The conflicts that take place within wealthy families are often on display through the media as a result of their public profiles (and because people want to read about them). For outsiders, they can be hard to understand: What are they fighting about? Surely there is enough there for everyone?

But in fact, wealthy families have all the same family issues as others: sibling rivalries, favouritism, jealousy, power struggles, and the search for identity. The only difference is that in wealthy families, the conflicts can be played out with much bigger stakes.

Throwing money at a family problem doesn’t make it go away – the best it can achieve is to “kick the can down the road”, or defer it. It’s rarely about the money, which cannot – in and of itself – make people happy. Solve the underlying issues, and the money component suddenly becomes easier.

Advising a family business, or developing a wealth/business succession plan with a family is part business advisory, and part therapy (often more of the latter)

Consider This: How many arguments within your family look like they are about money, but are really about deeper issues?

Original articles: https://www.townandcountrymag.com/society/money-and-power/a27191152/rupert-murdoch-family-therapist-dynasties/, http://www.campdenfb.com/article/keep-out-ring, https://www.theatlantic.com/family/archive/2018/12/rich-people-happy-money/577231/

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.

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The post Public conflict resolution in family wealth appeared first on David Werdiger.

source https://davidwerdiger.com/2022/10/public-conflict-resolution-family/

What would you rather in your family: to manage conflict or avoid it completely? Before you jump to door number two, snap out of fairy tale land and accept that family conflict cannot be avoided. Conflict is a part of any relationship, and especially present in families, and even more so when significant assets are added into the mix.

When family members are driven by self-interest, this leads to zero-sum dynamics. The ‘losers’ in any conflict will eventually get their chance to harm the ‘winners’ and these forces are a destructive influence on the whole family.

What helps families thrive through generations is unity, and that is supported by (among other things) the ability to manage conflict. Indeed, dealing with and resolving conflict can lead to a shared sense of purpose which strengthens family bonds and determination, rather than perpetuate long-term rivalries.

Having a framework and common set of rules for those connected to the wealth is essential, as is maintaining transparency and ensuring individuals and their needs are recognised and considered. Allowing for the division of assets under specific circumstances can potentially mitigate some aspects of conflict.

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.

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The post Manage or Avoid Family Conflict? appeared first on David Werdiger.

source https://davidwerdiger.com/2022/09/manage-or-avoid-conflict/

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

source https://davidwerdiger.com/2022/09/queen-charles/

Wealthy people broadly come in two flavours – wealth creators and wealth inheritors – and each have very different characteristics.

Attitudes to money and wealth are usually established as we grow up and largely remain with us for the duration of our lives. Creators often grow up without a lot of money and therefore have different attitudes to spending and the value of a dollar, are uncomfortable talking about it with their children, and often look at the wealth they created through an “ownership” rather than a “stewardship” lens. If they have created the wealth through starting a business, they also have a set of beliefs (resilience, confidence, sense of invincibility) common among business founders and entrepreneurs.

Inheritors view the world very differently, sometimes feeling conflicted or guilty for the “sin” of not having to earn it like most others. Depending on their upbringing, they may not have a sense of the value or spending power of money. They are often challenged to develop their own identity – not wanting to be known as “the child of …”, and needing to make their own mark. Their mark may often be in the non-financial arena (because their parents already made it financially).

In order to effectively transmit or transition the wealth to the next generation, both creators and inheritors need to understand their difference, and learn new skills (raising children with healthy money attitudes, adopting a “stewardship” approach, finding meaning beyond money).

Consider This: Have you considered how your attitudes to wealth might differ compared with your parents or children? Have you had family discussions about these differences and what they mean to each of you?

Original articles: https://edition.cnn.com/2019/07/23/success/financial-enabling/index.htm, https://www.fa-mag.com/news/russ-prince–among-super-rich–self-made-wealthy-and-inheritors-think-differently-45566.htm, https://www.fastcompany.com/90372281/5-lies-youve-been-told-about-generational-wealth, https://www.forbes.com/sites/forbesbooksauthors/2019/08/06/better-together-stewarding-wealth-and-wisdom-to-prevent-affluenza/#2e9f03807a58

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.

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The post Generational Attitudes to Wealth appeared first on David Werdiger.

source https://davidwerdiger.com/2022/09/generational-wealth-attitudes/

Kenny Rogers sang of the importance of knowing “when to hold ’em, and when to fold ’em”. Any succession plan worth its salt isn’t just a plan of who will succeed whom in running the business. It also needs a “Plan B” for the scenarios where the chosen successor is unwilling or unable, where there is no successor, or where a generational transition of the business might lead to serious conflict.

Some business founders/owners enjoy the early stages of creating and growing a business, but then tire as the management becomes more bureaucratic by necessity. Or worse, the founder is the one who does the “exciting” activities, and then passes it to the next generation who inherit a mature business with little scope for innovation.

Another possible obstacle when transitioning is the family dynamic of the rising generation: will they (collectively) be able to govern/manage the business without conflict? Will they end up being unwilling partners joined at the hip and with most of their wealth tied up in a single asset? Most families will choose to be financially separate and on good terms, than sharing assets and fighting over them.

Consider This: In your succession plan, have you done “scenario planning” to consider the ways thing might not go as you plan or aspire? To what extent has the rising generation’s own aspirations been taken into account at the planning stage?

Original articles: https://www.investmentnews.com/article/20190528/FREE/190529949/sometimes-a-sale-is-the-best-succession-plan, https://www.forbes.com/sites/forbescoachescouncil/2019/07/29/the-fifth-commandment-of-family-business-succession-know-whether-to-sell-or-transfer/#62382dc52307

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
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The post Transition or separation? appeared first on David Werdiger.

source https://davidwerdiger.com/2022/09/transition-separation/

Coming into wealth suddenly – such as through inheritance or a windfall liquidity event of a family business – can carry serious risks.

The rapid change in financial circumstance can lead to poor decision-making, a loss of perspective, and social isolation. It can lead to a dysfunctional relationship with money/wealth. In the case of inheritance, there can be mixed or conflicting emotions of loss and gain.

It can be like winning the lottery, and research shows that most people who do so end up losing their money in a relatively short time.

But unlike winning the lottery, families are able to prepare themselves for future changes to their financial circumstance. I would argue that it is incumbent on parents to prepare their children to be healthy custodians of family wealth, rather than hide it from them for fear of spoiling them.

Consider This: Are your children ready for the wealth they will inherit? What have you done to prepare them? If most of your family wealth is tied up in an operating asset, do you have a sense of what it is actually worth?

Original articles: https://www.kiplinger.com/article/retirement/T064-C032-S014-five-common-pitfalls-of-sudden-wealth.htm, https://www.ft.com/content/3122b790-70b3-11e9-bf5c-6eeb837566c5l

Reposted 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.

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The post Sudden liquidity carries risk appeared first on David Werdiger.

source https://davidwerdiger.com/2022/09/sudden-liquidity/

This is a difficult topic to broach, and needs to be done only in appropriate settings – indeed, that might be the most important message of this topic. After the story of BMW heiress Susanne Klatten went public, she was slammed on social media. Her personal challenges – the responsibility, self-doubt, and being targeted by scammers – are real. But it’s very hard for anyone brought up without wealth to have any sympathy (and often it’s the reverse), so seeking it from ‘outsiders’ is almost a waste of time.

For people without it, wealth is seen purely as an opportunity with only positives. People growing up with wealth realise that it also comes with a burden – expectations that can never be achieved, the challenge of finding purpose. For some, the burden can seem like more trouble than its worth. Wealthy families have the same family issues as others – indeed, when money is used to sweep issues under the carpet, the underlying issues only fester and become worse. My friend likes to say: “the poor want to be rich, and the rich want to be happy”.

Consider This: Do you have an appropriate forum (e.g. peer network or mentor) where you can discuss both the positives and negatives of wealth? Do you have family discussions that broach these issues?

Original articles: https://www.news.com.au/finance/money/wealth/bmw-heirs-reveal-downsides-of-wealth-in-surprise-interview/news-story/ab120741fca3c56d9f4219c26595b1bd

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
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The post Wealth Downside appeared first on David Werdiger.

source https://davidwerdiger.com/2022/09/wealth-downside/

A “universal truth” about the imbalance of inputs and outputs is what became known as the Pareto principle, or the 80/20 rule. While it doesn’t always come to be an exact 80/20 ratio, this imbalance is often seen in various business cases, Here we will address how not to sell a family business.

0% of all businesses do not sell, and only about 30% of family businesses get handed down to the next generation. If it doesn’t sell and isn’t passed down, what happens? Typically, they die a “slow death”, or are liquidated. Understanding why businesses don’t sell is the key to maximising the value of your own family business.

Many family businesses are “lifestyle” businesses – they deliver cash to the family, but are starved of the investment and strategic thinking needed to grow them and make them sustainable For too many of them, much of their value is tied up in family members (and their personalities). And most owner-founders have over-inflated expectations as to the value of the businesses they have created.

The way to make your business more sellable is to put yourselves in the shoes of a prospective buyer. They would ask: what intrinsic value are they getting for their money once the founders/owners leave? Are the accounts and structure ‘clean’? Has the business been getting enough re-investment to grow?

The process of making your business sale-ready is best achieved through externals (who don’t wear your rose-coloured glasses) and through the establishment of a governance structure that can regularly examine “big picture” strategic issues facing the business. Making you family business sale-ready, even if you have no intent to sell, is a worthwhile exercise in itself.

Consider This: Have you considered the future scenario of family members wanting to sell your family business? Have you ever had it assessed for sale-readiness or valued by an independent? Do you consider its long term disposition in risk assessment?

Original article: https://www.greenhousegrower.com/management/how-to-manage-succession-planning-when-there-is-no-succession/, https://www.bakersfield.com/kern-business-journal/why-most-businesses-don-t-sell-and-what-owners-should/article_a736d50a-a4af-5b69-94d6-c648e72baad6.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
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The post Lifestyle Family Business appeared first on David Werdiger.

source https://davidwerdiger.com/2022/09/pareto-principle-2/

Family offices (FOs) come in so many shapes and sizes that the term ceases to have specific meaning. It’s simply a set of services provided for a family.

The origins of the FO often determine their primary focus: there are plenty of FOs that are simply vehicles for co-investment, or glorified reporting platforms.

Having a FO essentially means taking a professional approach to managing the affairs of the family. It’s interesting that 92% of FO leaders believe the most successful FOs have external hires in key leadership positions.

What your FO will include depends on with your goals, so it’s important to consider them before you set one up (or start searching for a suitable MFO), and then to review against goals regularly.

The stuff everyone seems to look for are financial and investment services, but it’s hard to truly differentiate in those services.

The most ‘value’ you will actually get from FO services are the things that are the hardest to measure: creating continuity, cohesion and engagement across families for generations, helping the family define its purpose, and promoting family unity, harmony and happiness.

The rising importance of sound formalized investment management governance goes hand-in-hand with enhanced family governance.

Consider This: Does your family office have clearly articulated goals (both financial and non-financial)? How often do you measure performance against those goals? How often do you review the goals to ensure they are relevant to the family as it evolves?

Original articles: https://www.forbes.com/sites/forbesfinancecouncil/2021/07/19/how-a-family-office-can-uncover-goals-with-a-family-meeting/?sh=7b59ff99c1f5, https://www.forbes.com/sites/forbesrealestatecouncil/2021/06/29/how-to-build-a-family-office/, https://www.forbes.com/sites/paulwestall/2021/06/08/family-office-to-keep-it-in-the-family-or-not-to-keep-it-in-the-family-that-is-the-question/?sh=1cfe05b53f70, https://www.finews.asia/services/advertorials/34441-trust-administration-fiduciary-services-estate-planning-wealth-structuring-family-office-family-governance-trusts, https://www.kiplinger.com/retirement/estate-planning/602492/do-i-need-a-family-office-a-guide-for-the-rich-and-not-so-famous, https://www.campdenfb.com/article/rising-importance-social-capital-family-offices, https://www.lexology.com/library/detail.aspx?g=8b8eae4c-061f-47c9-8399-c5468b03e742, https://www.forbes.com/sites/johnjennings/2020/08/04/how-to-decide-what-your-family-office-should-outsource/#20f2c87e221c

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.

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The post Family Office Priorities appeared first on David Werdiger.

source https://davidwerdiger.com/2022/09/family-office-priorities/

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

source https://davidwerdiger.com/2022/09/until-divorce/