Personally, I think there is too much negativity around entitlement. Transitioning a business is a once-in-a-lifetime event, and “entitlement” comes up in almost every family discussion, presentation or lecture I give. It has become almost a dirty word when it comes to family wealth – something to be avoided at all cost. “How can I prevent my children from becoming entitled?” is what most every parent wants to know.

When it comes to family business, transcending the negative impact of entitlement can be achieved by 3 things:

1. instilling leadership qualities in children,
2. establishing good governance and a culture of accountability, and
3. create a sense of custodianship when making decisions about the family business.

The vast majority of parents will transmit their wealth to their children, so the key challenge is to be realistic and manage children’s expectations (rather than avoid them). Being a little entitled isn’t nearly as bad as having no purpose or meaning, which is another ‘symptom’ of children in wealthy families. More about that another time.

Consider This: Do you consider your children ‘entitled’? If so, to what extent is this a product of how you brought them up? How much entitlement is too much?
Original article: https://www.manilatimes.net/do-children-have-a-birthright-to-their-parents-wealth/526942/

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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Consider this from two perspectives: the family and the individual. Do families demand that younger generations prove themselves in some way, perhaps before being allowed to join the family business or take some other role with respect to the family assets?

The other side is the view of the younger family member. Being born into wealth can be a lodestone, especially the way ‘privilege’ is a dirty word in some circles. The world loves a rags-to-riches story, but subsequent generations that don’t start with ‘rags’ are automatically ineligible.

That makes the story of Tamir Triguboff – great-nephew of the second richest man in Australia – an interesting one. Without a cent of family money, he developed an app, which he sold for AUD 85K. He’s using half of the proceeds from the sale to fund his next venture – “a social platform that enables young people to voice their opinions on social issues”.

Consider This: How do you (or would you) handle a request from a family member for funding their business idea? To what extent should family members need to prove themselves? Would you want to see their story on the front page of the local newspaper? Is this even newsworthy – while they may not have relied on family money for the venture, have they overly relied on surname for publicity?

Original article: http://www.smh.com.au/technology/smartphone-apps/my-parents-haven-t-given-me-a-single-cent-grandson-of-australia-s-second-richest-person-out-to-prove-himself-20171217-p4yxsl.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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Studying failure is far better than studying success because it’s easier to avoid doing the wrong things than mimic the good that others are doing. Here are some of the ways things can go awry:

Families and businesses don’t grow at the same rate. From the third (and sometimes second) generation onwards, the family often grows faster than the business. What happens if many family members look to the business for employment or supplementary income?

Many owners maintain control by appointing only family members or close friends to their boards. This lead to the common problem of familiarity – where personal issues seep into the business, and where friends and family may tell the owner(s) what they want to hear instead of what they need to hear.

Policies regarding in-laws are a huge challenge and families tend to have polarizing views as to whether they are in favour or totally against. Whatever the policy, it’s important to welcome and evaluate in-law children as a spouse, not as an employee. It can be very difficult to remain business partners following a divorce – the worst-case scenario is that it the business needs to be sold to split the proceeds.

Working with relatives is a double-edged sword: it can generate much higher levels of trust and commitment, but it can also lead to tensions, festering resentments and open conflict. “It’s difficult when your dad isn’t only your dad, but your boss too.”

A recent study found that more than half of family businesses lack a succession plan. In too many family businesses, succession discussions are forced in that parents not wanting to inflame sibling rivalries leave it to the last possible moment to work through. A crisis, such as a major illness, is often the catalyst for a discussion that is by then often too late.

Consider This: Do you see any of these issues occurring within your family business? Is there a forum where you can discuss and seek to resolve or mitigate such challenges? Are there barriers to getting help in the first place?

Original articles: https://www.forbes.com/sites/dennisjaffe/2019/09/12/equal-partnerships-in-a-family-business-a-disaster-waiting-to-happen/#558f03764f6b, http://www.mondaq.com/australia/x/875598/wills+intestacy+estate+planning/A+rise+in+family+business+disputes+as+generational+succession+gets+messy, https://www.forbes.com/sites/iese/2019/12/27/five-rules-to-prevent-conflicts-in-family-businesses/#5aec82906662, https://hbr.org/2020/01/is-it-time-to-leave-the-family-business, https://www.bbc.com/worklife/article/20200204-how-to-leave-a-family-business, https://hbr.org/2020/02/should-your-family-business-have-a-no-in-laws-policy, https://www.roi-nj.com/2020/03/25/industry/breaking-up-is-hard-to-do-divorce-among-family-business-owners-can-be-complicated-and-have-far-reaching-consequences/, https://www.forbes.com/sites/francoisbotha/2020/06/30/avoid-the-common-pitfalls-of-family-business-boards/amp/, https://www.heraldgoa.in/Business/In-Business/4-bad-omens-of-the-family-business-curse/164281, https://www.forbesindia.com/article/family-business/how-to-tackle-a-split-in-the-family-business/62871/1

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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In times of chaos, economic uncertainty, and the crushing burden to lead the family’s assets out of the fire, the need for governance grows even stronger. 

Too many families consider family governance as a side dish – a pesky bug that wants to take away all the attention and resources from the main priorities which are revenues and operations. There is also an emotional side to effective family governance which is often overlooked by the first generation.

The principles of governance for families are very simple: How are we going to make decisions together? How are we going to communicate? How are we going to solve problems together?

While the principles are simple, implementation can be challenging. Getting a clear mandate from the top is essential, as well as dealing with stakeholders who resist change. Having external help is essential.

Some families chooses either business first or family first. One is not better than the other, but you need to be honest about the choice and develop family governance based on your choice.

In order to stay focussed in your governance journey, remember that it’s all about relationship, communication and understanding between the family, the family businesses and the shareholders.

Consider This: Has your family’s governance (or lack of it) been a factor through COVID? (How well) does your family communicate? Is there the capacity for group decision-making?

Original articles: https://hubbis.com/article/revisiting-family-governance, http://www.mondaq.com/jersey/x/873496/wealth+management/Avoiding+rags+to+riches+in+three+generations+family+governance+in+the+Middle+East, https://www.forbes.com/sites/forbesbusinesscouncil/2020/06/16/use-good-governance-to-steer-a-rudderless-ship/#4abdd14a1ffd, https://www.forbes.com/sites/forbesbusinesscouncil/2020/08/04/eight-concepts-to-help-plan-and-manage-your-family-business/#5fcaf80440ce, https://www.panaynews.net/family-business-governance-important-then-and-now/https://business.inquirer.net/308365/time-for-that-governance-talk

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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Case Study: A wealth originator dies leaving a second generation son in charge of the operating business and family fortune. A mix of 2nd and 3rd generation family members are employees but a 3rd-Gen college grad, never having worked in the family business, proposes a new business venture and asks the family to invest.

Read this Horizons Article on how best-selling author David Werdiger describes a resolution-construct to navigate between the conflicting agendas and uncover the core issues for an optimum outcome.

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 powerful and prominent family, and the religious institution they run. That was more than enough to pique my interest, and after rapidly working our way through three seasons of the outstanding Netflix series Greenleaf, it reinforced so much I already know about family business, succession, and intergenerational transition.

When telling people about this series, I delay mentioning the setting – a African-American mega-church in Memphis. While that aspect adds a wonderful dimension, the intersecting themes of family, succession and religion occur everywhere. The family doesn’t need to be the ones running the church for religion to have an impact.

Here are three things you will notice and learn while watching Greenleaf (and I will do this without having to resort to spoilers):

• Children need to individuate. Being part of a high-profile family with larger-than-life parents presents a challenge for the children. Everyone needs to develop an identity that is uniquely theirs. They don’t want to be “the pastor’s son”, even if they choose to follow a similar career. If they feel stifled, they may do go to great lengths (and with serious consequences within their own family) just to become “themselves”.
• Families are riddled with conflicts-of-interest. These may take many forms. It might be a conflict between the needs of the individual and those of the family (or more widely the community), between religious beliefs or obligations and realities of the contemporary world, or a clash between protecting some family members at the expense of others. In all cases, these conflicts arise because family members wear “multiple hats”: they have family relationships, friendships, business relationships, religious obligations, and much more.
• Secrets hurt. A healthy family is one where information flows freely, and people can share their feelings. Secrets, whether about misdeeds or about family matters that “you don’t need to know about”, eventually are revealed. Life a festering sore, the longer things stay secret, the more they hurt when the truth comes out.

This series is highly “binge-able”. I hope you enjoy watching it and would love to hear about what it meant to your own family.

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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Consider This: How do you explain your family wealth to young children? At what do you start this process? How do you say ‘no’ to them and place limits on their spending when they reply “but we can afford it”?

Affluenza and entitle-itis are some of the newest ‘diseases’ that afflict the wealthy, and of course there is always the ubiquitous ‘privilege’ that almost everyone is now obliged to check.

In her book Uneasy Street: The Anxieties of Affluence, Rachel Sherman, associate professor of sociology, has interviewed 50 affluent parents in and around NYC to understand the challenges they face raising children with wealth.

They are somewhat torn between stigma of wealth and the competitive environment in which they live. Attitudes to wealth have changed, and while parents want to give their children the opportunities that come with wealth, they still want to keep them ‘normal’ and able to mix comfortably in (and be accepted by) broad social circles.

As much as ‘tough love’ is needed to limit spoiling, it’s also essential to teach children to be comfortable with wealth, and to appreciate what it brings to their lives. Take it, but don’t take it for granted.

Original article: https://aeon.co/ideas/how-new-yorks-wealthy-parents-try-to-raise-unentitled-kids, http://press.princeton.edu/titles/11096.html (the book)

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

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Consider This: Are members of your family more driven by greed or envy? While neither are good attributes, what can you do to mitigate their risks?

Greed and Envy are two of the ‘seven deadly sins’ and are relevant to material wealth. Economists adopt the fundamental principle that people seek wealth maximisation (a form of greed), but is this really the case?

Because we live in communities and families, it can be argued that the more significant driver of behaviour is envy, because we invariably compare and benchmark ourselves to those around us.

For the economists among you, the analysis is in the link below, but more broadly interesting is the implications for family wealth.

If envy is a greater driver of behaviour than greed, then the principles of equity and fairness become all the more important when transitioning wealth within a family. Within families, envy can be a far more destructive attribute. Any gift (in the broadest sense, so including a role that is ‘given’ to a family member) should be considered in the context of how other family members may react and respond.

Original article: http://falkenblog.blogspot.com.au/2010/03/why-envy-dominates-greed.html (very dry)

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

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The top 3 causes of Business Owner burnout include long hours, family strife and organizational chart mismanagement. A dose of preventive medicine could go a long way.

A compelling question that inspires action; What would happen if I was run over by a bus? Not just to my business, but to my young and growing family. I couldn’t just fob this off – it went to the core of what I was trying to achieve in creating a business

What I wanted to accomplish was to have a business that wasn’t just all about me; that could continue providing services to its customers, and providing an income to my family even if I wasn’t there.

It’s an easy thing to state and aspire to, but at the time, the business was highly dependent on me. I was the single person who knew everything about what was supposed to happen when and where and how, both on a day to day basis, but also with a view to where it was going and how it would grow.

I produced a video course on this very topic: Learn more at http://bizcourse.transitionbookbonus.com “With the Transition Digital Video Course, you’ll establish a course of treatment and never leave the success milestones of your business to chance ever again.   Because when the right prescription works, we ensure you are at your best, every single day. David Werdiger is a master mediator who has succeeded in growing and selling multiple businesses.”

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

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Andrew Carnegie is credited with the most infamous and requoted aphorism in family business. “Three generations from shirtsleeves to shirtsleeves” refers to the commonly held belief that in the lifecycle of family business empires, the third generation is where it all goes wrong.

Increasing life expectancies have meant that for the first time in history, four generations are alive at the same time. This has important implications for the timing of the transition of family wealth.

There is an ‘inheritance boom’ coming when the Millennial generation inherit the wealth of the Baby Boomer generation, but this is expected to peak in 2035 when the average Millennial has already passed the age of 60!

Some wealth originators shudder at the idea of passing over the reins while they are still alive, having seen other children squander their family’s wealth. While there is always a risk that the next generation will blow it, the previous generation can reasonably argue that they don’t want to be around if/when that happens.

But is it reasonable to make the next generation wait that long? Granted, they will likely have many years to enjoy the wealth (and the control of the wealth), but holding back can create resentment and can be considered condescending and patronising.

Consider This: At what age do you think your children should inherit significant family assets? To what extent is that driven by your own experience? Whatever the age, what are you doing to prepare them for that eventuality?
Original articles: https://www.moneywise.co.uk/news/2018-01-02/millennials-set-inheritance-boom-when-they-turn-61 https://www.tharawat-magazine.com/facts/third-generation-failure-family-business/

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

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