One of the great challenges of family wealth is raising children. And one of the best articles I’ve read on the topic (and I read a lot of articles) is the first link below, and I urge anyone for whom this is an issue to read it in full.

It’s very important to be aware of the unintended consequences of our beliefs about wealth and the messaging we convey to our children about them. How we treat our children can often become a self-fulfilling prophecy.

For example, if we are fixated on controlling the family wealth for fear that our children may lose it, this conveys the message that we do not trust our children, and that can lead to them not putting sufficient trust in themselves to become good custodians of the family wealth. If we fear that wealth is toxic and can spoil our children and therefore we seek to hide it from them and not talk about it, that can lead them to pick up on the negative feelings and carry shame about being wealthy.

For most every vicious cycle, there is a corresponding virtuous cycle. If instead, we trust and empower our children, that in turn can lead to positive attitudes around the family wealth, which in turn can help them develop into effective custodians and contributors to society.

Consider This: What messages are you sending to your children about family wealth? What messages are you getting from your parents about family wealth? Have you ever sat down and shared this (now might be a good time)?

Further reading: https://www.forbes.com/sites/dennisjaffe/2021/11/03/a-guide-for-passing-down-your-wealth-harmful-and-helpful-assumptions/, http://www.campdenfb.com/article/did-great-great-great-grandpa-have-ipad-how-teach-your-children-wealth-responsibility, https://www.kiplinger.com/article/retirement/T065-C032-S014-raising-wealthy-kids-to-be-socially-responsible.html, https://qz.com/293849/how-baby-boomers-ruined-parenting-forever/

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 
#successionplanning #workfromhome #governance #leadershipdevelopment

The post Kids & Unintended Consequences appeared first on David Werdiger.

source https://davidwerdiger.com/2023/06/kids-unintended-consequences/

When there is more than enough wealth for the family itself, families often turn to philanthropy as a way of “giving back” to society.

Like anything, philanthropy can be done well, and not so well, and for the right reasons as well as the wrong reasons. These factors are not necessarily connected – someone may support a charitable project purely to feed their ego, yet it may achieve substantial social good. Certainly, doing things for the right reasons, and in the right way maximises the chance of getting good outcomes.

It’s important for families to ask “why?” as much as possible to understand their underlying motivations. Knowing “why” can also drive what the family seeks to achieve. In other terms, knowing your values helps articulate meaningful goals.

There are several family benefits to embarking on philanthropic activities. It’s well known that it’s a great way to engage the rising generation, and to build bridges between the generations. 

Another, lesser known benefit is that it can help equalise the hierarchy within a family. When it comes to business or investment, some family members may have seniority, aptitude and experience which makes their voices louder. But philanthropy can help raise the voices of all family members and allow all of them to contribute together in a meaningful way.

Consider This: Does your family understand why does philanthropy? Are all family members given the opportunity to learn about the space and participate? Who ‘leads’ philanthropy within your family?

Original articles: https://www.wealthmanagement.com/philanthropy/three-tips-set-table-family-philanthropy, https://www.fpmagazine.com.au/philanthropy-its-a-family-affair-379158/, https://www.millionacres.com/real-estate-investing/articles/what-is-a-family-office-and-who-might-need-one/ https://www.wealthmanagement.com/philanthropy/three-tips-set-table-family-philanthropy

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 The Family Equaliser appeared first on David Werdiger.

source https://davidwerdiger.com/2023/06/family-equaliser/

I’m thrilled to have joined the experts panel at &Simple, who are focussed on helping FOs and their service providers professionalise and be future-ready through insights, services and data.

In my first insight published on their platform, I articulate three principles of good family governance:

1. The stewardship (rather than ownership) mindset: family wealth does not belong to any individual, rather to the family – both present and future. The people who happen to be responsible for it at any time act as stewards, taking their turn to look after it for the benefit of the whole family.

2. Because they have this steward role, open communication and transparency is essential. Lack of communication leads to negative assumptions and an erosion of trust. Being open and accountable to family members builds trust and fosters a sense of accountability to the entire family.

3. More broadly, this is about the responsible use of power. Families have an inherent power dynamic based on generations and control. Those in power have a responsibility to use that power carefully and judicially.

Consider This: What are the attitudes of the incumbent generations to the family wealth? What are the differences in those attitudes between generations (particularly 1st and 2nd)? How openly does your family communicate about matters relating to the family wealth?

Further reading: https://andsimple.co/insights/principles-of-good-family-governance/, https://gulfbusiness.com/why-good-governance-makes-sense-for-family-businesses/, https://www.campdenfb.com/article/differentiators-help-family-businesses-thrive, https://mibiz.com/sections/economic-development/roundtable-communication-transparency-among-keys-to-managing-successful-family-businesses, https://qz.com/work/1711650/what-succession-gets-right-about-power-and-family/

[reprinted with permission]

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 Principia Familia appeared first on David Werdiger.

source https://davidwerdiger.com/2023/06/principia-familia-3/

How we deal with conflict in family business is totally different to a regular workplace. Why? In family business, we wear multiple hats: family member, co-worker, owner, and those roles can lead to conflicts of interests. The work hierarchy is overlaid by the family hierarchy, and that can lead to … conflicts of interests. And unlike a regular workplace, it’s not quite so easy to just quit for another job. By their nature, families and their businesses are deeply interdependent systems.

Understanding these key differences helps us work out how better to manage those conflicts.

A lot of conflict mitigation revolves around the principle of establishing boundaries. That helps provide clarity over the various roles we play, so that we have spaces where we are co-workers, and other spaces where we are relatives. Of course, we can’t instantly switch from one identity to the other. However, having codes of conduct, sacred spaces, formal meetings, and independent advisors make it less difficult.

The hardest part is learning how to debate tough issues, and criticise. This requires well-considered communication so that the message gets across in as positive a way as possible, with minimum spill-over to other aspects of the relationship.

Consider This: What tools or policies does your family use to reduce conflict in the family business? Is there a strong awareness of them? How often do you break your own rules or codes of conduct?

Original articles: https://www.forbes.com/sites/forbesbusinesscouncil/2021/09/21/keep-it-in-the-family-6-cs-of-managing-family-business-conflicts/, https://www.ibtimes.com/how-run-family-business-without-straining-relationships-3276000, https://www.forbes.com/sites/dennisjaffe/2021/07/29/how-to-prevent-family-dynamics-from-undermining-your-family-business-a-code-of-conduct/, https://www.entrepreneur.com/article/370008, https://www.franchising.com/articles/the_petty_crap_of_a_family_business.html

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 Conflict in Family Business appeared first on David Werdiger.

source https://davidwerdiger.com/2023/06/conflict-family-business/

James Clear famously said: “Ambition is when you expect yourself to close the gap between what you have and what you want. Entitlement is when you expect others to close the gap between what you have and what you want.”

Not everyone is ambitious – some people are just happy with what they have or don’t have a large gap between what they have and what they want. And that’s perfectly fine.

But what of the people from wealthy families who were “born on third base”? While they are often stereotyped as “entitled”, things are not quite so simple. They may have ambition to take the wealth they were given and do even more with it in their own way, or create their own stamp on the world.

If they are happy with what they already have (even if that is a lot and even if they did nothing to close any gap), then by Clear’s definition they are neither ambitious nor entitled. That ought to be as acceptable in society as for someone who is not of significant wealth.

Having been “born on third base” is not a choice anyone made; no-one gets to choose their parents. The choice is in how you view it. A bit of humility can go a long way.

Consider This: If you are a wealth inheritor, what are your ambitions? What obligations do you think you have simply because you were born into wealth? Do you find it harder to be ambitious because you already have a head start?

Further reading: https://www.forbes.com/sites/standard-chartered-bank/2023/03/16/a-three-step-plan-for-a-successful-succession/?sh=2610fc103280, https://www.campdenfb.com/article/career-trajectories-top-where-does-ideal-family-office-leader-come, https://www.forbes.com/sites/dennisjaffe/2020/08/26/how-a-culture-of-values-preserves-family-fortunes/#4d29c8432e79, https://www.accountancydaily.co/family-owned-businesses-suffer-trust-fund-syndrome

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 #leadership

#entrepreneurship

The post Ambition vs Entitlement appeared first on David Werdiger.

source https://davidwerdiger.com/2023/05/ambition-vs-entitlement/

In society, the wealthy often get a bad rap.

If you’re a wealth creator, people may view the wealth you have created as coming at the expense of someone else. They may rally against “inequality” – that some people have (a lot) more than others. The fact is that the gap between wealthy and poor is increasing – each one is a reinforcing loop so the rich tend to get richer and the poor get poorer. That can lead to feelings of guilt about the wealth you have created. If you are a wealth inheritor, these feelings are compounded because you “won the genetic lottery” and have received an unfair leg up in life.

A further level of guilt can arise when considering how your family’s wealth was acquired. If the family money came from fossil fuels or tobacco, the rising generation may feel a need to divest and shift into other investments because those assets might now be considered “toxic”. They may further be driven to direct philanthropic efforts to combat climate change, and feel a need to “atone” for the negative impact on the environment made by their ancestors.

It can even go further. Some families are now delving into their past to determine if their families benefited from slavery, and if so they wish to make amends philanthropically.

There is an important distinction to make here. If wealth was created using means that were legal or acceptable by the standards of society at the time, it is not fair to judge our ancestors by today’s ethical standards. On the other hand, if the wealth was created through activities that were illegal or criminal at the time, they could well be considered “ill gotten gains”.

Consider This: What do you know of your family wealth “origin story”? How is this told within your family? What “secrets” are kept regarding this? Is there a diversity of views on this from different generations and if so, how are they reconciled?

Further reading: https://www.philanthropy.com/article/more-foundations-are-examining-the-ethics-of-where-their-money-came-from-and-changing-their-grant-making, https://www.privatebankerinternational.com/features/esg-philanthropy-products-hnwis/, https://www.theguardian.com/commentisfree/2023/mar/25/slaves-trade-amends-grenada-laura-trevelyan, https://www.bloomberg.com/news/articles/2022-02-23/family-offices-see-next-leaders-ceding-profit-in-succession-rift, https://www.mondaq.com/uk/wealth-asset-management/1136088/responsibility-writ-large-how-families-are-broadening-perspectives-on-philanthropy-and-ethical-investing

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 #leadership
#entrepreneurship

The post Wealth Guilt 2.0  appeared first on David Werdiger.

source https://davidwerdiger.com/2023/05/wealth-guilt-3/

The headlines are everywhere – a high percentage of family businesses have no formal succession plan – and then the story launches into the usual tropes about estate planning, life insurance, choosing a successor, etc.

But maybe we should be turning this upside down? After all, by necessity, a family business succession involves two generations – the incumbent and the rising – and so much of the thinking about succession focusses on (a) the perspective of the incumbent generation, and (b) the legal, structural and procedural.

What does succession look like from the rising generation? Are they plagued with self-doubt or burdened with high expectations? What of their own personal dreams and needs to individuate? While they may be chosen/groomed from a young age to do the job, it’s very important that they are taking it on for the right reasons, and have the space to make the role truly ‘theirs’.

And just like company mergers most commonly fail on culture, family business successions are seriously put at risk if there are family “elephants in the room” that are not dealt with. Issues that might seem petty (especially to parents) can fester over many years, and explode once the incumbent generation have stepped aside or passed away.

Consider This: Is the rising generation in your family business interested in taking over? What are their dreams and aspirations (both about the family business, and in general)? Have you discussed this with them early in your own succession planning process?

Further reading: https://www.kiplinger.com/business/small-business/603023/what-role-should-your-children-play-in-your-business-succession-plan, https://www.campdenfb.com/article/how-next-generation-can-conquer-their-fear-and-anxiety-family-business-succession, https://ifamagazine.com/article/psychology-of-family-governance-appreciating-the-importance-of-family-dynamics-in-succession-planning/, https://www.saltwire.com/nova-scotia/business/exit-planning-family-matters-have-to-be-ironed-out-before-business-succession-273087/

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 Turning Succession Upside Down appeared first on David Werdiger.

source https://davidwerdiger.com/2023/05/succession-upside-down/

Most wealth is created through entrepreneurship. When wealth creators think about the legacy they leave to future generations, the most common thing that comes to mind is the wealth itself, which is the product of entrepreneurial activity. But what of the entrepreneurial spirit itself?

Gates, Bezos, Musk and others received support from their families in the early stages of their ventures. Family members who are so inclined can more readily access seed capital to fund their ideas. However, it’s important to bear in mind that decision-making and risk-taking abilities are influenced by the socioeconomic background of the founder.

Some midlife entrepreneurs are forming businesses alongside a younger member of their family or with a co-founder decades younger. This is a wonderful intergenerational bridge and a great way to transmit those values as well as generational wisdom and experience.

Some rising gen family members are carrying forth her family’s legacy in their roles, and adding new dimensions, such as women’s empowerment in entrepreneurship. Another approach is to honour the family’s entrepreneurial legacy while also approaching their industry in a new way.

Of course, this is not for everyone. Just because someone comes from a family of entrepreneurs doesn’t necessarily make them one. Entrepreneurship has several ingredients including appetite for risk, grit and determination, and leadership.

Consider This: Does your family have a cultural memory of the entrepreneurial spirit that created its wealth? How is this expressed? Is entrepreneurship encouraged/developed in the rising generation?

Original articles: https://www.forbes.com/sites/forbesbusinesscouncil/2021/11/01/considering-generational-wealth-as-a-factor-for-entrepreneurs/, https://www.forbes.com/sites/bernhardschroeder/2021/06/26/advice-and-insights-for-millennial-entrepreneurs–from-a-millennial-entrepreneur/, https://www.forbes.com/sites/nextavenue/2021/01/17/how-to-launch-an-intergenerational-small-business-in-midlife/, https://www.forbes.com/sites/stephanieburns/2020/05/24/how-to-build-a-legacy-for-your-business/#608a408d1380, https://www.entrepreneur.com/article/338538, https://www.weforum.org/agenda/2019/08/family-businesses-lifeblood-of-the-middle-east/, https://www.smh.com.au/business/small-business/hyatt-heir-says-there-is-no-secret-sauce-when-it-comes-to-succession-planning-20190609-p51w1x.html, https://www.forbes.com/sites/jaredhecht/2019/01/15/how-the-great-recession-killed-the-entrepreneurial-spirit-of-millennials/#5ff01d1811ff, https://www.fastcompany.com/40513553/can-the-wave-of-boomer-entrepreneur-retirements-create-a-surge-of-worker-owned-businesses

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 #leadership
#entrepreneurship

The post The Spirit of Entrepreneurial Legacy appeared first on David Werdiger.

source https://davidwerdiger.com/2023/05/spirit-entrepreneurial-legacy/

A recent survey has found that only about a quarter of HNW parents plan to split their wealth equally amongst their children. Factors in the decision include their children having different approaches to money, estrangement, not wanting to support a child’s partner, and adjusting for previous significant financial support. There are also variations for the different care responsibilities of children, and the number of grandchildren.

There are two key lessons here: firstly, equal is not the same as fair. We like to think “equal” can be measured objectively, but even then, there are different ways to measure it – we can adjust for inflation because of the age gaps between children, or for many children each child has, or for previous gifts. So even “equal” has many interpretations. Seeking to be “fair” starts to bring in other more subjective factors like the specific needs of each child, or other sources of wealth they may have.

There is no right or wrong way to do this, and just as in parenting generally, the needs of our children may conflict and have us making trade-offs between them. It’s important to avoid viewing (and framing) matters as a zero-sum game – that one child ‘wins’ at the expense of another (who therefore ‘loses’).

The second lesson follows directly from this: having open discussions about wealth transfer helps children understand the ‘why’ and therefore achieve buy-in to the parents’ plan. Parental edicts can be just that until their children reach about teenage-hood. Beyond that, we can’t expect our children to simply accept what we want at face value. We need to consider their perspective. Communication is the foundation upon which any wealth transfer must be built.

Consider This: Does your family favour “equal” or “fair”? How does this work in practical terms? How do family members feel about it?

Further reading: https://www.wealthbriefing.com/html/article.php?id=193349#.YgR1UN9BxqZ, https://www.forbes.com/sites/forbesbooksauthors/2021/10/01/how-to-start-wealth-conversations-with-your-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 Fair or Equal? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/05/fair-equal/

“How to transition the family business to the next generation?” The answer depends on (a) who is asking (incumbent or rising generation) and (b) when (in the life-cycle of the business) they are asking. More often than not, the question is raised too late – when the incumbent generation is thinking of retirement, when there are already unstated expectations from both generations, and when there is already latent conflict.

The key ingredients to a successful family business transition are open communication between the generations working in the business and with other family stakeholders (current and future owners), a shared vision both for the future of the business and for the family itself, and a good governance structure.

Those things are the foundation required for succession. They come before identifying the right family member to occupy any particular management position.

Most families don’t set the foundations first, but that doesn’t mean all is lost. A process of vision alignment, improving communication and establishing strong governance can get things on track and reduce the risk of the latent conflict blowing up.

Consider This: Has your family business thought about succession? Have your imagined or visualised what succession looks like (for both the incumbent and rising generation)? Do both generations have a clear understanding of what will happen and when?

Original articles:

https://www.forbes.com/sites/forbescoachescouncil/2019/10/16/the-10th-commandment-of-family-business-succession-create-family-unity/, https://knowledge.insead.edu/family-business/the-key-to-making-succession-work-in-family-business-12546, https://www.propertycasualty360.com/2019/09/26/six-lessons-to-successfully-moving-a-family-business-to-the-next-generation/, https://www.asianjournal.com/life-style/lifestyle-columnists/family-unity-is-critical-for-business-continuity-part-2-of-2/, http://www.campdenfb.com/article/bringing-next-generation-family-business, https://www.forbes.com/sites/forbesbostoncouncil/2019/09/16/how-to-transition-a-family-business-to-the-next-generation/#2d9ab33c173d

[reprinted with permission]

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 #leadership
#entrepreneurship

The post Family Business Transition Key Ingredients appeared first on David Werdiger.

source https://davidwerdiger.com/2023/05/key-business-transition/