Family Business; Talk About Money

Money is one of the few remaining taboo topics for discussion, but in wealthy families, it’s something that eventually does need to be discussed. The challenge is to develop a greater comfort in discussing it.

The first step towards this is to understand the reason for discomfort, and it is usually because discussions about money bring on fear: fear that there isn’t or won’t be enough, that the next generation might be spoilt by excess, that money might be used to play out family roles from childhood. There are so many things that can go wrong, the easy route is simple to avoid conversations (and therefore the risk of confrontation).

While the fear of the unknown is a barrier to conversation, that same lack of communication can cause serious problems in the future.

One approach is to frame wealth in a different context – one of legacy. To do this, start thinking about the positive things wealth has achieved and can achieve in your family. Topics like how the family have used and can use the wealth for purpose (philanthropic or impact), and stories about those who made loyal and enduring commitments to the family (such as in the family business) can put a more positive spin on family wealth.

Consider This: Does your family have (official or unofficial) discussion taboos? Have you discussed the family wealth with the next generation? If you keep procrastinating, have you asked yourself why?

Original articles: https://www.wealthmanagement.com/client-relations/money-talks-family-gatherings, https://www.financial-planning.com/news/why-financial-advisors-should-be-looking-toward-gen-xers-not-millennials

[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.

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

The post Family Business; Talk About Money appeared first on David Werdiger.

source https://davidwerdiger.com/2021/07/family-money/

No Millennials Without Boomers

While I abhor the “generation wars” narrative that pops up regularly, the article below is about a novel – Boomer1 by Daniel Torday – that captures this generation wars zeitgeist, and tells the story of a frustrated millenial who takes his fight to the internet, complaining about boomers who refuse to retire and make jobs available to those of his generation.

The article makes some great points about this ongoing debate, and postulates as to what is at the core of this generational divide. It also examines the political shifts that may be emerging as Gen Xers and Millenials mature and start to vote (although the Boomers are still hanging around).

One one hand, generational politics seem to be just another manifestation of identity politics. But Gabriel Winant argues against this, suggesting that generation is not an identity – “it’s a relationship: no children without parents, and no millennials without boomers”. I think this is deeply insightful as it opens a new way to look at the collective familial relationship, and view generations as something that can bring us together rather than divide us.

Consider This: In your family, are generational labels used often as stereotypical pseudo-insults? Have you ever considered the extent to which generational attitudes of children came “from” parents?

Original article: https://www.theringer.com/2018/9/18/17873612/millennials-baby-boomers-boomer1-novel-daniel-torday

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 #familybusiness #entrepreneurship

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source https://davidwerdiger.com/2021/06/no-boomer-no-millenial/

Intergenerational Resilience

#Intergenerational necessity, vulnerabilities, and resilience are typical factors addressed in determining wealth transition. However, adapting to the changing demands, expectations and opportunities in the disruption via #pandemic will epically force family businesses to rethink their strategies.

The immediate need for #workfromhome, revised #familybusiness strategy, #riskassessment, and governance are paramount for pivoting to #nextgeneration and #futureofwork organizations.

In the UK, the final report by the Intergenerational Commission speaks in terms of an intergenerational contract – “the principle that different generations provide support to each other and that each successive generation should be better off than previous ones.

One of the biggest issues in current reporting on this and so-called “generation wars” is the cost of housing, which has become significantly less affordable for Millennials compared to Baby Boomers.

The Financial Times challenges the entire underpinning of this argument, namely that there is no such thing as an intergenerational contract. They argue that generational boundaries are arbitrary (which in my view is only relevant to labelling), that inequality within each generation is far more significant than between them, and that the idea that successive generations should enjoy a better life is simply a proxy for sustained economic growth.

These are all good points, particularly the latter. As they point out, in the last decade, real GDP rose by 3.5 percent, compared with 29 percent in the previous decade.

The other consideration is the ageing population: as birth rates are collapsing in many countries, this poses a huge risk to economic growth as not enough young people are coming through the system.

We’ve discussed earlier the impact to wealthy families of increasing life expectancies, and will probably revisit this in future.

Consider This: It’s very easy to make arguments about how things ought to be between generations, but there are always implicit assumptions, and it’s a good exercise to challenge them. What are the unstated assumptions about how things ought to be between generations in your family?

Original article: https://www.ft.com/content/918e9a28-58f8-11e8-b8b2-d6ceb45fa9d0 (requires registration; if you don’t want to do that, access the article via google by searching for “The focus on intergenerational inequity is a delusion” and https://www.resolutionfoundation.org/advanced/a-new-generational-contract/

About
David Werdiger is a Familosopher, the Founder and Principal in Nathanson Pearson Family Advisory and Adjunct Professor https://www.transitionbook.co/conflict-resolution

Specialties Include:
#ConflictResolution
#CommunicationManagement
#StrategicPlanning
#SuccessionContinuity
#Governance
#LeadershipDevelopment
https://www.DavidWerdiger.com

#covid19 #coronavirus #pandemic #socialdistancing #shelterinplace #washyourhands #familybusiness #nextgen #familyoffice #businessowner #founders #transition #ypo #uhnw

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source https://davidwerdiger.com/2021/06/intergenerational-resilience/

Mid-range and high-end intergenerational wealth transfer

Consider This: Are you (and your family) aware of both the direct and indirect ways wealth is transmitted? This can make for a good family discussion about the value and meaning of wealth.

The US Federal Reserve have completed a study on how intergenerational wealth transmission can affect wealth concentration. The issue of “inequality” is a popular one – the notion that the rich are the primary beneficiaries of national economic benefit (at the expenses of others, whatever that means), and the lack of economic mobility. I will tackle these issues in more depth in future newsletters.

The stats in the report are revealing. More than 70% of intergenerational gifts given while the beneficiary is alive are less than USD 50K, but the gifts of greater than USD 1M account for nearly 50% of gifts by value. This points to a two-speed intergenerational wealth transfer: let’s call them mid-range and high-end. This is an important point to note when reading commentary on this issue – these two groups display very different attributes with respect to wealth transmission.

Another important observation of the report are the indirect forms of intergenerational wealth transmission (which apply to both groups). While I abhor popular connotations of the term, they relate to family “privilege” that is self-perpetuating in wealthy families. In addition to financial gifts, a very important thing we can transmit to the next generation is access: to a good education, to a powerful network, and to employment opportunities. The value of these should not be underestimated.

Original article: https://www.federalreserve.gov/econres/notes/feds-notes/how-does-intergenerational-wealth-transmission-affect-wealth-concentration-20180601.htm

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 #familybusiness #entrepreneurship

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source https://davidwerdiger.com/2021/06/mid-range-wealth/

Fostering Entrepreneurship

Not every entrepreneurship story is “rags to riches”.

Many high-flying entrepreneurs came from from upper-middle-class families. While they don’t owe their success entirely to mom and dad, without their parents’ help, be it financial or otherwise, they may have never gotten their ventures off the ground. Research has shown that 75% of entrepreneurs from 48 countries said that their family was involved in starting their businesses.

Family money and background plays a critical role when it comes to starting up a business. In some cases, it can provide a financial safety net in the case of failure. As much as economically, the family environment that has a big impact on the startup entrepreneur.

Entrepreneurial behaviour is driven by families, not just family businesses. Families can act entrepreneurially together to create growth, and foster entrepreneurship and positive impact in society.

This doesn’t happen by default. While the entrepreneurial spirit of the founder may be passed along to their children, the spirit and drive may dissipate in subsequent generations. Passing on the creativity and innovation of the founding generation across new generations is a challenge of the highest order

In some families, the elders were able to build intergenerational bridges to their grandchildren by mentoring them as young entrepreneurs. The value created in doing that is far more than financial.

Consider This: Does your family ‘remember’ the entrepreneurship of the founder(s)? What do you do to foster the continuity of the entrepreneurial spirit? (e.g. share stories? invest in entrepreneurial risk asset class? mentor rising generation entrepreneurs?)

Original articles: https://www.forbes.com/sites/nextavenue/2021/04/22/im-turning-my-young-grandsons-into-entrepreneurs/?sh=37814eb51c0chttps://www.theguardian.com/business/2021/jan/31/small-business-entrepreneurs-success-parentshttps://entrepreneurship.babson.edu/family-entrepreneurship-family-business/https://www.entrepreneur.com/article/357381https://www.forbes.com/sites/dennisjaffe/2020/05/05/preparing-for-deep-change-in-a-family-business/#7efb375a7942https://www.fa-mag.com/news/russ-prince–the-downsides-of-being-a-rich-entrepreneur-55401.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: www.transitionbook.co/member-area/

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

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source https://davidwerdiger.com/2021/06/fostering-entrepreneurship/

Family Business – blood non-blood

Unless your family business is a “mom & pop corner store” (which is more akin to owning a job than owning a business anyway), you will need to have a mix of ‘blood’ and ‘non-blood’ people working in it.

As any business matures and grows, there becomes a need for professionalisation and systemisation. While owners may put a high value on the people in the business (especially family), the true value created in any business is through systems. A business that cannot function as well without family members is not worth very much to a potential buyer.

Family or non-family CEO? That is a huge question for many family businesses, especially as the founder generation seeks to retire. Even if there is a family member who is willing and able, is that what is best for the business itself?

For a non-family CEO to succeed in a family firm, they must understand the values of the family. The family also needs to be able to articulate those values to the CEO, and monitor their adherence in some way (which is by no means simple).

The challenge for any incoming CEO of a family business is to maintain and respect the ingrained culture, and at the same time drive the business forward. It is important to create an atmosphere of inclusion and purpose, and ensure people outside of the family are also seen and heard.

In larger business with many family members involved, possibly from multiple branches of the family and multiple generations, the kinship tensions are multiplied to a great degree.

When family differences get in the way, it doesn’t necessarily make you a bad employee, or a bad child, sibling, or cousin. It’s important for family members to retain their own identity and not become overly subsumed within the family enterprise and its mission.

Having people outside the family circle who can provide objective feedback – whether as advisors to the board or mentors to family employees – can be very helpful.

Consider This: Does your family business have policies around how family members qualify for a position and their performance measured? Do you have a board with externals and/or mentors available so family members can have a forum to discuss issues of concern?

Further reading: https://knowledge.insead.edu/family-business/why-family-ceos-outperform-their-non-family-predecessors-16601https://www.institutionalinvestor.com/article/b1rnywtxhyr5kq/How-Family-Offices-Can-Strengthen-Next-Gen-Relationshipshttps://hub.jhu.edu/2021/04/27/dynamics-of-family-owned-businesses-phillip-phan/https://www.smartbrief.com/original/2021/04/expanding-family-business-while-preserving-its-culturehttps://www.forbes.com/sites/chriswestfall/2021/03/29/leaving-the-family-business-how-to-know-when-its-time-to-go/?sh=569aa4571e7ehttps://www.thomasnet.com/insights/how-to-prepare-to-lead-your-multi-generational-family-business/https://www.campdenfb.com/article/transfer-family-business-power-next-generation-effectivelyhttps://www.dailyherald.com/business/20200716/6-tips-for-running-a-successful-family-business

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: www.transitionbook.co/member-area/

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

The post Family Business – blood non-blood appeared first on David Werdiger.

source https://davidwerdiger.com/2021/06/blood-non-blood/

2nd & 3rd Generational Response to their Parents Success

Children tend to grow up with their parents as role models and therefore their benchmarks of success. Now, here is some real research on generational difference. According to a study by Oxford University academics, men who surpass their parents’ qualifications report lower levels of psychological stress, while those who do worse are more likely to feel depressed, lonely or sad. Women, however, have no such hangups.

The study is quite extensive – using European Social Survey data from 52,773 people aged 25 to 65 in 28 countries.

The lead researcher attributed a possible reason that men are more likely than women to attribute success and failure by pointing to their own merits, abilities and effort rather than factors they have no control over.

At first glance, this looks quite controversial, in particular the suggested cause as a difference between the way men and women attribute success and failure (which looks like conjecture more than anything).

It is also commonly held that parents are rarely jealous of their children’s success and want them to achieve more than them.

Consider This: In high-net worth families, how large do patriarchal figures loom? Do the second generation feel the challenge of achieving more than their fathers insurmountable (I certainly felt that way)? What can both generations do to mitigate those negative feelings?

Original article: https://www.thetimes.co.uk/article/happiness-is-doing-better-than-your-parents-if-you-re-a-man-tshrgt5wk (requires registration but is free)

[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: www.transitionbook.co/member-area/

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

The post 2nd & 3rd Generational Response to their Parents Success appeared first on David Werdiger.

source https://davidwerdiger.com/2021/06/2nd-3rd-generation/

Australia’s COVID Elimination Strategy Has Failed

What’s the best thing about Australia? It’s far from everywhere.
What’s the worst thing about Australia? It’s far from everywhere.
Isolated & strong borders, reversed seasons. In the world of COVID, these would appear to be a blessing.

When COVID first emerged, the cold winter in the northern hemisphere contributed to its rapid spread. In Australia, the warmer climate helped reduce the spread, and together with border control and quarantine, we were largely able to get things under control. The Prime Minister and State Premiers insisted that our strategy was one of “suppression”, and if “elimination” happened, that would be a bonus. But as daily case numbers dwindled to single digits or teens in several states, the lockdowns continued. They said suppression but their policies screamed elimination.

After some months (and in Victoria, many months), the end result was that we did achieve elimination or “COVID-normal”. But no government official ever acknowledged that this was the intent from the start. Other than restrictions on travel in and out of the country, life returned to something resembling normal. Restaurants were open, and sports stadia bristled with fans.

But beneath the surface, there were serious problems.

Cracks in the federation continued to be revealed. Small outbreaks in cities would lead to border closures between states, and state parochialism and rivalry increased. Disparities in the policies and effectiveness of the states’ public health systems became apparent. Victoria’s was shown up to be nothing short of disastrous, and we are now coming out of our fourth lockdown, the most recent for two weeks. The last two lockdowns were called “circuit breakers” by a state government that continues to use language of fear, has lost the trust of many, and where the Chief Health Officer talks like a politician rather than a medical professional.

The federal government took a “wait and see” approach on vaccination. They placed a huge bet on AstraZenica (which could be manufactured locally thus supporting industry and solving supply chain challenges) which backfired as a mix of fear over blood clots and politicisation of the vaccination within UK/EU led to problems with both demand and supply. They have increased supplies of Pfizer and done a deal with Moderna, but the program is still running way behind schedule. There are evident flaws in the vaccination program itself – priority was given to the elderly and their carers, and those at medical risk, but certain classes of workers such as food delivery staff who travelled around cities extensively and therefore had the potential to spread COVID easily were ignored. They have been very slow to adapt and tinker with the program and be more strategic about prioritising to reduce spread.

In the past six months, state Premiers had twice proven a simple formula: lock your borders and your population and win an election. The “Fortress Australia” policy became very popular, with over 70% support in a recent poll. Many Australians were comfortable being locked down in a big country. Government threw money at the struggling airlines to encourage domestic tourism, and figures indicated the economy was bouncing back rapidly. With a federal election to be held within ten months, there did not appear to be any incentive for the government to open things up in a hurry.

All of this has led to a typically Australian complacency – “she’ll be right, mate” in the local parlance. Between a feeling of safety within Australia and a fear of vaccination, people are not lining up for it. There has not been any government social marketing campaign to address these attitudes, nor any policy carrots or sticks that would encourage people to vaccinate. Fully vaccinated Australians need permission to leave the country and must still spend 14 days in hotel quarantine on their return.

With a policy goal of COVID-zero, COVID-normal has led to laziness in behaviour. It took Victoria over a year to implement a state-wide system for contact tracing, and people are not taking it seriously. People are not sanitizing their hands regularly as there is no perceived need. The need to protect COVID-normal at all costs (and the preference for the blunt instrument of lockdowns) has led to the 14-day lockdown of nearly 7 million people over a few dozen cases.

Consider the alternative policy approach: that governments were comfortable with a small number of cases circulating at any time and had the health system capacity and the tools to control them. In that case, citizens would be far more vigilant about contact tracing and hygiene, and would be lining up in droves to be vaccinated. Only one state – New South Wales – have had both the policy fortitude and the faith in their own systems to have struck a balance of controlling the spread and maintaining an open economy. While they did need to resort to some short lockdowns, they were highly localised.

WHO recently stated that Australia and other countries that chose elimination strategies face a “genuine dilemma” on how to open up. Israel, UK and USA are leading with vaccination take-up, and we would need much higher rates to be able to open.

While we have been largely isolated from the global devastation of COVID, we have swapped it for a domestic devastation of leadership. We don’t have a pathway to return to being part of the rest of the world, which is now further away than ever.

The post Australia’s COVID Elimination Strategy Has Failed appeared first on David Werdiger.

source https://davidwerdiger.com/2021/06/australias-covid-elimination-strategy-has-failed/

Generational Labels in Family Business

The millenial impact research has illuminated a much more caring generation than generally believed, one that is complex in their depth of passion toward causes. http://www.themillennialimpact.com/about

The ongoing debate about ‘generation wars’ will never stop, but here’s an interesting take on this from Slate Magazine, which claims that research on generations is flawed.

Statements like “baby boomers are selfish” and “millennials are narcissists” abound, but where is the science to support this, it asks. While they acknowledge that times change and people do, they reject the idea that distinct generations capture and represent these changes.

The author then goes on to debunk common generational tropes, e.g. that millennials are less satisfied in their jobs, that national pride shows differences between generations, and show that statistically these are incorrect.

He goes further to suggest that we should focus more on ‘why’ groups of people are different, and stop using generational labels, in part because they reinforce a fallacious 20 year boundary.

My response: the essence of generational theory is that people are influenced by external events during their formative years. I haven’t seen anyone debunk that. What naturally follows is that groups of people who share those influences because they grew up during a similar time, will be influenced in similar ways. People are still different, and are a product of nature and nurture in different measures. It’s important to remember that.
The danger in applying these principles is that it’s very easy to put labels on people and draw hard generational boundaries. That is no different to any taxonomy – proponents of the Myers Briggs Type Indicator (MBTI) will not suggest there are exactly 16 types of people.

In addition, there are some things where generational differences are significant, and others where they are not. You are far more likely to read about sensationalist labels (selfish, narcissist) than the more meaningful ones (political beliefs).

The question really should be: how are models like this useful? The answer is that by acknowledging differences and some of the causes of difference, we are better able to bridge those differences.

Consider This: In your family, do you often apply generational labels and stereotypes? Next time you do, think a little deeper about whether the labels themselves provide any value, and instead, think about how to recognise difference as a way to build better intergenerational connections.

Original article: https://slate.com/technology/2018/04/the-evidence-behind-generations-is-lacking.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: www.transitionbook.co/member-area/

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

The post Generational Labels in Family Business appeared first on David Werdiger.

source https://davidwerdiger.com/2021/06/generational-labels-2/

Transition of Trusted Adviser Relationships

The rising generation stands to inherit significant wealth, and families are spending much effort and expense to ensure that they are well prepared to become effective custodians of that wealth. However, it’s important for families to also consider the services required to help manage that wealth: advisors.

In any family, at some point in time, the wealth will shift from one generation to another. When someone inherits wealth, it becomes ‘theirs’. This contrasts with advisor relationships which ‘belonged’ to their parents, and can be much harder to fully transition. Many advisors are older and cannot connect to younger heirs. On the other side of that equation, some wealth inheritors are uncomfortable dealing with someone who was their parents’ advisor for many years, and want a fresh start to help them individuate and put their stamp on things.

The advisor community is well aware of this impending wealth transition, and are developing their own strategies to deal with it. Some have developed their own succession plans, or are selling out to larger firms. Like their clients, they too need education in shifting generational trends and how to build deeper and multigenerational connections to their client families to reduce the risk of losing the family’s business when the wealth transitions.

Consider This: Have you reviewed the relationships between your family and its trusted advisors (lawyers, accountants, wealth managers, family advisors)? Have you had 3-way discussions (two gens of family + advisors) to consider the impact of wealth transition in the advisor relationship context?

Original articles: 

https://www.ftadviser.com/investments/2019/09/26/advisers-risk-becoming-out-of-touch-with-next-generation/

https://www.forbes.com/sites/forbesfinancecouncil/2019/10/16/five-reasons-advisor-succession-plans-fail/#736cad5866a9

https://www.nytimes.com/2019/09/13/your-money/wealth-advisers-mergers-clients.html

https://www.wealthprofessional.ca/the-frontline/should-succession-planning-be-regulated-305962.aspx

[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: www.transitionbook.co/member-area/

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

The post Transition of Trusted Adviser Relationships appeared first on David Werdiger.

source https://davidwerdiger.com/2021/06/trusted-advisor/