law share a bed with our children, and are the parents of (and pass genetic material to) our grandchildren. Even if they are not allowed “at the table” for family meetings, they are often there by proxy.

The challenge is to frame family policies that relate to marriage in positive terms. The role of in-law children can be an opportunity, not just a risk. If only viewed as a risk, that can be a missed opportunity.

Remember: families start with a partnership of two (who themselves come from different families).

Consider This: How are your family’s policies regarding marriage framed? How are your feelings about married-ins influenced by yours or the family’s previous experience with divorce? Are married-ins ever told “you can’t do [X] because you might divorce?”

Original articles: https://spearswms.com/new-generation-family-lawyers-hnw-divorce/, https://www.wealthprofessional.ca/news/industry-news/saving-family-businesses-from-divorce-during-covid-19/335407, https://www.ft.com/content/d38ab97b-0abf-4624-8063-80bc48599aa3

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Married-ins Until They Divorce? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/08/married-ins-until-divorce/

I have a lot of empathy for Tom Brady. While not in his ‘league’ on several fronts, I can fully appreciate his exasperation at the challenges of teaching children with wealth to understand “the real world”. Anyone facing these and similar challenges deserves to be taken seriously, and to get the support and empathy they need to deal with the issues.

There’s just one small catch.

People who don’t have or genuinely understand the experience of living with significant wealth (i.e. 99.9%+ of the population) are not only unlikely to be able to provide empathy and support, but may actually respond with the very opposite.

This is what happened to Brady when he stated in a podcast interview that bringing up his children amid great wealth was “probably the hardest thing for us as parents”.

There are two perspectives of living with wealth: outsider and insider. To outsiders, wealth is viewed as a panacea that will instantly solve all problems. The insider knows this is not the case. The only place insiders can get support and empathy is from other insiders.

The popularity of TV shows like Succession is that they show that wealthy families suffer from the same family dynamics challenges as others: jealousy, rivalry, favouritism. They are just played out with much higher stakes.

Family members need two things: insider networks to provide support, and an understanding of what can and cannot be shared with outsiders.

Consider This: How do members of your family deal with the assumptions and judgments of outsiders? What peer-networks do they rely on to provide support?

Further reading: https://www.newsweek.com/tom-brady-mocked-wealth-hardest-thing-parenting-1724887, https://www.irishnews.com/lifestyle/familyandparenting/2021/10/26/news/five-ways-to-be-a-parenting-boss—and-run-your-family-like-a-business-2482106/, https://www.moms.com/20-baby-boomer-parenting-tactics-that-millennial-moms-are-finally-ditching/, https://www.mamamia.com.au/worst-generation-of-parents/, https://vulcanpost.com/585663/millennial-parenting-discipline-mistakes/

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Seeking Real World Empathy appeared first on David Werdiger.

source https://davidwerdiger.com/2023/08/real-world-empathy/

There are many consultants out there who advise non-profits on things like strategy, marketing, grant-writing, etc. The market for the philanthropic dollar follows the usual 80/20 rule: 80% of the funding comes from 20% of the donors (it’s probably far more skewed than that – more like 95/5). A particular area of focus for consultants is therefore how to capture the high-end of the market – HNW family giving. We can think of this as the ‘sell-side’ of philanthropy.

On the ‘buy-side’, there are the families. Because of supply-demand economics, it is a buyer’s market: causes are most always chasing families rather than the other way around.

Families choose causes for a variety of reasons, but too often those reasons are unorganised and reactive. They may be a response to a personal connection, or a direct solicitation. That may leave family members looking back at a schedule of the gifts for the year and wondering why, and what their impact has been.

It behoves families on the ‘buy-side’ to take a more strategic and proactive approach to their philanthropy. That starts with having a strategy and goals, and then choosing to allocate in a more sophisticated way. This can be balanced by an ‘allocation’ or ‘bucket’ for opportunistic or reactive giving. 

Consider This: What proportion of your family’s giving is reactive vs proactive? Does your family have articulated goals for its philanthropy? How does it measure against those goals?

Original articles: https://www.forbes.com/sites/johnjennings/2022/04/30/top-tips-for-effective-charitable-giving/, https://www.forbes.com/sites/forbesfinancecouncil/2022/03/28/philanthropy-four-steps-to-giving-strategically/, https://www.wealthprofessional.ca/news/industry-news/its-a-great-time-to-help-clients-think-about-their-philanthropy/362908

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Philanthropy Buy- vs Sell-side appeared first on David Werdiger.

source https://davidwerdiger.com/2023/08/philanthropy-buy-sell/

There has been a lot of talk about the risks intergenerational wealth transition poses to wealth managers. As the rising generation assumes control of family wealth, they often active seek a change of advisors just for change’s sake, and/or prefer a relationship with someone who (they perceive) better understands their needs and/or is closer to them in age.

From the advisor perspective, one important question to ask is: who is your client? While your relationship might have started with the principal, if the wealth is generational then it is likely being managed for the benefit of the entire family.

This can be a provocative question when put to the client – “Who is my client: you, the entire family, or something in between?” Answers can range from “I made it, and it’s mine until I say otherwise” to “I worked hard for my family” and anything in between. This is a great conversation starter to set the context and scope of a wealth management engagement. If indeed the client is the entire family, then that opens the door for the advisor to talk to other family members, and perhaps also facilitate family discussions about wealth (if they have the skills to do this).

While a question like this might seem silly, it’s important to avoid assumptions on either side and help manage expectations.

Consider This: With whom in your family do your wealth managers have relationships? What is your strategy regarding age-appropriate discussions with rising generation family members about wealth management and attitudes to wealth?

Further reading: https://www.fa-mag.com/news/the-next-generation-of-clients-requires-nextgen-advisors-73037.html, https://www.fa-mag.com/news/-succession-planning-for-financial-advisors-72504.html, https://www.ifa.com.au/news/32268-why-advisers-fear-intergenerational-wealth-transfers, https://www.ftadviser.com/investments/2022/05/12/one-in-10-advisers-confident-retaining-clients-family-wealth/

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Who is the Client? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/07/whos-client/

Q. When should I start a family office?

A. It’s quite possible that you already have one! It all depends on how you define a family office. My preferred definition is “a set of services provided to a family” which is very broad.

For example, you may have an operating business, but if you also spend time on diversified investment, your accounting team do the compliance and reporting for a number of entities across the family group, and your executive assistant helps plan family getaways and manages your summer home, then you already have what would be called an “embedded family office”.

The question then becomes: when should I formalise or professionalise my family office? It may be advantageous to have the family office as a distinct entity if you plan to ultimately sell the operating business, or if it needs to be a separate entity as part of your estate plan. Another consideration is the personnel required: often, the principal spends their time on the family office, but like any business, that may not be something you want to do until the day you die. Establishing a family office means putting in place appropriate policies and governance so those functions can be done by others.

Whatever you choose to do, it’s important to be conscious of what you are doing (e.g. that you actually have a family office), and how you want it to operate to best serve the current and future needs of your family. 

Consider This: What resources (people, time, money) does your family office use? What competition is there within the family group for those resources? What should your family office look like in 5-10 years? How are you set up to allow that to happen?

Further reading: https://www.forbes.com/sites/andybusser/2023/06/08/the-pros-and-cons-of-different-family-office-structures/?sh=7252b53d723a, https://www.fa-mag.com/news/maximizing-results-in-your-family-office–treat-it-like-a-business-72577.html?section=40, https://spearswms.com/what-is-a-family-office-really/, https://www.forbes.com/sites/francoisbotha/2022/08/28/the-five-building-blocks-of-the-future-family-office/?sh=c36c5766fb91, https://www.dentons.com/en/insights/articles/2022/january/18/family-office-strategic-considerations-pivotal-questions-family-offices-should-ask-their-lawyer, https://www.bizjournals.com/seattle/news/2022/03/14/building-successful-family-office.html, https://www.prnewswire.com/news-releases/bny-mellon-wealth-management-global-family-office-research-finds-more-than-half-of-global-family-office-executives-agree-that-succession-planning-is-challenging-as-the-values-of-the-older-and-new-generations-are-hard-to-reconcile-301489674.html, https://www.livemint.com/money/personal-finance/family-offices-are-of-many-types-and-offer-their-own-positives-negatives-11630610252345.html, https://www.worth.com/8-experts-every-family-office-should-have-now/, https://wtop.com/business-finance/2018/11/family-offices-are-not-just-for-the-superwealthy-anymore/

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Q&A: When to start a Family Office? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/07/qa-when-to-start-a-family-office/

Friends and family members often turn to lawyers (and other professionals like accountants and wealth managers) they know in because they naturally trust a lawyer who is close to them rather than a stranger. But is this the best approach?

Advisors can provide the best services when they are objective and are governed by reason and not by emotion. Often, and especially in a family situation, they specifically need to be the voice of reason while clients are the ones whose decisions may be driven by passion and emotions.

For lawyers in particular, the issue of ‘who is the client?’ is important. Initially, the client is usually the patriarch / matriarch as wealth owner. But as the family grows, things can get complicated. It may not be possible for the lawyer to act ‘for the family’. Where there is a ‘family office’, consideration will be needed as to what the family office actually is and who is, in fact, the client.

Similarly, wealth managers may not be permitted to talk to the children of their client without a formal engagement. And of course, don’t engage a wealth manager if you’re going to be uncomfortable sacking them if they don’t perform well.

The relationship between a family and all its advisors needs to have just the right amount of ’emotional distance’.

Consider This: How close are you to your advisors? Are they too close that you can’t get rid of them if you needed, or adequately assess their performance? Do you have genuinely independent voices at the table?

Further reading: https://abovethelaw.com/2022/06/lawyers-shouldnt-get-too-emotional-when-representing-friends-and-family/, https://www.lexology.com/library/detail.aspx?g=47051b35-6556-4bfd-b130-58fa573336f5

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Lawyer or Friend? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/07/friend-lawyer/

The term ‘retirement’ evokes a certain scenario: someone spends their working life in employment, accumulating savings along the way, then ceases work (perhaps in their 60s or beyond), lives off their savings and enjoys a life of leisure instead of work.

While that scenario may fit for a large proportion of people, there are many for whom it is completely meaningless and foreign.

Plenty of entrepreneurs ‘retire’ after a business sale, quickly get bored, and look for a new challenge. For many younger people, the notion of full-time employment is being challenged: the ‘gig’ economy allows people to choose what they do, when, and for whom, without the traditional constraints of a boss, or a career path. Where there is a family enterprise, or family wealth, the role of ’employment’ within that system may again be something entirely different.

The term ‘retirement’ is very loaded, and in certain contexts even the mention can lead a family into a challenging situation. In family business, the longer an incumbent waits to consider ‘it’, the harder ‘it’ gets.

Certainly within the family enterprise space, it’s time to stop using the r-word entirely. Rather, we can think of stages of life, roles, and the transitions between them. That framing should start as early as possible for everyone.

Consider This: Have members of your family found the thought of retiring confronting? Do you know of any family members who never actually moved forward from the role they held for many years? What was the impact on them and on the wider family?

Original articles: https://www.thinkadvisor.com/2021/12/15/what-to-do-when-your-married-clients-cant-agree/?slreturn=20220005230529, https://www.fa-mag.com/news/russ-prince–framing-your-expertise-using-high-net-worth-psychology-53351.html, https://www.thestreet.com/retirement/just-how-differently-millennials-feel-about-retirement-compared-to-baby-boomers-14564624, https://www.goodhousekeeping.com/uk/consumer-advice/money/a575763/baby-boomers-retire-early/

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post What Is ‘Retirement’ in a Family Enterprise? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/07/retirement-family-enterprise/

Sudden change of any type is risky. When someone’s personal wealth circumstances change quickly, it can lead to all sorts of adverse and unintended consequences.

Here are some examples:

* after being drafted, sportsperson gets a huge contract

* winning the lottery – research shows most lose it

* entrepreneur sells business for huge gain

* ‘sudden’ inheritance

Specialist wealth managers have emerged to support people through such transitions. Once the shock subsides, recipients sometimes feel pangs of guilt. For entrepreneurs, a realised exit is often affirmation of their success, but inheritance can sometimes lead to feelings of unworthiness – “the inheritors dilemma”. 

Younger people who advocate against inequality and then find themselves on the wrong side of that equation can feel shame and guilt.

Of all the examples, ‘sudden’ inheritance is the most easily avoided. After all, the only certain thing is death, and there is usually ample opportunity for parents to discuss family finances with future inheritors.

The lack of willingness of parents to discuss family finances and succession planning with the children usually comes from the politeness of not discussing money, or the fear of spoiling children. But the risks of not preparing heirs is just as bad or worse.

Consider This: Incumbent generation – what (if anything) have you done to prepare your children to be responsible heirs? Rising generation – do you feel sufficiently informed (to the extent this is possible) about the intergenerational wealth transition within your family? Both generations – talk more, not less!!

Further reading: https://spearswms.com/how-to-manage-sudden-wealth/, https://www.wealthmanagement.com/high-net-worth/ten-ways-talk-about-family-wealth, https://425magazine.com/qa-with-stacy-allred/, https://www.forbes.com/sites/forbes-shook/2022/03/01/when-and-how-to-tell-your-children-about-wealth/

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Sudden Wealth Syndrome appeared first on David Werdiger.

source https://davidwerdiger.com/2023/07/sudden-wealth-syndrome/