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]

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

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source https://davidwerdiger.com/2022/03/advisor-cobblers-children/

Family business conflict is often over long-standing concerns relating to roles and contributions to the company as well as family issues like rivalry and jealousy, and can simmer just below the surface for decades. Nothing can undermine a successful family business faster than an unresolved conflict among its owners.

One thing that distinguishes conflict in family businesses is that the owners make the rules and therefore can also break them.

Family squabbles are usually highly subjective, irrational and overly emotional. It is difficult to be emotionally detached when family members are on the opposite side of a dispute.

Because for most people, conflict is uncomfortable, families have a tendency to sweep them under the carpet rather than confront. Looming large is the rich history of other family arguments tearing successful businesses to pieces.

However, too little conflict can have an equally destructive impact. When the disagreement is too cold, there is quiet seething and avoidance rather than addressing the issues head on. Family members stick to light conversations and ignore the elephant in the room. They do not have the ability to maintain healthy debate and discussion over important issues.

What to do?

* Having more intimate financial discussions can actually bring your family closer

* Encourage family members to share their expectations and perspectives so that they have a collective understanding regarding the intergenerational transitions

* Clearly define management responsibility as separate and distinct from the ownership structure of the company.

* Put policies in place before they become personal issues.

Consider This: Thinking about your own family … What are the simmering issues that are never discussed? What is the reaction when they are raised (if they are raised)? How do these elephants in the room impact the ability of the business to move forward and grow, and impact family relationships?

Original articles: https://www.campdenfb.com/article/finding-goldilocks-zone-conflict-family-business, https://www.cnbc.com/2020/11/13/how-to-navigate-uncomfortable-money-matters-with-your-family.html, https://www.denverpost.com/2020/11/22/gary-miller-when-should-you-fire-your-kid-from-the-family-business/, https://www.ftadviser.com/pensions/2020/12/10/how-to-manage-conflict-over-asset-distribution/, https://finance.yahoo.com/news/intergenerational-conflict-is-getting-worse-deutsche-bank-analysts-warn-200542605.html, https://www.jdsupra.com/legalnews/ten-tips-for-avoiding-litigation-tip-2-47096/, https://www.forbes.com/sites/forbescoachescouncil/2020/02/19/when-youre-in-business-with-family-three-critical-considerations/#4b88c86e24d1

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

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source https://davidwerdiger.com/2022/03/family-business-conflict-2/

While the family business may be delivering good returns, how much is it actually worth? Often, family members are disappointed that the market value does not reflect a large enough multiple, because they are unable to look at the business as an outsider (and potential buyer) would.

The first article has some classic ‘value drivers’ expressed in terms of growth and risk reduction. What I think this is missing from this model is the most important question a family business should ask: what is the business worth with family members vs what it is worth without them? If your business is overly dependent on family talent, then it lacks intrinsic value that can be realised in the market.

On that note, the second article discusses the process of bringing in outsiders into the family business. Whether in management or on the board (or advisory board), outsiders can add significant value because of their perspective, and also their ability to mediate conflict and help ensure all family members voices are heard. In order to be effective, the family must be prepared to listen and learn.

Consider This: Have you considered the value of your family business without family members? Are the business accounts run at arms length so they can reflect the true value of the business? Are external advisers viewed with disdain or for the value their experience and diversity can bring?

Original articles: https://www.bakertilly.com/insights/thinking-about-selling-how-to-grow-the-value-of-a-family-owned-business/, https://www.forbes.com/sites/nextavenue/2019/01/29/hiring-an-outside-expert-for-your-family-business/#7b2749bc61ed

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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source https://davidwerdiger.com/2022/03/dependence-family-advisors/

[repost; still relevant today] The pandemic is not over, but after another year, we know a lot more, and there are reasons for hope. There are feelings of ambiguous loss, of knowing we can’t go back (and perhaps not wanting to), but missing who we were and what we had “before”.

As 2020 draws to a close, we may be catching up with family, in some cases after being separated for a long time. It is a time to celebrate being able to reconnect, but also to recap all the *(&^$ we’ve been through during the year.

Grief is a process, and in order to come out the other side of it, it is important to actually grieve. We can do this both individually, and as families. Rather than have COVID talk dominate our family gatherings, it might be helpful to formally acknowledge what we have lost during this year. At a family gathering, you might go around the table and have each person briefly review the impact of COVID during the year on them, and on the family at large. Once that it done, you could agree as a group to formally close the book on 2020, and take a fresh positivity into the coming new year.

Consider This: Has your grief over COVID been continuous throughout the year? Has every meeting started with a mandatory rant about COVID? Have you thought about both the positives and the negatives? Have you thought about how life might look for you and your family post-COVID?

Original article: https://rojospinks.medium.com/2020-will-never-end-unless-you-grieve-it-71910e183c3c

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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source https://davidwerdiger.com/2022/03/grief-over-covid/

A successful wealth transition means the family stays intact and they maintain control of the assets. Ideally, you’d like both. Some families can only achieve one, and some end up with neither.

People often setup their estate plan so that it will avoid tax and preserve wealth, but they’re really not paying attention to the impact of their plan on the next generation. The biggest risk to their assets is not the market or the business or even the competence of the people they have supporting them. It’s actually the people sitting around the dinner table. If they can’t function as a family, then it may end up losing both the family relationships and the family wealth.

Give with a warm heart or a cold hand? It’s a parent’s prerogative on how they plan to spend and gift their wealth. However, with people living longer and a lack of planning around proper wealth transfer, many people are receiving their inheritance at the wrong time in their life. One benefit to beginning the gifting process early is being alive to see how your children benefit. You can watch and support/advise (you may want to ‘advise’, but your children may want and need your ‘support’) them on taking risks, making key purchases and enriching their lives 

Poor communication is the cause of most failed succession plans. Despite death being one of the few certainties in life, it’s amazing how difficult some people find it to talk about it. Being transparent and open about money with your family and the responsibilities it conveys can be a valuable education piece for your children.

Families don’t just inherit wealth, they inherit the same patterns. It’s also important to be aware of the patterns (positive and negative), and whether they are helping or hindering family members.

Consider This: Is your wealth transition plan ‘just’ an estate plan? What is more important (if you could only have one): being a family or a group of co-owners? How much do you ‘invest’ (with a long term outlook) in each of those?

Original articles: https://www.fool.com/investing/2020/08/21/how-you-can-ensure-next-gen-is-ready-for-wealth-tr/, https://www.wealthprofessional.ca/news/industry-news/what-do-the-wealthy-worry-about/333641, https://www.bloombergquint.com/gadfly/parents-shouldn-t-wait-to-pass-down-wealth-to-children, https://cyprus-mail.com/2020/10/04/perils-of-wealth-transfer-to-children/, https://www.forbes.com/sites/forbesfinancecouncil/2020/10/30/dont-overlook-these-two-pieces-of-your-wealth-transfer-strategy/?sh=4d49333c397f, https://www.moneymarketing.co.uk/opinion/we-must-get-comfortable-talking-about-death/, https://www.financialexpress.com/money/succession-planning-for-family-business-patriarchs-must-transform-from-leaders-to-mentors/2114781/

[reprinted with permission] full article repost

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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source https://davidwerdiger.com/2022/02/successful-wealth-transition/

Different places around the world continue to deal with the challenges of COVID in different ways. Whether they are experiencing a second wave, or varying degrees of opening up, many of the challenges and opportunities are still present.

The issues that have arisen through the pandemic are primal, and place the fragility of life in sharp relief. Our instinctive responses also also primal: fight/flight/freeze, and we can remain locked in such states for a prolonged period.

One way to help move forward is for business owners to share their dilemmas with other business owners in similar situations. To do so (and obtain genuine benefit) requires a sense of communal trust and being prepared to share vulnerability (consider that most business owners will be experiencing similar to you).

Families in business together can move into action more quickly than most corporate entities because they’re more flexible, aren’t focused on the next quarter’s results, and understand the values that have made them successful over generations.

Leaders of family businesses that are effectively managing the crisis are prioritizing governance as an ‘essential service’ – adapting oversight of the enterprise under conditions of extreme uncertainty to ensure that family owners, board members, and executives remain aligned.

It is not surprising that many multigenerational family businesses are experiencing the pandemic differently from non-family businesses. Surprisingly few had deeper concerns about their survival and well-being as a family business. This is because multigenerational family businesses tend to define success in ways that go beyond short-term profits

In addition, the pandemic is accentuating the need for UHNW families to have a holistic, fully-integrated family office solution in place. This becomes even more critical when a family owns more complex assets and as the value and complexity of the balance sheet grows 

Prolonged self-isolation is also leading families to fast track their succession and estate planning.

Consider This: After several months of COVID, has your family done a review of your response, and your learnings? How have things changed/adapted? Where have you fallen short? What opportunities still remain?

Original articles: http://www.campdenfb.com/article/coronavirus-effect-mental-health-family-business-millennials-and-succession, https://www.forbes.com/sites/dennisjaffe/2020/03/24/how-family-businesses-can-respond-to-the-pandemic–collaboration-openness-and-sharing-the-burden/#27d3c8ed4e34, https://thriveglobal.com/stories/pandemic-creates-spectrum-of-opportunities-for-enterprising-families/, https://hbr.org/2020/05/what-family-businesses-need-to-adapt-to-a-crisis, https://nation.com.pk/24-Jun-2020/family-firms-and-covid-19, https://www.forbes.com/sites/nextavenue/2020/06/28/5-ways-family-businesses-can-adapt-to-covid-19/, https://hbr.org/2020/07/when-to-return-to-leading-your-family-business-during-a-crisis, https://insight.kellogg.northwestern.edu/article/family-businesses-experiencing-covid-19-crisis, http://www.campdenfb.com/article/why-succession-planning-pandemic-once-generation-opportunity-transfer-wealth

[reprinted with permission] full article repost

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 
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source https://davidwerdiger.com/2022/02/covid-opportunities-challenges/

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 #leadershipdevelopment

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source https://davidwerdiger.com/2022/02/entrepreneurial-legacy-2/

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 
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The post Equal or Fair? appeared first on David Werdiger.

source https://davidwerdiger.com/2022/02/equal-fair/

There are several good reasons why family enterprises should care about making active efforts toward gender equity. If they want family members to be involved, their talent pool is limited, so why waste 50% of their potential? A more diverse leadership team will reap the same benefits that have been noted in the non-family business world. Finally, family cooperation, collaboration and harmony are important to families, so excluding women from paths to leadership can lead to resentment and conflict.

In general, the family business world appears to be somewhat behind the corporate sector in explicitly considering issues of gender equity. There is variability across the world, and it is apparent that cultural norms play a strong role.

Some examples: only 7% of senior management positions in the 100 biggest firms held by German families are women, and the top people managing those firms are mostly male, German and advanced in age. In India, women-led family businesses have increased by 58% since 2007. In the US, married women 45 and younger are twice as likely as older married women to make the financial decisions in their families, which is partly due to women marrying at later ages than their parents’ generation (note that these studies are not directly comparable as they don’t all focus on family enterprises).

Another portion of the US study measured unconscious bias in the financial advising industry and found that while most advisors have “good intentions,” they are still more likely to make (incorrect) assumptions about the investment knowledge and risk appetite of women. Researchers used live eye tracking technology to measure how long a financial advisor spent making eye contact with each partner in a heterosexual couple and found that advisors, regardless of their gender, spent 60 percent of the meeting focusing on the male partner.

Consider This: Do the women in your family have roles in the family enterprise? Do they want to? Have they been asked? Are education opportunities within the family applied equally to males and females?

Original articles: https://www.forbes.com/sites/prudygourguechon/2019/01/16/how-family-businesses-can-take-the-lead-in-achieving-gender-equality/#4520f2916f6e, https://www.dw.com/en/german-family-owned-businesses-still-male-and-conservative/a-53739934, http://www.businessworld.in/article/Breaking-Through-The-Patriarchy-Women-Calling-The-Shots-In-Family-Business/02-08-2020-303553/, https://www.nbcnews.com/know-your-value/feature/younger-women-are-twice-likely-make-their-families-financial-decisions-ncna1238859

[reprinted with permission] full article repost

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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source https://davidwerdiger.com/2022/02/gender-diversity-in-family-wealth/

I’ve always had a soft spot for Matthew Stafford. The guy has a huge arm, and can make pretty-much any throw, and there he was stuck at the Lions teasing us. From time to time, they would support him with a deep threat and something of a rushing attack, but they were not able to put all the pieces together. So the swapsie deal that brought him to the Rams seemed like the ultimate test of his talent. Equally, it was a test of the Rams: was a top QB (plus a couple of others) the only missing pieces for them? Even if they don’t win the final game of the season, I think it’s fair to say both have passed the test.

Aside from the awful wildcard round, this has been one of the best NFL post-seasons ever, and one that reinforces the idea that defence and ball control wins playoff games. In my opinion, the Bills had the wrong defensive game plan against Mahomes – it’s hard to win a shoot out against him. His game against the Bengals started off the same way, but they slowly worked their way back into the game, with defence dominating in the second half. The 49ers got as far as they did despite Jimmy Garoppolo, not because of him.

The Bengal’s defence have been decent through the year but really came into their own in the post-season. They are fast and swarming and bring plenty of pressure. Jay Burrows has been a revelation – he showed amazing strength in staying in the pocket and being able to evade sacks at the last minute, and surprising poise for a relatively young player. He is a legitimate star, has a great offensive line in front of him, a tough running back in Mixon, and some deep threats like Chase. The Bengals have arrived sooner than expected, and will be interesting to see what success they can enjoy in the next few years in a very strong AFC North.

List-wise, the Rams are similarly strong in all the right places, with a good offensive line and some fast receivers, but with no star at running back. Their defence, previously well led by Aaron Donald and now bolstered by the addition of Von Miller, did the job well throughout the playoffs, which took pressure off Stafford.

So how will this tantalising Superbowl play out? Let’s examine it through a betting lens: the Rams are 4 point favourites, which seems fair. The Bengals will be very happy with official underdog status, and it won’t put them off in the slightest. There are no value bets there. If this is close in the fourth quarter, it will come down to who holds their nerve, and whether Sean McVay makes some crazy fourth-down decisions (which he did during the season and has avoided thus far in the playoffs). I think it will be a close finish and don’t have a view as to which team will win, so am going to avoid predicting, and instead recommend one of my favourite punts – the “Tribet”: either team under 6 points for $3.20.

The over/under on total points scored is 48.5 and that one looks more interesting. I think this game will be dominated by some tough, hard-hitting defence, so am going for the under on this one. A low-scoring game may just favour the Bengals, who will rush it all day long in the hope of keeping Stafford and co off the field. So keep a close eye on ball control. Crazy tip: this might come down to special teams.

This is the first Superbowl ever without at least one No. 1, No. 2 or No. 3 seed, and the lowest-seeded matchup in the game’s history. No Rogers, Brady, or Mahomes? No problem for me. The two teams still in the competition have done everything to deserve to be there, and I’m really looking forward to this one!

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source https://davidwerdiger.com/2022/02/superbowl-lvi-preview/