What Next? Retirement, Succession, New Career?

We’ve previously discussed the effect of increasing life expectancy on wealth transition – the ‘problem’ of the ageing family member who refuses to step aside is more prevalent than ever (the popular TV series Succession makes for great watching on this topic).

Traditionally, roles within families have very long tenure, For someone who has been managing the family wealth for many years, the thought of leaving a job they have become very good at can leave a huge void in their lives. The easy option is to leave things as they are. What can help is for older family members to have something to look forward to beyond their lives in the family’s operating businesses or family office.

This might be a shift to the family foundation (such as Bill Gates), a move into politics (Amo Houghton from Corning), or a more structured ‘statesman’ role working with the next generations (in their own or other families).

Having new roles they can look forward to is good for both the current and rising generation, and can avoid the fear associated with starting a ‘new career’ in middle age.

Consider This: What is your family’s history and attitude to how (or if) elder members step aside? Is retirement considered taboo? Have family members in their 50s and 60s thought about possible second careers?

Original article: https://www.forbes.com/sites/dennisjaffe/2018/11/15/stepping-up-what-family-business-leaders-can-do-after-they-step-down/

As an advisor to #familyoffice and #familybusiness I often help guide #intergenerational parties through counseling and actionable generational wealth succession strategies. Now offering online talks, panels, classes at http://davidwerdiger.com

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

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source https://davidwerdiger.com/2020/05/what-next-2/

Legacy; Let’s 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

As an advisor to #familyoffice and #familybusiness I often help guide #intergenerational parties through counseling and actionable generational wealth succession strategies. Now offering online talks, panels, classes at http://davidwerdiger.com

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

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source https://davidwerdiger.com/2020/05/legacy-money-talk/

Wealthy kids relying on wealthy parents

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

As a third party advisor to #familyoffice and #familybusiness Werdiger often helps guide the #intergenerational parties to a win-win-win result. Family Business Advisors-Counseling 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 Family Matters newsletter: https://www.transitionbook.co/member-area/ or book a call or speaking engagement at https://www.davidwerdiger.com influenced and partly based on the Book E-Myth Revisited case study.

#newfamilyoffice #familyworth #nextgeneration #newmoney #intergenerationalwealth #entrepreneurship

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source https://davidwerdiger.com/2020/04/wealthy-kids-and-parents/

Political Preferences and Family Business

With the recent 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

As a third party advisor to #familyoffice and #familybusiness Werdiger often helps guide the #intergenerational parties to a win-win-win result. Family Business Advisors-Counseling 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 Family Matters newsletter: https://www.transitionbook.co/member-area/ or book a call or online course at https://www.davidwerdiger.com influenced and partly based on the Book E-Myth Revisited case study.

#newfamilyoffice #familyworth #nextgeneration #newmoney #intergenerationalwealth #entrepreneurship

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source https://davidwerdiger.com/2020/04/political-preference-and-family/

The Next Generation May Not Be Interested

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

As a third party advisor to #familyoffice and #familybusiness Werdiger often helps guide #intergenerational parties through counseling and actionable generational wealth succession strategies.

#pandemic #shelterinplace #washyourhands #stayathome #conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

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source https://davidwerdiger.com/2020/04/next-generation-not-interested/

Finding Purpose in Transition – Retirement or Stay at Home

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

As a third party advisor to #familyoffice and #familybusiness Werdiger often helps guide #intergenerational parties through counseling and actionable generational wealth succession strategies. http://davidwerdiger.com

pandemic #shelterinplace #washyourhands #stayathome #conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

The post Finding Purpose in Transition – Retirement or Stay at Home appeared first on David Werdiger.

source https://davidwerdiger.com/2020/04/purpose-in-transition/

Keeping Family Business Strong in Times of Change

Family businesses aren’t just businesses that happen to be owned and/or managed by a family. Factors like a long-term perspective, and the multiple/overlapping roles of owners, employees and family members are both strengths and weaknesses. These factors mean that family businesses need another set of principles to help them stay strong.

Because many stakeholders have multiple hats, separation of powers is very important. Everyone needs to understand what their roles are (employee, manager, owner, etc) and the scope of each role.

Because family business transitions fail most often because of poor communication, a governance structure that includes independent director(s) is essential for mature family businesses. This helps the business and family stay true to its values, put policies in place to manage conflict, and maintain open communication and accountability. Good governance ensures that issues are dealt with in the appropriate forum at all times.

Another reason for failure is lack of strategic renewal. External voices on a board can ensure regular strategic planning happens, established ideas are challenged, and all stakeholders’ voices are heard.

Consider This: Does your family operating business have a board? Does your family have a council (or similar), separate from the governance of any operating businesses? At family meetings, who is the chair? Does everyone who attends genuinely have a voice?

Original articles: https://www.forbes.com/sites/forbescoachescouncil/2020/01/17/15-tips-for-navigating-family-business-challenges/#462bab2b8a92, https://www.smartcompany.com.au/business-advice/family-business-constitution/, https://hbr.org/2020/01/managing-the-trickiest-parts-of-a-family-businesses, https://hbr.org/2020/01/every-family-business-needs-an-independent-director, https://hbr.org/2020/02/should-your-family-business-have-a-no-in-laws-policy, https://hbr.org/2020/02/what-makes-a-family-business-last, https://www.forbes.com/sites/rochellemclarke/2020/02/29/6-tips-for-working-with-family-and-friends/#4de7af5612f9

As a third party advisor to #familyoffice and #familybusiness Werdiger often helps guide #intergenerational parties through counseling and actionable generational wealth succession strategies. http://davidwerdiger.com

#pandemic #shelterinplace #washyourhands #stayathome #conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

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source https://davidwerdiger.com/2020/04/keeping-family-business-strong/

What is the ‘Why’ or Value of Wealth Between Generations?

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

David Werdiger is an experienced technology entrepreneur, strategic thinker, adviser, philanthropist, not-for-profit innovator, online speaker/trainer and author. https://www.transitionbook.co/conflict-resolution

#pandemic #shelterinplace #washhyourhands #stayathome #conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

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source https://davidwerdiger.com/2020/04/intergenerational-wealth-value/

The Power of Pause; #Disruption of Family and Business Relationships

The COVID-19 pandemic has caused a degree of change that we’ve never seen or even imagined before. Just a few months ago, few people would have believed that a virus would cause economies to shut down and cities and countries to go into lock-down. Quickly, we’ve needed to adapt to a new way of life.

But the change we are experiencing and now expecting goes far deeper, and this is evident in the language we’re seeing in the media from leaders and opinion-makers. Phrases like “[…] will never be the same again” and “we will inhabit a different world” are now common. This kind of language point to an unprecedented and radical change.

How can we make sense of change of this magnitude? One useful framework is ethnographer Arnold van Gennep’s concept of a “rite of passage”, which describes an individual’s change from one group to another. Van Gennep explains that such changes occur in three steps:

  1. separation from the previous state,
  2. a transition stage, and then
  3. re-entry into a new state.

The rapid onset of the virus has forced us very quickly to separate from our regular lives. Many people are stuck at home and/or working from home. Social activities which previously took so much of our lives have been curtailed, leaving a huge gap. In the interim, our lives are in limbo or transition as we await a new future. We carry much uncertainty about what the new state will look like. Our lives have been put on pause. We can view this as the second stage of a rite of passage.

This pause is a very important stage for individuals: a time when the most important action is no action. It is a time for contemplation and reflection on what is important so we can prepare for the next stage (however that might look). While the rite of passage model is usually applied to the development of an individual, the nature of the change we are all experiencing means we can broaden its application and consider three classes may experience this pause: the individual, the family/collective, and with a national/global viewpoint.

As explained, as individuals we are finding ourselves with more time on our hands, and our movements and activities have been constrained. A typical day looks very different than a few months ago. This pause is a time to look back at the things that were taking up our time in the past, and consider how important they really are. If we are getting by without them now, how much did we really need them after all?

What we prioritise in this time of crisis is a strong indicator of what is important in our lives. So it’s an opportunity to reassess what is truly important to us. In these weeks, people have found themselves spending more time calling on others to see how they are or how they can help. Many have become more thoughtful and kinder towards others.

During the pause, we can reassign the priorities of all the activities in our daily lives, and imagine a future where the current constraints have passed, but we are now living a life based on our actively chosen priorities. This would surely be better than doing things because that’s what we did yesterday, or last week.

Families are either spending more time together, or are separated by physical distance with plans to meet and spend time together cancelled. Time close together is a double-edged sword – for some families it will increase stress and bring latent conflict to the surface, and for others it’s a time when their bonds can become closer. For families unable to be close physically, it’s a time to find new ways to connect despite social distancing rules and travel restrictions.

In all three cases, there is significant #disruption to the family dynamic, and families should respond as proactively as possible. This pause is an opportunity for families to have discussions about their connection and the meaning of their family relationship. While some families may be focussed on their financial capital and how to preserve it in times of economic upheaval, this is also the perfect time to refocus on the other forms of family capital:

• Spiritual capital – the common vision and purpose of the family group
• Social capital – the family’s ability to make collective decisions and their system of governance for doing this
• Intellectual capital – the lifelong learning process both individual and collective
• Human capital – helping each family member thrive individually

These can be difficult conversations, and sometimes are best done through a facilitated process that ensures family members all have a voice. These conversations are also essential because at their core, they deal with the compact that binds families together, and any systems for managing family capital (in all its forms) are only as strong as the compact that underpins them.

While my focus is on families of means, the pause concept can also apply to collectives such as communities, and businesses. Community life has also been disrupted and leaders can use this pause to review the compact and values that underpin the community, and how that can be strengthen to prepare for what may come next.

Some businesses are in turmoil, having to adapt their business models or make cutbacks to ensure their survival. They may not have entered the pause stage of the rite of passage just yet. Other businesses have been forced to close their doors and are genuinely paused. In both cases, it’s a time in the business cycle to rethink strategically and hopefully come out more robust when this has passed.

Viewing the pandemic through a national & global lens raises some challenging ideas. Globalisation and our hyper-connected society has helped the virus to spread so rapidly, yet it needs global cooperation to share knowledge and develop the best response to this crisis. Some believe society has moved beyond the concept of nation states and we should have open borders, but containment measures necessitate the closure of borders and distinct responses by each country.

There is global concern about climate change, but as factories have closed, planes have disappeared from our skies and cars from our roads, pollution monitoring satellites have shown the positive impact to the air around us. To be sure, factories will reopen and economic activity will resume, but this does give a glimpse into how large scale change can make rapid improvements to our environment.

This pause is therefore also time for us to look at the biggest picture of all: our compact with the world in which we all live, our countries, and the cooperation between countries. While on one hand, governments are scrambling to implement containment measures and reallocate resources to deal with large number of sick, this pause is a unique opportunity to put some of the big discussions on the agenda.

We don’t know why this awful #pandemic has encircled the world. But we can view it as a rite of passage for all of us – as individuals, families & collectives, and human inhabitants of our planet. If “ordinary life” had continued, we would have been unlikely to step back and had the kinds of discussions I’ve mentioned. But our lives have been put into a pause, so now is a unique opportunity for reflection and discussion about what is important to us, to our families and collectives, and to the world around us. These discussions can help us push the metaphorical reset button on all three levels, and emerge stronger and better to face a world that may look very different once this passes.

David Werdiger is an experienced technology entrepreneur, strategic thinker, adviser, philanthropist, not-for-profit innovator, online speaker, trainer and author.

covid19 #coronavirus #shelterinplace #washyourhands #stayathome #conflictresolution #strategicmanagement #successioncontinuity #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

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source https://davidwerdiger.com/2020/04/power-of-pause/

The two sides of public debt: Intergenerational altruism and burden shifting

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

As a third party advisor to #familyoffice and #familybusiness Werdiger often helps guide the #intergenerational parties to a win-win-win result. Family Business Advisors-Counseling 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 Family Matters newsletter: https://www.transitionbook.co/member-area/6cf3b890596 or book a call or speaking engagement at https://www.davidwerdiger.com influenced and partly based on the Book E-Myth Revisited case study.

#newfamilyoffice #familyworth #nextgeneration #newmoney #intergenerationalwealth #entrepreneurship

The post The two sides of public debt: Intergenerational altruism and burden shifting appeared first on David Werdiger.

source https://davidwerdiger.com/2020/03/intergenerational-burden/