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

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

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

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

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

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

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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)

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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What have you noticed about the difference between the way you and other generations (up or down) use social media?

I stumbled across a wonderful article that deals with the intersection of two of my favourite topics: intergenerational issues and the impact of social media on society. It analyses the starkly different ways that Facebook is used by Baby Boomers, as opposed to Millenials. It comes from a web site called The Cheat Sheet, which is “dedicated to providing audiences the information they want in an approachable, entertaining way”. But looking at the content and the presentation, it looks much more like advertising-ridden viral click bait (which it probably is). While I might be old fashioned, to me the term “cheat sheet” brings to mind a memory aid concise enough to sneak into an exam. Because the actual content of the article is so good, I’m reproducing it here in a true “cheat sheet” form!

Baby Boomers	Millennials
Connect with old friends	Make new friends
Value family connections	Prefer to not have family connections
Tend to overshare	Share the highlights of their lives
Do not use Facebook as their sole news source	Use Facebook as their primary news source
More likely to fall for scams	Less likely to fall for scams
Use Facebook to rekindle old flames	Use Tinder and other sites to kindle new flames
Use Facebook to bookmark sites	Use the browser’s bookmark to keep track

So now that you have a real cheat sheet, let’s talk about what it means. There are some interesting themes here.

Friendship & Family: Boomers have accumulated plenty of friends already, and have had their share of relationships. So their approach is to reconnect rather than expand their network. Millennials are at a stage in life where they are expanding their personal networks and are less interested in family relationships. When I joined Facebook, there was a group (remember groups?) doing the rounds called “OMG my Mom’s on Facebook” as the young people expressed shock at the idea of their mothers invading their social media world. It seemed funny to me at the time, until a few years later when my mother (who was around 80) joined!

Media: For Boomers, social media augments traditional media – they get news from both. For Millennials, social media supercedes traditional media, so their newsfeed is their source of news. This is actually very significant, because it enhances the ‘echo chamber’ effect of social media (as users just see what their friends like and share) , and further erodes the value of online news sources, which are becoming less financially viable.

Technology: Millennials are far more tech savvy than Boomers, so understand the specific use of other platforms like Tinder, and other tools like browsers. They also know how to spot a scam a mile off.

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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I think the notion of generational wars is a perpetual myth (or perhaps a perpetual truth). Every generation has certain influences which drive their attitudes (political & social) and thus the policies enacted by their leaders. It’s very easy to point cross-generational fingers of blame, but very hard to sit in the other-generational seat and play judge.

Have the Baby Boomers ruined the US economy (and the world) for the Millenials? That’s what Bruce Gibney asserts in his book A Generation of Sociopaths: How the Baby Boomers Betrayed America. Gibney lays blame on the Boomers that have controlled Congress for decades for the huge increase in the debt-to-GDP ratio, the under-investment in infrastructure, and inaction on climate change. He claims that it all stems from their lack of investment in the future.

UK academic Dr Beverley Searle agrees somewhat, stating that the blame sits with politicians’ funding decisions which makes the welfare state unsustainable, but deflects the notion of blaming Boomers for the benefits they enjoyed.

Further, I think Gibney is using the Boomers and Millennials labels as proxies for conservatives and progressives. The policy approaches of Boomers that he condemns are conservative policies, and he is a progressive. He might be better off calling a spade a spade rather than masking a political argument as an intergenerational one.

The Pew Research Center’s March report “The Generation Gap in American Politics” makes for interesting reading. While it shows younger people being more progressive, it doesn’t explore whether there are generational drivers and what they might be.

Consider This: In your family, are the older generations more politically conservative than the younger ones? To what extent are their differences driven by generational influences rather than politics?

Original articles: https://www.vox.com/2017/12/20/16772670/baby-boomers-millennials-congress-debt, Gibney’s book https://www.hachettebookgroup.com/titles/bruce-cannon-gibney/a-generation-of-sociopaths/9780316395809/, https://www.scotsman.com/news/attacks-on-greedy-baby-boomers-are-unjustified-says-academic-1-4686858, Pew Report http://www.people-press.org/2018/03/01/the-generation-gap-in-american-politics/

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

As The Economist magazine poignantly wrote: “Inheritance is a process, not an event”.

According to Australian research, family businesses are ill prepared for succession planning, appointing a new CEO, or even a strategy for the future of the business.

The first consideration is whether anyone in the family even wants to take over the business – plenty of children have no interest. Then, decide if the current owner(s) want to hand it over. Any successful transition needs both of those things at the outset.

It might be better to either sell the business, or allowing a committed employee to take over rather than a disinterested and reluctant heir. If both generations are indeed willing, then significant planning is needed.

Articulating the long-term vision for the business, ensuring that younger family members are part of the process and have time to establish themselves as owner-managers within the business, and being ready to truly step away and allow the next generation autonomy to make changes are all essential.

Consider This: When did you start thinking about succession in your family business? If it was when your children became adults, is that 20 years too late? Original article: https://www.modoras.com/

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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“I am, you are, we are Australian”, wrote The Seekers in a beautiful expression of national identity that spans our very diverse origins. While through COVID-10 we ought to feel especially blessed to live on this remote, island nation, the experience has highlighted the structural essence of our nation like nothing else could.

As most Australians know, our country is a federation of states that were originally separate self-governing colonies, and chose to come together in 1901 to form a single country. But for most of the time since then, state divisions were more synonymous with sporting and parochial rivalries, and that was mostly all they meant to the general population. The Prime Minister would meet regularly with the Premiers of each state, argue about things like funding and GST allocation, and then all go home and continue business as usual. There were not huge discrepancies between the states in terms of their economies or other significant metrics of success.

Several years ago, I started to wonder why we even needed state governments. Does a country of about 25 million people really need three levels of government? This seemed to be a relic that had outlived its usefulness. If we were designing our country from scratch, would we do it this way? Not sure. It is a huge country, and resources and needs vary significantly from one part to another. We also may not want too much concentration of power in any one layer of government. At the end of the day, it seems rather academic, as getting rid of layers of government is nigh impossible.

And then, COVID happened, and very quickly we learned the practical implications of the different powers held by federal and state governments. We went from trading barbs over closing borders to seeing the stark difference in competence between state governments with regards their public health infrastructure, and quarantine programs.

In Victoria, we experienced a debacle of the highest order as government incompetence led to a second wave, and more than four months of heavy lockdown. Even now, despite over two weeks of zero new cases, life is nothing like the ‘normal’ of other states. We are a state traumatised, and many people are exhibiting signs of Stockholm Syndrome in their gratitude to a leader who saved us from a second wave (that he allowed to happen).Personally, I am racked with doubts as to our government’s ability to open up and also keep the virus spread in check, and fear of blanket lockdown measures that could be invoked again at any time.

Perhaps the perspective of a Victorian gives me greater sensitivity to the way the relationship between our states is now evolving. We seem to be over our second wave and ready to open up. At the same time, the tiniest spike in SA is now leading to talk of closures.

Even now, the parochialism continues. Some borders are opening, and some are not. Victoria is now included in the NZ bubble. NSW will shortly open the border, but Queensland will not. It’s not clear when WA is moving from “hard” closed borders to “soft”, but nothing approaching “open” just yet. Christmas looms large as the target date to allow free travel. Is that because so many Australians celebrate it, or because it happens a useful milestone at the end of December?

I had some interesting feedback in a discussion about the timing of border openings: “We will favour NSW for our summer holiday because they opened up sooner, and don’t feel any desire to go to Queensland any more”. While I can understand why people feel this way, it is a disturbing development. We don’t know if Queensland Premier Annastacia Palaszczuk is prioritising the needs of her state’s population over the rest of the country, or playing politics having just been returned to power in an election, or a bit of both. But no Australian state is an island. The policies and actions of each state impacts all of us. And delays in opening up can have interstate tourism blowback.

Looking forward to when borders do open up, and when we do have a vaccine, how will the relationships between the states and the federal government and the perceptions of Australians about the states be different? I fear that this experience has brought to front of mind the differences between the states, rather than what unites us as a country.

Perhaps this is the time for us to plan a review of the federation. How has it served us – as a nation – during this crisis? Should lines of responsibility between levels of government be shifted? And most importantly, what can we do to restore “I am, you are, we are Australian” to a statement that actually means something?

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

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

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.theoaklandpress.com/lifestyles/vitality/5-ways-family-businesses-can-adapt-to-covid-19/article_5d5426bc-bd62-11ea-b242-6308fbcad99a.html, 
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

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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Can money buy happiness? And does being ‘happy’ mean something different to those who have wealth and those who don’t? These are the questions considered in a recent research study.

Most anyone who has wealth would find it obvious that the answer to
the first question is a resounding ‘no’, but it takes the rigour of an
academic to first define happiness (life satisfaction and a set of
distinct positive emotions), and then examine the correlation between
them and wealth or social class.

So the answer to the second question is ‘yes’. But how are they
different? For those of higher social class, happiness is reflected in
self-oriented feelings like pride and contentment, which may reflect
their desire for independence and self-sufficiency.

On the other hand, lower classes exhibit other-oriented feelings of compassion and love as their expression of happiness, which could help them cope with their more threatening environments.

Consider This: What makes you happy? How much of your happiness derives from wealth or consumption?

Original articles: from the LA Times http://www.latimes.com/science/sciencenow/la-sci-sn-happiness-rich-poor-20171219-story.html which is based on a research publication from the magazine Emotion http://www.apa.org/pubs/journals/releases/emo-emo0000387.pdf (a very dry read for those academically inclined).

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

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 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