[reprinted with permission]

There’s a fascinating story currently on Bloomberg about the Singh brothers – heirs to an Indian health-care empire – and their relationship with guru Gurinder Singh Dhillon. What makes this interesting is the financial relationship between them, and the dramatic fall in their fortune over the last few months.

It brings to mind another story with plenty more still to happen – that of Clare Bronfman’s involvement with a New York self-help group called Nxivm, which appears to display cult-like behaviour. In addition to Bronfman sisters using their substantial fortunes to underwrite Nxivm in a variety of ways, most recently there have been accusations of criminal behaviour including conspiracy and criminal racketeering, and Ms Bronfman herself has been arrested and is out on USD 100M bail.

Stories like this are a warning bell to wealthy families of their vulnerability to people of all kinds with ulterior and sometimes nefarious motives. Many families employ gatekeepers to protect them, but this is a never-ending game of cat and mouse. Social media and techniques like social engineering can readily be used by protagonists to worm their way in. When it comes to trust, families should observe a healthy (but not obsessive) measure of vigilance.

Consider This: Does your family have policies about the use of social media, and acceptance of ‘friendship’. Do family members have an awareness of spotting ‘hangers on’, and maintaining the right degree of scepticism and vigilance when meeting new people?

Original articles: https://www.bloomberg.com/news/features/2018-08-16/billionaires-and-the-guru-how-an-indian-family-lost-2-billion and https://www.cnbc.com/2018/08/12/new-york-times-digital-from-heiress-to-sex-cult-defendant.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

The post Wealthy Family Vulnerability appeared first on David Werdiger.

source https://davidwerdiger.com/2022/05/wealthy-family-vulnerability/

The post Wealth Transition Resilience appeared first on David Werdiger.

source https://davidwerdiger.com/2022/05/wealth-resilience/

Whether you choose to spend your kids inheritance, gift assets, or you prefer to hold money back for the kids, managing what you leave behind can be done a few different ways. There is no right way, and there should be no pressure to choose one direction or another. Your life, your money!

Mass media will always jump on stories that seek to challenge and debunk commonly accepted narratives. CNBC is running a story suggesting that the huge intergenerational wealth, estimated at $30 trillion, is a myth, because the actual transfers will be “small, fragmented and drained”. Why? Because baby boomers will spend on themselves as they age (what’s known as SKIing – Spending your Kids’ Inheritance), and because they will choose to gift their wealth to charitable causes.

This is where some nuance is needed, particularly in light of the US Fed report cited above. We can split the boomer wealth into two categories: “mid-range”, where big spending by parents can actually have an impact, and “high-end”, where even that is a drop in the ocean. While certainly the mid-range will be affected by SKIing, the bulk of the wealth by value will certainly be transmitted.

Consider This: Don’t get jumpy when you read sensationalist stories like this one. Every family is different, and therefore their approach to transmitting family wealth should be uniquely considered.

Original articles: https://discover.rbcroyalbank.com/skiing-spending-the-kids-inheritance-and-other-ways-to-manage-what-you-leave-behind/, https://www.cnbc.com/2018/05/22/that-30-trillion-great-wealth-transfer-is-a-myth.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.

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#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment

The post Your Kids Inheritance; SKIing appeared first on David Werdiger.

source https://davidwerdiger.com/2022/05/spending-inheritance/

With all the talk about intergenerational wealth transition, another very important topic doesn’t get the attention it deserves: transition of trusted adviser relationships.

The baby boomer generation of advisers manage a third of all client assets, and they too have retirement plans. Firms need to manage the succession planning of these advisers, and this means both advisers and families need to manage the transition of the relationships.

In my family, we’ve had relationships with banks, accounting and legal firms that have spanned 60+ years and 2-3 generations. In large banks, people move around all the time, but with accounting, legal, and investment advisers (depending on the size of the firms), the key account managers tend to stay around for longer. In those situations, the relationship transition needs to be actively managed.

Younger generations want to talk to advisers who understand them, and who are able to view them as the owners, not the children-of. It therefore stands to reason that advisers need to lead the way on transitioning.

Consider This: How long have key trusted adviser relationships been in place in your family? Are the firms you deal with family businesses themselves? What are you and they doing about laying the foundation for the next set of relationships between the family and its advisers?

Original article: http://www.wealthmanagement.com/industry/baby-boomer-advisors-near-retirement-many-have-no-game-plan

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 Advisor Transitioning appeared first on David Werdiger.

source https://davidwerdiger.com/2022/05/advisor-transitioning/

Consider This: How do you explain your family wealth to young children? At what do you start this process? How do you say ‘no’ to them and place limits on their spending when they reply “but we can afford it”?

Affluenza and entitle-itis are some of the newest ‘diseases’ that afflict the wealthy, and of course there is always the ubiquitous ‘privilege’ that almost everyone is now obliged to check.

In her book Uneasy Street: The Anxieties of Affluence, Rachel Sherman, associate professor of sociology, has interviewed 50 affluent parents in and around NYC to understand the challenges they face raising children with wealth.

They are somewhat torn between stigma of wealth and the competitive environment in which they live. Attitudes to wealth have changed, and while parents want to give their children the opportunities that come with wealth, they still want to keep them ‘normal’ and able to mix comfortably in (and be accepted by) broad social circles.

As much as ‘tough love’ is needed to limit spoiling, it’s also essential to teach children to be comfortable with wealth, and to appreciate what it brings to their lives. Take it, but don’t take it for granted.

Original article: https://aeon.co/ideas/how-new-yorks-wealthy-parents-try-to-raise-unentitled-kids, http://press.princeton.edu/titles/11096.html (the book)

[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 Privilege and Other Diseases of the Wealthy appeared first on David Werdiger.

source https://davidwerdiger.com/2022/05/wealth-privilege/

I’ve written several times about the challenges of advisor succession, and now want to look at this from a family risk perspective. If your advisor is suddenly unable to work, is it the advisory firm’s problem, or yours?

While the personal connection between a family of significant wealth and its advisors is important, succession arrangements on the advisor side can have a huge impact on the family. From a risk perspective, it’s important to avoid any “single points of failure”. Each advisor needs a back-up in case of emergency. This applies to wealth managers, lawyers, accountants and other family advisors.

A recent survey in Canada showed that 69% of advisors are nearing retirement or have started creating a succession plan, but only 11% said they have a formal succession plan. Advisors seem to be ageing, and this is also a concern for families who need advisors to be able to connect with rising generation family members.

Consider This: Have you included advisors as part of your family’s risk register? Does each of your advisors have a back up? Do you consider succession as a factor in your choice of advisors?

Original articles: https://www.wealthprofessional.ca/investments/wealth-technology/why-advisor-succession-isnt-just-an-exit-event/363194, https://www.investmentexecutive.com/newspaper_/building-your-business-retirement/the-advisors-retirement-making-a-smooth-transition/, https://www.wealthprofessional.ca/news/industry-news/nearly-nine-tenths-of-advisors-have-no-formal-succession-plan/356350, https://www.theglobeandmail.com/investing/globe-advisor/advisor-news/article-succession-planning-still-a-big-issue-in-financial-advice-industry/

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

The post Advisor succession: family perspective appeared first on David Werdiger.

source https://davidwerdiger.com/2022/04/advisor-succession/

Change is in the winds. Women control more than 60% of personal wealth in the USA. While older generations hold a patriarchal view of wealth, only a third of their children held such views. Women family leaders, regardless of age, are challenging traditional gender roles. 

The ecosystem is adapting to these changes, recognising that within the family office, there was a need to approach women differently than men. We are seeing initiatives to help women find their voices and become more active participants in their family’s wealth.

Women want to work with advisors who will empower them to make their own decisions, and the more valued advisors were the ones who proactively worked in terms of shared understanding and decision-making for both spouses.

The advantages of having women involved in decision making are well established – a diversity of opinions and perspectives leads to better decision making. In particular, when it comes to family wealth, women often focus on the big picture and the whole family’s end goal instead of just the numbers.

Consider This: Are the women in your family involved in family wealth decision making? Do your advisors actively seek to include them? Are there cultural barriers to involving women?

Further reading: https://www.fa-mag.com/news/what-does-a-family-office-mean-for-ultra-wealthy-women–pitcairn-s-amy-hart-clyne-on-her-work-with-female-family-leaders-65535.html, https://www.thinkadvisor.com/2021/12/15/why-women-must-be-part-of-planning-meetings/, https://www.femina.in/life/careers-and-money/gender-diversity-in-estate-planning-212626.html, https://www.forbes.com/sites/forbesbooksauthors/2021/08/30/the-power-of-diverse-perspectives-why-we-need-more-women-in-finance/?sh=23293f1e6945, https://www.monaco-tribune.com/en/2020/12/what-role-do-women-play-in-high-net-worth-families-and-how-is-it-changing/

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

The post The New Matriarchs appeared first on David Werdiger.

source https://davidwerdiger.com/2022/04/new-matriarchs/

What proportion of your family wealth is tied up in the operating family business? According to Camden Research’s recent report, succession is a greater priority for families than wealth preservation. Of the two, succession is surely the harder to achieve.

While we all push cliches and statistics about the survival of family businesses over three generations, perhaps we should be broadening our perspective? A family operating business is one store of wealth for a family, and one which is capable of employing multiple family members.

Another phrase currently doing the rounds is “business family” – a family whose wealth is well diversified and includes a number of operating assets. Such a family must focus on establishing strong governance for their assets, including rules by which family members can be involved in the operating assets, or draw on the family wealth to start new ventures of their own.

Such a structure, done well, is far more robust from a succession perspective, as it allows children who may not want to join the family business (and this is an increasingly common phenomenon) to do their own thing and still be part of the family asset base.

Consider This: Do your children want to follow in your footsteps? Have you ever asked them? Are your parents pressuring you to follow in their footsteps?

Original articles: http://www.campdenfb.com/article/succession-beats-wealth-preservation-top-priority-families, https://www.inkstonenews.com/business/chinas-big-family-businesses-lack-succession-plan/article/3000444, https://www.sunstar.com.ph/article/1782733/Cebu/Business/Soriano-Is-it-a-family-business-or-a-business-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

The post Business Family Succession appeared first on David Werdiger.

source https://davidwerdiger.com/2022/04/succession-business-family/

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

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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#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment

The post Equity and Fairness – 7 Deadly Principles  appeared first on David Werdiger.

source https://davidwerdiger.com/2022/04/7-principles-equity-fairness/

Q: How do we protect the next generation from blowing our money?

A: Stop right there. Whether you have created or inherited the wealth, the language of the question reeks of a power, control and mistrust dynamic.

Many families either hang on to their wealth or setup structures to prevent their children from “blowing it” (which is often controlling from the grave). Yes, it’s awkward having discussions about estate planning and family wealth, and who wants to talk about their own death?

A friend once said: “Procrastination is caused by fear. Don’t try to ‘learn’ how to stop procrastinating, find out what you’re really afraid of“. It might be fear of death, fear of losing control, fear that children will not do what you expect of them, fear that divorce might lead to a loss of the wealth, or something else (or all of the above). Understanding those fears is an important barrier to overcome.

Successful families have had a willingness to be open with each other about the wealth that they’ve created, and not wait until death to leave everything to their heirs. Legacy is about passing on values and life skills to the next generation. If that is done well, the money (while it may be significant) becomes secondary.

Consider This: What are you waiting for? What are you afraid of?

Original articles: https://naples.floridaweekly.com/articles/tips-to-prevent-your-kids-from-squandering-their-inheritance/, http://www.williamsonherald.com/features/business/commentary-consider-training-your-family-to-handle-inheritance-properly/article_1b04fd32-66ad-11eb-bdef-a3dab823138b.html, https://www.bloomberg.com/news/articles/2021-02-17/how-to-talk-to-your-family-about-money-inheritance-and-wealth-to-avoid-fights, https://www.kiplinger.com/retirement/estate-planning/601269/how-do-we-protect-the-next-generation-from-blowing-our-money, https://www.thisismoney.co.uk/money/pensions/article-8494985/Parents-hoarding-wealth-avoid-children-losing-divorce.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

The post The Fear Concerning Wealth Transfer appeared first on David Werdiger.

source https://davidwerdiger.com/2022/04/wealth-transfer-fear/