According to a Merrill Edge report, one third of “mass affluent” (mid-range wealth) Americans say their financial stability depends on their inheritance. But interestingly, this is more a result of prevailing economic conditions (markets, unemployment, weak wage growth) than the generation being brought up with a silver spoon sense of entitlement.

Economic conditions for creation of wealth have been challenging for the rising generation. There are even signals of a decline in social mobility. The fact that they are looking for family assistance both for key life and investment decisions is an interesting social trend, perhaps reflecting a more sombre and realistic approach, and a decline in appetite for risk.

Consider This: As a “rich parent”, how does this make you feel? While this view has come through in research, is it something that has been discussed in your family? Is it a topic that can easily be discussed?
Is it a good thing or a bad thing? Or is it simply a product of the economic environment, in which case should families acknowledge it and make changes to the way they intend to transition wealth?

Original articles: https://www.businessinsider.in/its-official-rich-people-are-relying-on-their-rich-parents/articleshow/64497260.cms, https://www.merrilledge.com/report/infographic

Actionable Generational Wealth Succession: For more in-depth, thought-provoking discussion points and commentary on family and business, access my Familosophy newsletter archives: www.transitionbook.co/member-area/

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Here’s another goody from the archives. With the US 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 commentary on family and business, access my Familosophy newsletter archives: www.transitionbook.co/member-area/

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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: For more in-depth, thought-provoking discussion points and commentary on family and business, access my Familosophy newsletter archives: www.transitionbook.co/member-area/

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

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: For more in-depth, thought-provoking discussion points and commentary on family and business, access my Familosophy newsletter archives: www.transitionbook.co/member-area/

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The role of family offices has evolved from being an investment platform to guiding the next generation(s) back into the family business. A next-generation development program will help the next generation become good owners and future leaders.

According to HBR, these programs focus on five key objectives:

• business ownership skills and competencies;
• family business principles and
• practical knowledge of the family business’ assets,
• understanding the family history and values; and
• developing personal leadership competencies.

Boston Private’s 2018 report “The Why of Wealth” surveyed respondents with new investable assets of $1-20M, and found that “individuals pursue financial wealth to achieve emotional well being”, rather than for the pursuit of material goods.

Across generations, there was slight variations in attitudes. Older generations prioritise peace of mind, Baby Boomers place more importance on financial capital, and Millennials see wealth as a “gateway to happiness”.
The most interesting difference in attitudes was between genders – 28% of males valued power and influence compared to 20% of females. Men valued forms of external/reputational wealth, while women found more significance in inner emotional wealth. (This is reminiscent of a great Al Pacino scene in Scarface, immortalised in ICE T’s rap classic Money, Power, Women).

Consider This: Does your family have open discussions about what wealth means to them? Or is this a big secret that is a taboo discussion? Only by being able to discuss it and understand both our own attitudes and those of other family members can we hope to translate it into something meaningful and relevant to the entire family.

Original articles:
https://www.scmp.com/print/presented/business/topics/defining-family-office-landscape/article/3076192/lifelong-learning-drives
https://www.businessinsider.com.au/how-rich-people-view-wealth-every-generation-2018-6, https://go.bostonprivate.com/wowsurvey

Actionable Generational Wealth Succession: For more in-depth, thought-provoking discussion points and commentary on family and business, access my Familosophy newsletter archives: www.transitionbook.co/member-area/

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The pandemic is not over, but after nearly a 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 commentary on family and business, access my Familosophy newsletter archives: www.transitionbook.co/member-area/

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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/

Actionable Generational Wealth Succession: For more in-depth, thought-provoking discussion points and commentary on family and business, access my Familosophy newsletter archives: www.transitionbook.co/member-area/

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

For a business founder, their ”investment” in the business is multi-dimensional: financial and emotional. Selling the business isn’t just an event, it’s a journey. So argues the author of this article, an author, advisor and figure in the wealth management industry.

There is a lot of commentary at the moment about business owners selling and transferring what they have built. It is an emotional and challenging process and the field is littered with stories of owners wondering if they had sold a business too cheaply, or that the process was arduous and complicated. Advising such business owners on these transfers is a big growth area in the North American wealth management industry.

To talk about the topic is David Werdiger, who is an advisor on intergenerational wealth transfer, a succession planner, adjunct professor, speaker and author. This news service is pleased to share these views with readers and invite responses. The usual editorial disclaimers apply.

The number of businesses bought and sold hit a record level in 2018 (1). Yet, the majority of business owners fail to prepare for a sale-ready operation, leaving five to six figures on the table for any one transaction. This article gives three key essentials to being prepared and optimizing for a better profit.

Read the full article at https://www.fwreport.com/article.php?id=186400

Actionable Generational Wealth Succession: For more in-depth, thought-provoking discussion points and commentary on family and business, access my Familosophy newsletter archives: www.transitionbook.co/member-area/

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

A fascinating research article discusses public debt and intergenerational burden shifting. Using laboratory experiments, it seeks to understand how voters make choices about the way public debt should be accumulated in the presence of multiple and/or overlapping generations.

The study finds that in the presence of future generations, voters are comfortable with the government loading up with debt in the knowledge that this debt burden will have to be satisfied by future generations. But without considering future generations, voters are far more conservative about how much debt the government should take on.

Now, while the study is in the context of people voting about how much debt government should take on, how much it should spend on services, and who will eventually repay it, the principles and attitudes are relevant to multi-generational family wealth.

In a family, decisions must be made to balance present day distributions and investment risk profile (which may include debt) with the needs of future generations. Of course this is a function of the size of the family wealth and the anticipated future needs of generations to come. It is also a function of the historic attitudes to risk (particularly those of the wealth originator).

Consider This: To what extent does your family consider its investment risk profile and gearing levels with a view on the burden that may be transmitted to future generations? Are those next generations part of the discussion?

Original article: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0202963

Actionable Generational Wealth Succession: For more in-depth, thought-provoking discussion points and commentary on family and business, access my Familosophy newsletter archives: www.transitionbook.co/member-area/

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The pandemic crisis is forcing the hand of family businesses to address the pace of change in new ways. Every day we must act and even make some tough choices—despite the lack of any reliable information about the best direction to take. Some owners make tough decisions on their own, rather than seeking help from others. Some choose impulsive or blind allegiance pathways.

I wrote the following on the Bloomberg press 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.forbes.com/sites/dennisjaffe/2020/03/24/how-family-businesses-can-respond-to-the-pandemic–collaboration-openness-and-sharing-the-burden/#58b2b7a94e34 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 commentary on family and business, access my Familosophy newsletter archives: www.transitionbook.co/member-area/

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