Family and Politics

December 29, 2021 davidwerdigertransitionsLeave a comment

With the US midterm elections in the news, there is talk of generational shifts in the electorate (which will take some time still to have a significant impact), and with the further polarisation within the US, the way political affiliations have come between friends and family members.

This fascinating NPR podcast discusses how political preferences are driven by hidden moral frameworks. The nation is often described using the family as a metaphor, with terms like founding fathers, homeland security, not wanting things in our backyard, etc. On that basis, the two political views of a nation can find parallels in two views of a family. In the “strict father” model, the father knows best, supports and protects the family, and teaches the children their moral views. In contrast, the “nurturant parent” empathises with the child, seeks to find out what they need, and has more two-way discussions.

Researchers found that Republicans were more likely to rely on strict father ideas to make their points, and Democrats were more likely to use nurturant parent ideas.

Our own political leanings are influenced by our parents and their styles, and as parenting styles change from one generation to the next, so can political views.

Consider This: What are the parenting styles in your family? How do they relate to governance of family wealth? How have they influenced the family’s political leanings, and how is that evolving through the next generation?

Original article: https://www.npr.org/2016/09/13/493615864/when-it-comes-to-our-politics-family-matters

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

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Family Governance; Ownership vs Management

December 26, 2021 davidwerdigertransitionsLeave a comment

When family wealth is controlled or owned by a single person (usually the wealth creator), things are simple. But at some point, the wealth will likely pass to more than one person – the wealth creator’s children. In respect of the family wealth, the members of the family are bound together through three circles of involvement: family, business and ownership. That adds a huge degree of complexity, as no decision gets made in isolation.

Strong governance establishes a process for decision-making and conformity within the family. Clearly defined policies and processes for governance, in line with a formal family vision and mission statement, can reduce the potential for conflict.

Family governance can also focus on strengthening the non-financial capital within the family – working on these can ensure it’s not “all about the money” (because usually it isn’t anyway).

For some families, there may be an advantages to separate ownership and management. This can ensure the sustainability of the family business and wealth through its management by professionals with the diverse skills needed. The family members govern (set policy, monitor), and others manage.

There is an emotional side to effective family governance which is often overlooked by the first generation. In order to be effective, family governance needs to take into account all interested family members in the planning process and to be consistent with the existing family culture which is likely to have evolved over multiple generations.

Consider This: Who owns and controls your family’s wealth? Who will own and control it in ten years? How many ‘hats’ (business, family, owner) does each family member wear? Are you aware of the diverse interests and aspirations of each family member (across multiple generations) in respect of the family wealth?

Original articles: https://www.bizjournals.com/sanantonio/news/2020/04/27/effective-governance-strengthens-family-unity-and.html, https://www.forbes.com/sites/francoisbotha/2020/04/29/the-importance-of-separating-ownership-and-management-3-steps-to-get-families-started/#f7efd62655b1, http://www.campdenfb.com/article/carlos-arbesu-governance-and-succession-family-business-boards, http://www.mondaq.com/jersey/x/873496/wealth+management/Avoiding+rags+to+riches+in+three+generations+family+governance+in+the+Middle+East

Actionable Generational Wealth Succession

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement
#successionplanning #workfromhome #governance #leadershipdevelopment

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source https://davidwerdiger.com/2021/12/family-business-divide-2/

Legacy of Entrepreneurial Spirit

December 21, 2021 davidwerdigertransitionsLeave a comment

Most wealth is created through entrepreneurship: taking a risk to start a business, and growing that business. Some families with generationally “old” money (i.e. more than 3-4 generations removed from the wealth creator) may have their family wealth in passive assets, and the entrepreneurial spirit that created it is long gone from memory, sometimes irretrievably lost.

For families that hold (or acquire) operating assets, it’s important to maintain that entrepreneurial spirit in subsequent generations, but that has its challenges. Rising gen family members born with spoons in their mouths often don’t share the hunger (or need) of wealth creators.

To do this, families need to tell stories of the bad times as well as the good, and create space for rising gen family members to become entrepreneurs of their own, rather than being in the shadow of others (external mentors can often help). Operating assets, especially those held by the family for a long time, need the governance that can facilitate regular strategic renewal (which may need entrepreneurial thinking) to ensure their long-term survival.

Consider This: Do family members know the story of how the family wealth was created? When was the last time an operating business you own did some serious strategic planning? Has anyone assessed whether there is “stale thinking” in the family business leadership?

Original articles: https://hbr.org/2020/05/is-the-next-generation-of-your-family-business-entrepreneurial-enough, https://www.stamfordadvocate.com/business/article/5-Factors-for-Planning-Your-Entrepreneurial-Legacy-15204834.php, http://entrepreneurship.babson.edu/barber-family-entrepreneurship-journey/, http://entrepreneurship.babson.edu/the-power-of-the-entrepreneurial-family/

Actionable Generational Wealth Succession

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement
#successionplanning #workfromhome #governance #leadershipdevelopment

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Family Advisor Traits to Consider

December 21, 2021 davidwerdigertransitionsLeave a comment

When it comes to advisors, I have two simple rules:

Get good advisors
Listen to them

Family advisors need additional skills because they must work with the various members or governance structures of a family, and key people & structures may change with time. They need to know about communication, in order to help the family members themselves communicate well.

They need to understand family dynamics, and get to know the ins and outs of the families they deal with. They may need to act as facilitators of family discussions and formal meetings, to help the family develop the ability to have open discussions and make collective decisions. To do this effectively, they need to be independent, and have the ability to say things that the family needs to hear (even though they may be difficult or confronting).

They, or their firms, need to be able to talk to multiple generations within the family, so as to maintain a parallel transition – as generational control passes within the family, the advisor relationships may also change. As part of that transition, it may be helpful to bring younger family members into advisor discussions.

In addition, they may want to be across emerging trends like impact investment, cybersecurity, and online reputation management.

A family advisor is so much more than a wealth manager, or the family lawyer or accountant. It can be rare to find all the skills needed in a single individual.

Consider This: Do you have an independent family advisor? Are you able to discuss anything the family needs with that person? Does that person have a relationship with multiple family members or across multiple generations? When did you last do an audit of your advisor relationships to ensure they are meeting the family’s needs now and in the future?

Original articles: https://www.forbes.com/sites/francoisbotha/2019/10/18/the-top-5-new-generation-advisors-every-family-office-needs/#586314691369, https://www.investmentnews.com/article/20191118/FREE/191119941/ria-consolidation-could-put-2-4-trillion-in-play-over-next-decade, https://www.ftadviser.com/your-industry/2019/11/29/advisers-urged-to-include-clients-families-in-meetings/, https://www.fa-mag.com/news/the-ultra-wealthy-prefer-multi-family-offices-to-wealth-managers-53825.html, https://www.forbes.com/sites/dennisjaffe/2020/03/18/family-wealth-advisors-need-skills-in-family-dynamics/#34154180ecb2

If you are a business owner, lawyer or accountant to them, my advisory services may be the perfect match to navigate the tough decisions in strategizing #intergenerational relationships.

There are a number of use cases where I have worked with families that may be adjacent to your practice. Let me help you:

· help family develop shared vision, charter etc
· mediate family conflict management
· mentor rising generation
· coach family through the emotional side of business sale – before, during, after
· help family businesses with ‘soft’ aspects of succession planning

Actionable Generational Wealth Succession

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement
#successionplanning #workfromhome #governance #leadershipdevelopment

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source https://davidwerdiger.com/2021/12/family-advisor-traits/

What Transition?

December 13, 2021 davidwerdigertransitionsLeave a comment

For years, we’ve been writing and talking about this trillion dollar wealth transition that is “going to happen in the next ten years”, ostensibly as baby boomers retire. But has it happened? The fact that we’re still talking about it as “happening” says plenty.

We need to ask: why were the predictions of so many people incorrect? and more importantly, what (if anything) should we be doing differently about it?

I’ve written previously about the “two speed” state of wealth – splitting by value rather than by number. Broad aggregate statistics do not tell the whole story. There are millions of relatively ‘small’ wealth transitions, and a much smaller number of very large wealth transitions. Within each ‘wealth band’, they work very differently.

My view is that one of the biggest impacts is increasing life expectancies. People (particularly those in business) don’t retire at 65; they can often continue to be productive for another 10-20 years or more. By that time, there may be two (or more) generations who are active in the family enterprise.

This can leave the rising generation as ‘waiters’ for a lot longer than they used to be. Does anyone want to be handed control of the family enterprise or inherit significant wealth in their 60s? Think of Prince Charles – born and raised to be king, and now 73 and still waiting for his turn.

With longer life expectancies, it’s time for a rethink on what intergenerational wealth transition actually means and how it should work. More on this theme to come in future newsletters.

Consider This: How old is the ‘rising generation’ in your family? Is your own family’s wealth transition plan on track as envisaged ten years ago?

Original articles: https://www.marketcurrentswealthmanagement.com/succession-planning-the-impact-of-skipping-a-generation/, https://www.washingtonpost.com/opinions/we-need-a-major-redesign-of-life/2019/11/29/a63daab2-1086-11ea-9cd7-a1becbc82f5e_story.html, https://www.denverpost.com/2018/07/15/improving-investor-behavior-longevity-and-the-fear-of-running-out-of-money/, https://www.heraldpalladium.com/features/generational-interdependency-has-grown-as-we-continue-to-live-longer/article_6b65e6e9-f9c2-5505-a9ac-c9f549092c9d.html

Actionable Generational Wealth Succession

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement
#successionplanning #workfromhome #governance #leadershipdevelopment

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source https://davidwerdiger.com/2021/12/what-transition/

Kids & Unintended Consequences

December 13, 2021 davidwerdigertransitionsLeave a comment

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

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

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

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

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

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

Actionable Generational Wealth Succession

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement
#successionplanning #workfromhome #governance #leadershipdevelopment

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source https://davidwerdiger.com/2021/12/unintended-consequences/

NextGen Custodians of Significant Wealth

December 10, 2021 davidwerdigertransitionsLeave a comment

How can families best prepare the rising generation for inheritance and/or joining the family business?

Parents may reasonably worry about raising spoiled or entitled offspring, and may feel uncomfortable discussing topics like wills and trusts before their kids are mature enough to grasp such concepts. However, a failure to prepare children for the responsibilities that come with being a custodian of significant wealth is not in the best interest of the child or the assets.

In addition to an estate plan, parents ought to provide children with a sound financial education, and develop the ability to communicate honestly and openly about family wealth.

Where there is an operating business, it’s important to embrace best practice in talent management, and identify/develop prospective leaders. Genetic factors play a role, but the majority of leaders are made not born. Personality development of the rising gen is an important factor – helping them individuate, and make an active choice to join the family business, rather than doing so from a sense of obligation. Finally, it’s worth noting that women-led family businesses have increased by 58% since 2007, so sons and daughters should be a part of the same conversations and be an active part of all discussions around the family business.

Consider This: Have you thought about how to prepare children for the wealth that will ultimately come their way? Do you have ways to talk about family wealth and family business? To what extent have you considered what the children want when it comes to these issues?

Original articles: https://www.forbes.com/sites/adamstrauss/2020/07/01/4-ways-to-prepare-children-now-to-oversee-their-inheritance-later/#28e7df7d193c, https://www.forbes.com/sites/francoisbotha/2020/06/23/3-simple-steps-to-develop-successful-family-business-leaders/#3cb8124474e7, https://www.thisismoney.co.uk/money/pensions/article-5263603/More-half-50s-prefer-spend-not-leave-money.html, https://hbr.org/2020/05/why-the-second-generation-can-make-or-break-your-family-business, https://www.forbes.com/sites/forbesbusinesscouncil/2020/03/04/start-preparing-daughters-now-to-take-over-the-family-business/#690970b91241, https://www.bizjournals.com/denver/news/2020/02/03/tips-on-talking-to-the-next-generation-about-your.html?s=print

[reprinted with permission]

Actionable Generational Wealth Succession

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement
#successionplanning #workfromhome #governance #leadershipdevelopment

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source https://davidwerdiger.com/2021/12/nextgen-wealth/

Family Advisor Transition

December 9, 2021 davidwerdigertransitionsLeave a comment

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

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement

#successionplanning #workfromhome #governance #leadershipdevelopment

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Next Generation Interest in Family Business

December 2, 2021 davidwerdigertransitionsLeave a comment

Transitioning a business can be difficult when the #nextgeneration aren’t interested … It turns out there are 4 core components to consider, and if you get them right, the conflict resolution usually runs very smoothly.

Medium to large sized family business (turnover $50M+) have a problem: the next generation aren’t interested in joining. There are so many options out there in the job market (jobs that didn’t exist in the previous generation) that the family business often doesn’t hold an interest.

Grant Thornton’s July 2017 report ‘Diversity of Thought in Family Businesses’ discusses the risk-averse nature of mature family businesses that can often be an impediment to the next generation wanting to make changes.

Many family businesses suffer from two big issues: (a) younger generation being frustrated and the older ones feeling disrespected, and (b) a reluctance of the founders to step aside (the so-called ‘sticky baton’).

It could be useful to think of this in ‘purpose’ terms, as per the previous article. If the foundation for intergenerational family connection is a purpose that transcends the family business or wealth-generating capacity, then discussions about what the next generation do with their lives are built on a stronger foundation.

Consider This: If the next generation don’t want to join the family business, then either the business might need to change, or the next generation might need to change. Which of those is more likely to happen?

Original articles: https://www.transitionbook.co/conflict-resolution
https://www.linkedin.com/pulse/kids-arent-interested-now-what-carmel-melouney/, https://www.grantthornton.com.au/globalassets/1.-member-firms/australian-website/services/fos/pdfs/gtal_2017_fos-report_lf_screen.pdf

Actionable Generational Wealth Succession

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement

#successionplanning #workfromhome #governance #leadershipdevelopment

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source https://davidwerdiger.com/2021/12/next-generation-interest/

Purpose goes Beyond Work Life

November 30, 2021 davidwerdigertransitionsLeave a comment

People are living longer, which means time spent in ‘retirement’ is increasing – the latest US Census figures report the average retirement is 18 years. The huge numbers of Baby Boomers moving into this stage of life is becoming a phenomenon of its own, and could potentially ‘reinvent’ what retirement actually looks like. Just because they are ‘old’, doesn’t mean the huge Baby Boomer cohort won’t continue to change society rather than ride off quietly into the sunset.

We all need to plan for retirement, and Tom Kalejta points out that this often means finding a (new) purpose beyond full time employment or business ownership. The shift into retirement can lead to depression for some people (not just professional sportspeople). Further, he notes that it’s important to distinguish ‘keeping busy’ from actually having a purpose.

I would take this one big step further. If purpose goes beyond our work life, then it doesn’t necessarily need to change significantly when we retire. This is about changing our thinking that work is not a purpose in and of itself, rather a means to achieve the purpose.

Finding that true purpose isn’t always easy, but having that as the foundation makes it easier to transition through the various stages of our life as we age.

Consider This: Do members of your family – particularly the wealth originators or generators – have a clear sense of the purpose in their lives? How does their purpose differ from those of other generations in the family?

Original article:
https://www.thereporteronline.com/reinventing-retirement-finding-purpose-in-retirement/article_81bc9104-b0ab-5e95-920e-8f2be73e70e5.html

Actionable Generational Wealth Succession

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement
#successionplanning #workfromhome #governance #leadershipdevelopment

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source https://davidwerdiger.com/2021/12/purpose-beyond-work/