I think the notion of generational wars is a perpetual myth (or perhaps a perpetual truth). Every generation has certain influences which drive their attitudes (political & social) and thus the policies enacted by their leaders. It’s very easy to point cross-generational fingers of blame, but very hard to sit in the other-generational seat and play judge.

Have the Baby Boomers ruined the US economy (and the world) for the Millenials? That’s what Bruce Gibney asserts in his book A Generation of Sociopaths: How the Baby Boomers Betrayed America. Gibney lays blame on the Boomers that have controlled Congress for decades for the huge increase in the debt-to-GDP ratio, the under-investment in infrastructure, and inaction on climate change. He claims that it all stems from their lack of investment in the future.

UK academic Dr Beverley Searle agrees somewhat, stating that the blame sits with politicians’ funding decisions which makes the welfare state unsustainable, but deflects the notion of blaming Boomers for the benefits they enjoyed.

Further, I think Gibney is using the Boomers and Millennials labels as proxies for conservatives and progressives. The policy approaches of Boomers that he condemns are conservative policies, and he is a progressive. He might be better off calling a spade a spade rather than masking a political argument as an intergenerational one.

The Pew Research Center’s March report “The Generation Gap in American Politics” makes for interesting reading. While it shows younger people being more progressive, it doesn’t explore whether there are generational drivers and what they might be.

Consider This: In your family, are the older generations more politically conservative than the younger ones? To what extent are their differences driven by generational influences rather than politics?

Original articles: https://www.vox.com/2017/12/20/16772670/baby-boomers-millennials-congress-debt, Gibney’s book https://www.hachettebookgroup.com/titles/bruce-cannon-gibney/a-generation-of-sociopaths/9780316395809/, https://www.scotsman.com/news/attacks-on-greedy-baby-boomers-are-unjustified-says-academic-1-4686858, Pew Report http://www.people-press.org/2018/03/01/the-generation-gap-in-american-politics/

[re-posted with permission]

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#entrepreneurship

The post Are Generational Wars Political or Social? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/11/political-social-2/

Increasing life expectancies have meant that for the first time in history, four generations are alive at the same time. This has important implications for the timing of the transition of family wealth.

There is an ‘inheritance boom’ coming when the Millennial generation inherit the wealth of the Baby Boomer generation, but this is expected to peak in 2035 when the average Millennial has already passed the age of 60!

Some wealth originators shudder at the idea of passing over the reins while they are still alive, having seen other children squander their family’s wealth. While there is always a risk that the next generation will blow it, the previous generation can reasonably argue that they don’t want to be around if/when that happens.

But is it reasonable to make the next generation wait that long? Granted, they will likely have many years to enjoy the wealth (and the control of the wealth), but holding back can create resentment and can be considered condescending and patronising.

Consider This: At what age do you think your children should inherit significant family assets? To what extent is that driven by your own experience? Whatever the age, what are you doing to prepare them for that eventuality?

Original article: https://www.moneywise.co.uk/news/2018-01-02/millennials-set-inheritance-boom-when-they-turn-61, https://www.tharawat-magazine.com/facts/third-generation-failure-family-business/

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The post An Inheritance Boom is Coming appeared first on David Werdiger.

source https://davidwerdiger.com/2023/11/inheritance-boom-2/

As a family enterprise matures, and often in the context of succession planning (or ageing incumbents), the decision to appoint a non-family CEO comes to the fore. Having made the decision to consider one, families ask the usual question: what do we want in a (non-family) CEO?

Perhaps they should turn it around and ask themselves: what non-family member would want to be our CEO and why? Putting themselves in the shoes of a prospective CEO makes it easier to reduce the risk in the hire and avoid setting the candidate up for failure.

For the prospective CEO, well-defined authority and autonomy is essential, as is the comfort that the role is not interim while the family works out the ‘real’ next CEO. The boundaries of the role are also essential. A family cannot expect an external CEO to also be burdened with family issues. That could be a huge distraction from their main role.

That means (a) the family governance must be in order, and (b) the family may also need the assistance of externals who have a focus on the non-business aspects of family.

Consider This: Is your family considering a non-family CEO? Do you have a clear delegation of authority as part of the position description? Have you considered how long the CEO might stay on the job and why?

Further reading: 

https://www.forbes.com/sites/forbesbusinesscouncil/2022/02/16/family-businesses-10-tips-for-hiring-your-first-nonfamily-ceo/?sh=7355d7737c38, http://www.campdenfb.com/article/rising-above-how-succeed-non-family-chief-executive, https://www.forbes.com/sites/dennisjaffe/2019/01/09/leading-a-family-business-when-its-not-your-family-opportunity-or-potential-disaster/#2aab184a1b37, https://insight.kellogg.northwestern.edu/article/family-business-decision-making

Actionable Generational Wealth Succession 

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source https://davidwerdiger.com/2023/11/non-family-ceo-2/

Successful entrepreneurs are often control freaks. But they can’t control whether their children can take over the business or the assets and keep them growing.

Entrepreneurs may be visionaries, but sometimes it takes an external advisor to identify choices that they might otherwise overlook. Transferring full control of an operating asset to children isn’t the only option. Neither is continuing the way things have always been done just for the sake of it.

The drive towards impact and environmental, social and governance, ESG, investment is running in parallel with the generational wealth transition. The stereotype that it is just young people who are interested in ESG investing is quickly becoming out of date. Often, parents say that they support this investment choice but when they were setting up the business in the beginning, their focus was on profitability. A common interest in ESG investing can help parents and advisors connect with the rising generation.

That said, a change in investment approach driven by the rising generation can be a source of conflict, and needs to be handled judiciously.

For effective wealth transition, it’s important for families to learn how they can create value together through increased understanding of each other and a shared vision of their family’s future.

Consider This: What has your family done to raise the next generation of entrepreneurs? Are you able to deal with “Dad: I have a great idea – can I have a million dollars to invest in it?” Has your family experienced intergenerational conflict over investment decisions?

Original articles: https://entrepreneurship.babson.edu/power-of-entrepreneurial-family/, https://www.marketwatch.com/story/how-to-know-if-your-children-are-ready-to-take-over-your-business-2020-10-20, https://www.ft.com/content/dea5e5d1-8650-4819-aecc-699b612419aa, https://www.ftadviser.com/investments/2020/12/10/who-is-making-the-esg-investment-choices/, https://www.ftadviser.com/investments/2020/11/25/how-esg-can-help-succession-planning/

[Reposted with permission]

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.

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#entrepreneurship

The post ESG Investing for the Rising Generation appeared first on David Werdiger.

source https://davidwerdiger.com/2023/11/esg-nextgen-2-2/

Advisors don’t spend enough time thinking about their own succession and exit planning. Like most people, many are too involved in the day-to-day work. But like family businesses, exit planning for advisors is not just a financial transaction, but is also the chance to leave a legacy. 

The wealth management industry is ‘old’ – the average age of financial advisers today is about 55, with 20% of them 65 or older. Why? Because most of them have been servicing the incumbent generation of wealth holders. A similar profile would apply to accountants and lawyers servicing this group.

Research shows a mismatch between the ‘opportunity’ advisors see in the incoming intergenerational wealth transfer and tangible steps taken to address it. The wealth transfer poses a risk both for families and advisors., and both groups need to be aware of it and plan accordingly.

But who advises the advisors on managing this? I have been following this niche issue for a number of years, and will be launching a series of products including educational, knowledge base/community, and specialist consulting to advisors and their firms.

Consider This: Families: have you had an open discussion with your advisors about their ‘parallel’ transition? Rising gen family members: are you comfortable with your parents’ advisors becoming yours? Advisors: are you aware of the risks and opportunities to your business with the generational wealth transition? Have you formally assessed this?

Original articles: https://www.wealthprofessional.ca/news/industry-news/helping-advisors-pave-the-path-for-succession/331963, 

https://www.forbes.com/sites/forbesfinancecouncil/2020/07/27/the-psychology-of-a-retiring-advisor/?sh=53daca6f57a6,

https://www.kiplinger.com/retirement/601878/your-financial-adviser-wants-to-retire-too,

https://www.napa-net.org/news-info/daily-news/what-are-biggest-practice-issues-advisors,

https://www.ftadviser.com/your-industry/2020/11/19/advisers-slow-to-address-wealth-transfer-opportunity/,

https://www.journalofaccountancy.com/news/2020/dec/succession-issues-surge-at-accounting-firms.html

[reposted with permission]

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The post The Exit of The Cobbler’s Children go Barefoot appeared first on David Werdiger.

source https://davidwerdiger.com/2023/11/cobblers-children-2/

Most people with wealth to pass on have never talked to their heirs about how they plan to distribute their assets after they die because they consider the information too personal, according to a recent survey. In six out of 10 families, there is no process in place to ensure family wealth decisions are made and communicated effectively (from another survey).

This is actually no surprise, because these sorts of discussions are among the most difficult. They evoke feelings of mortality in the incumbent generation. And because our relationship with money is primarily emotional, talking about money produces subconscious reactions in those participating in those discussions.

These reactions are usually driven by fear and most people will need help to understand their emotional drivers. Understanding our attitudes to money is therefore a prerequisite to having a healthy family communication framework.

In the absence of communication, family members fill in the gaps by guesswork, or what they can find out online, both of which are usually wrong which leads to assumptions. Open communication helps children learn about wealth and values, while enabling the family to comfortably navigate difficult money talks.

By creating a family mission and vision statement first, discussions about money can be suitably contextualised and be less about the numbers, and more about the underlying purpose and meaning to their lives.

Consider This: What have you told your children about the family wealth? What do you think they have discovered without you telling them anything? At what age do you consider it appropriate to start preparing them to be good custodians of family wealth? Are they are aware of all the things money can’t buy?

Original articles: https://www.kiplinger.com/article/retirement/T021-C032-S014-to-successfully-pass-down-wealth-share-your-intent.html, https://www.bizjournals.com/bizwomen/news/latest-news/2019/08/most-heirs-left-in-the-dark-about-estate-plans.html?page=all, https://www.wealthbriefingasia.com/article.php?id=185247#.XbYkguYzaUk, https://www.moneymanagement.com.au/news/financial-planning/australians-need-discuss-their-will-children, https://www.forbes.com/sites/forbesfinancecouncil/2020/01/31/how-being-too-guarded-can-prevent-your-family-from-achieving-its-mission/#7fdd15732df5, https://www.bizjournals.com/denver/news/2020/02/03/tips-on-talking-to-the-next-generation-about-your.html?s=print

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

The post Navigating Wealth Communication with Heirs appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/talking-wealth-2/

[Reposted with permission] I’ve recently returned from a speaking engagement at a conference in Dubai, which was my first visit there. As I walked around the city and particularly the mall, I pictured “founding father” Sheikh Al Maktoum just a few decades earlier looking out on a desert, and imaging a future that few others could imagine.

Creating modern Dubai took a huge amount of money and some outstanding engineering, but the most important ingredient was … vision.

Those blessed with fewer financial constraints than most have an opportunity to make their visions a reality. Their vision can make the world around them a better place in so many ways. But it starts with imagining and dreaming of possibilities. For some, those dreams come spontaneously, but for others they can be stimulated through a structured process. For families, there is an opportunity to do this as a group, which has added benefits: the contribution of diverse voices to build the vision, and the power of shared vision to bind the family together.

Warren Buffet famously said that he would leave his kids enough to do anything but not enough to do nothing. If we are blessed with wealth, we ought to make our “anything” the best it can be.

Consider This: Has your family articulated a shared vision? Do you encourage rising generation family members to dream and consider the possibilities open to them? Whatever your age, what are you dreams?

As a third party advisor to #familyoffice and #familybusiness Werdiger often helps guide the #intergenerational parties through #conflictresolution to a win-win-win result through Family Business Advisors-Counseling Actionable Generational Wealth Succession. For more in-depth, thought-provoking discussion points and commentary on family and business, sign-up to gain access to the archives of my Family Matters newsletter: https://www.transitionbook.co/member-area/6cf3b890596 or book a call or speaking engagement at https://www.davidwerdiger.com influenced and partly based on the Book E-Myth Revisited case study.

newfamilyoffice #familyworth #nextgeneration #intergenerationalwealth #entrepreneurship

The post Founding Fathers, Rising Generations appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/family-vision-2/

Philanthropy, in simplistic terms, is often manifested as the flow of funds from a grant-maker to a beneficiary, and as such can be considered one-directional. Yet so many people who do this (whether they are giving of their time, talent or treasure) have expressed the rewarding feeling of giving. I can attest to this personally, particularly in respect of several non-profit board and committee positions.

Family philanthropy, when done well, can be “win-win”. It can deliver immense value to the family.

Like many things, doing it well means doing it with a plan. For a family, that means asking “why should we give?”, “what are our (collective) values?”, “what impact do we want to leave on the world?” and other such questions. These questions don’t have simple answers, and just discussing them as a group can be an enlightening and bonding experience for the family.

While asking these questions can lead to better quality and more strategic philanthropy, they have the additional benefit to the family in providing a focal point to broader family questions such as “what does it mean to be wealthy?” and “what does my life mean given I never need to work?”. It can also be a great way to engage younger and rising generation family members who may not want (nor may be ready) to discuss financial matters.

In some families, philanthropy can be a source of conflict, of competing interests and ego. It doesn’t have to be, provided the family is prepared to put in the effort to do it well. It can be win-win for both the beneficiaries of their generosity and the family.

Consider This: What discussions have your family had about philanthropy? Have those discussions been helpful? Who is involved in vision and strategy? To what extent are the rising generation involved?

Further reading: https://www.imd.org/ibyimd/leadership/happy-families-the-unifying-force-of-philanthropy/, https://www.wealthprofessional.ca/news/industry-news/why-family-philanthropy-isnt-just-about-writing-a-check/375734, https://www.opalesque.com/industry-updates/7089/increasing-wealth-drives-family-office-focus-on-philanthropy.html, https://www.insidephilanthropy.com/home/2023/3/7/evolving-family-models-alter-the-ways-a-new-generation-gives-back, https://cfi.co/menu/corporate/2022/11/strategy-structure-shared-purpose-there-are-rules-to-protecting-family-wealth/, https://www.barrons.com/advisor/articles/ultrawealthy-financial-advisors-family-meetings-51650484720

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.

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The post Win-Win Family Philanthropy appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/win-win-family-philanthropy/

Where we spend our time and energy is a reflection of our priorities. In a wealthy family, whether or not they have a formal family office, we can think about three types of activity:

* money: investment or operating business aimed at growing the family’s financial capital

* legal: regulatory obligations, estate planning, tax, insurance, and other risk management

* family: maintaining and improving the physical, mental, emotional, and spiritual health and well-being of the family

It is thought that in many family offices, the split between these activities is about 60/30/10. Some say that even the 10% allocation to “family” is generous.

What does this say about a family’s priorities? How does family wealth differ from corporate wealth? Companies have human resources departments whose purpose includes managing the wellbeing of team members. Notwithstanding that recruitment and performance management are not quite needed within families, managing the well-being of the family, both individually and collectively, is surely a function to which family resources should be allocated.

Jay Hughes developed the notion of multiple forms of family capital: human, intellectual, social, legacy (or spiritual) and financial. He illustrates this with a hand where the thumb represents the financial capital, and the four fingers are the “non-financial”, and holds his hand with four fingers out and the thumb pointing down. The purpose of financial capital is to underwrite and enable the development of the other forms of family capital. It is the means, not the end. A family’s greatest asset is its members, not its financial balance sheet.

Consider This: What resources does your family allocate to maintain and improve the well-being of family members? What does it do (proactively and reactively) in support of this well-being? How is the saying “family comes first” reflected in practical terms?

Further reading: https://ffipractitioner.org/the-family-focused-office/, https://www.morningstar.com/news/marketwatch/20230823369/not-just-for-rich-people-6-ways-were-messing-up-inheritances, https://www.morningstar.in/posts/74723/what-wealth-cant-buy.aspx, https://www.fa-mag.com/news/for-family-wealth-conversations–focus-on-the-why-74090.html, https://www.businessinsider.com/family-offices-no-inheritance-plans-wealth-transfer-strategy-2023-6, https://ceoworld.biz/2023/03/16/the-importance-of-having-the-talk-concerning-family-wealth/, https://www.chase.com/personal/investments/learning-and-insights/article/we-need-to-talk-communicating-your-estate-plan-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.

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The post Family Wealth Priorities appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/family-wealth-priorities/

Consider This: Are members of your family more driven by greed or envy? While neither are good attributes, what can you do to mitigate their risks?

Greed and Envy are two of the ‘seven deadly sins’ and are relevant to material wealth. Economists adopt the fundamental principle that people seek wealth maximisation (a form of greed), but is this really the case?

Because we live in communities and families, it can be argued that the more significant driver of behaviour is envy, because we invariably compare and benchmark ourselves to those around us.

For the economists among you, the analysis is in the link below, but more broadly interesting is the implications for family wealth.

If envy is a greater driver of behaviour than greed, then the principles of equity and fairness become all the more important when transitioning wealth within a family. Within families, envy can be a far more destructive attribute. Any gift (in the broadest sense, so including a role that is ‘given’ to a family member) should be considered in the context of how other family members may react and respond.

Original article: http://falkenblog.blogspot.com.au/2010/03/why-envy-dominates-greed.html (very dry)

Actionable Generational Wealth Succession

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The post Greed or Envy – 2 of the 7 Deadly Sins  appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/7-principles-greed-envy/