Advisors don’t spend enough time thinking about their own succession and exit planning. Like most people, many are too involved in the day-to-day work. But like family businesses, exit planning for advisors is not just a financial transaction, but is also the chance to leave a legacy. 

The wealth management industry is ‘old’ – the average age of financial advisers today is about 55, with 20% of them 65 or older. Why? Because most of them have been servicing the incumbent generation of wealth holders. A similar profile would apply to accountants and lawyers servicing this group.

Research shows a mismatch between the ‘opportunity’ advisors see in the incoming intergenerational wealth transfer and tangible steps taken to address it. The wealth transfer poses a risk both for families and advisors., and both groups need to be aware of it and plan accordingly.

But who advises the advisors on managing this? I have been following this niche issue for a number of years, and will be launching a series of products including educational, knowledge base/community, and specialist consulting to advisors and their firms.

Consider This: Families: have you had an open discussion with your advisors about their ‘parallel’ transition? Rising gen family members: are you comfortable with your parents’ advisors becoming yours? Advisors: are you aware of the risks and opportunities to your business with the generational wealth transition? Have you formally assessed this?

Original articles: https://www.wealthprofessional.ca/news/industry-news/helping-advisors-pave-the-path-for-succession/331963, 

https://www.forbes.com/sites/forbesfinancecouncil/2020/07/27/the-psychology-of-a-retiring-advisor/?sh=53daca6f57a6,

https://www.kiplinger.com/retirement/601878/your-financial-adviser-wants-to-retire-too,

https://www.napa-net.org/news-info/daily-news/what-are-biggest-practice-issues-advisors,

https://www.ftadviser.com/your-industry/2020/11/19/advisers-slow-to-address-wealth-transfer-opportunity/,

https://www.journalofaccountancy.com/news/2020/dec/succession-issues-surge-at-accounting-firms.html

[reposted with permission]

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com.

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#entrepreneurship

The post The Exit of The Cobbler’s Children go Barefoot appeared first on David Werdiger.

source https://davidwerdiger.com/2023/11/cobblers-children-2/

Most people with wealth to pass on have never talked to their heirs about how they plan to distribute their assets after they die because they consider the information too personal, according to a recent survey. In six out of 10 families, there is no process in place to ensure family wealth decisions are made and communicated effectively (from another survey).

This is actually no surprise, because these sorts of discussions are among the most difficult. They evoke feelings of mortality in the incumbent generation. And because our relationship with money is primarily emotional, talking about money produces subconscious reactions in those participating in those discussions.

These reactions are usually driven by fear and most people will need help to understand their emotional drivers. Understanding our attitudes to money is therefore a prerequisite to having a healthy family communication framework.

In the absence of communication, family members fill in the gaps by guesswork, or what they can find out online, both of which are usually wrong which leads to assumptions. Open communication helps children learn about wealth and values, while enabling the family to comfortably navigate difficult money talks.

By creating a family mission and vision statement first, discussions about money can be suitably contextualised and be less about the numbers, and more about the underlying purpose and meaning to their lives.

Consider This: What have you told your children about the family wealth? What do you think they have discovered without you telling them anything? At what age do you consider it appropriate to start preparing them to be good custodians of family wealth? Are they are aware of all the things money can’t buy?

Original articles: https://www.kiplinger.com/article/retirement/T021-C032-S014-to-successfully-pass-down-wealth-share-your-intent.html, https://www.bizjournals.com/bizwomen/news/latest-news/2019/08/most-heirs-left-in-the-dark-about-estate-plans.html?page=all, https://www.wealthbriefingasia.com/article.php?id=185247#.XbYkguYzaUk, https://www.moneymanagement.com.au/news/financial-planning/australians-need-discuss-their-will-children, https://www.forbes.com/sites/forbesfinancecouncil/2020/01/31/how-being-too-guarded-can-prevent-your-family-from-achieving-its-mission/#7fdd15732df5, https://www.bizjournals.com/denver/news/2020/02/03/tips-on-talking-to-the-next-generation-about-your.html?s=print

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Navigating Wealth Communication with Heirs appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/talking-wealth-2/

[Reposted with permission] I’ve recently returned from a speaking engagement at a conference in Dubai, which was my first visit there. As I walked around the city and particularly the mall, I pictured “founding father” Sheikh Al Maktoum just a few decades earlier looking out on a desert, and imaging a future that few others could imagine.

Creating modern Dubai took a huge amount of money and some outstanding engineering, but the most important ingredient was … vision.

Those blessed with fewer financial constraints than most have an opportunity to make their visions a reality. Their vision can make the world around them a better place in so many ways. But it starts with imagining and dreaming of possibilities. For some, those dreams come spontaneously, but for others they can be stimulated through a structured process. For families, there is an opportunity to do this as a group, which has added benefits: the contribution of diverse voices to build the vision, and the power of shared vision to bind the family together.

Warren Buffet famously said that he would leave his kids enough to do anything but not enough to do nothing. If we are blessed with wealth, we ought to make our “anything” the best it can be.

Consider This: Has your family articulated a shared vision? Do you encourage rising generation family members to dream and consider the possibilities open to them? Whatever your age, what are you dreams?

As a third party advisor to #familyoffice and #familybusiness Werdiger often helps guide the #intergenerational parties through #conflictresolution to a win-win-win result through 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 #intergenerationalwealth #entrepreneurship

The post Founding Fathers, Rising Generations appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/family-vision-2/

Philanthropy, in simplistic terms, is often manifested as the flow of funds from a grant-maker to a beneficiary, and as such can be considered one-directional. Yet so many people who do this (whether they are giving of their time, talent or treasure) have expressed the rewarding feeling of giving. I can attest to this personally, particularly in respect of several non-profit board and committee positions.

Family philanthropy, when done well, can be “win-win”. It can deliver immense value to the family.

Like many things, doing it well means doing it with a plan. For a family, that means asking “why should we give?”, “what are our (collective) values?”, “what impact do we want to leave on the world?” and other such questions. These questions don’t have simple answers, and just discussing them as a group can be an enlightening and bonding experience for the family.

While asking these questions can lead to better quality and more strategic philanthropy, they have the additional benefit to the family in providing a focal point to broader family questions such as “what does it mean to be wealthy?” and “what does my life mean given I never need to work?”. It can also be a great way to engage younger and rising generation family members who may not want (nor may be ready) to discuss financial matters.

In some families, philanthropy can be a source of conflict, of competing interests and ego. It doesn’t have to be, provided the family is prepared to put in the effort to do it well. It can be win-win for both the beneficiaries of their generosity and the family.

Consider This: What discussions have your family had about philanthropy? Have those discussions been helpful? Who is involved in vision and strategy? To what extent are the rising generation involved?

Further reading: https://www.imd.org/ibyimd/leadership/happy-families-the-unifying-force-of-philanthropy/, https://www.wealthprofessional.ca/news/industry-news/why-family-philanthropy-isnt-just-about-writing-a-check/375734, https://www.opalesque.com/industry-updates/7089/increasing-wealth-drives-family-office-focus-on-philanthropy.html, https://www.insidephilanthropy.com/home/2023/3/7/evolving-family-models-alter-the-ways-a-new-generation-gives-back, https://cfi.co/menu/corporate/2022/11/strategy-structure-shared-purpose-there-are-rules-to-protecting-family-wealth/, https://www.barrons.com/advisor/articles/ultrawealthy-financial-advisors-family-meetings-51650484720

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com.

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The post Win-Win Family Philanthropy appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/win-win-family-philanthropy/

Where we spend our time and energy is a reflection of our priorities. In a wealthy family, whether or not they have a formal family office, we can think about three types of activity:

* money: investment or operating business aimed at growing the family’s financial capital

* legal: regulatory obligations, estate planning, tax, insurance, and other risk management

* family: maintaining and improving the physical, mental, emotional, and spiritual health and well-being of the family

It is thought that in many family offices, the split between these activities is about 60/30/10. Some say that even the 10% allocation to “family” is generous.

What does this say about a family’s priorities? How does family wealth differ from corporate wealth? Companies have human resources departments whose purpose includes managing the wellbeing of team members. Notwithstanding that recruitment and performance management are not quite needed within families, managing the well-being of the family, both individually and collectively, is surely a function to which family resources should be allocated.

Jay Hughes developed the notion of multiple forms of family capital: human, intellectual, social, legacy (or spiritual) and financial. He illustrates this with a hand where the thumb represents the financial capital, and the four fingers are the “non-financial”, and holds his hand with four fingers out and the thumb pointing down. The purpose of financial capital is to underwrite and enable the development of the other forms of family capital. It is the means, not the end. A family’s greatest asset is its members, not its financial balance sheet.

Consider This: What resources does your family allocate to maintain and improve the well-being of family members? What does it do (proactively and reactively) in support of this well-being? How is the saying “family comes first” reflected in practical terms?

Further reading: https://ffipractitioner.org/the-family-focused-office/, https://www.morningstar.com/news/marketwatch/20230823369/not-just-for-rich-people-6-ways-were-messing-up-inheritances, https://www.morningstar.in/posts/74723/what-wealth-cant-buy.aspx, https://www.fa-mag.com/news/for-family-wealth-conversations–focus-on-the-why-74090.html, https://www.businessinsider.com/family-offices-no-inheritance-plans-wealth-transfer-strategy-2023-6, https://ceoworld.biz/2023/03/16/the-importance-of-having-the-talk-concerning-family-wealth/, https://www.chase.com/personal/investments/learning-and-insights/article/we-need-to-talk-communicating-your-estate-plan-with-your-family

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com.

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The post Family Wealth Priorities appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/family-wealth-priorities/

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 further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

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The post Greed or Envy – 2 of the 7 Deadly Sins  appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/7-principles-greed-envy/

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/

[re-posted with permission]

Actionable Generational Wealth Succession:

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com.

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The post NextGen Family Business Strategy appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/next-gen-strategy/

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 further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement

[reposted with permission]
Actionable Generational Wealth Succession

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post How Do 3rd & 4th Generations in Your Family ‘Prove Themselves’? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/3rd-4th-generation-privilege/

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).

[reposted with permission]

Actionable Generational Wealth Succession

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com.

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The post Will Money Buy Happiness? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/will-happiness-buy-money/

The 1992 book Men Are from Mars, Women Are from Venus asserted fundamental psychological differences between the sexes. These differences are also reflected in the approach to finance, business and succession.

Women talk and think about money very different to men. They tend to be more focused on the impact of money, and how wealth can help bring the family together. They find it easier than men to talk about money with their families. They think longer term – across generations, seek to invest wealth in a manner aligned with their personal values, and skew conservative in investing when the market sentiment is bad. Legacy often means more than passing wealth down to the next generation; it also means being capable of positively impacting the lives of others.

It is therefore no surprise that while nearly 90% of the world’s billionaires might be men, many turn to females in investment banks, investment firms, and hedge funds when it comes to managing their money.

Women are under-represented in finance and family enterprise leadership, yet we’d all likely be better off if more women took on these roles.

Three key factors strongly influenced women’s paths to leadership: early exposure to the business, communication of inclusion as a family value and strong female role models in the family. How we tell our family’s origin story is important. While Grandpa may have been brilliant entrepreneur, how did Grandma’s support contribute to his success at work?

Consider This: How are women and men treated within your family? Are they given similar opportunities? When telling your family’s story, what are the relative roles of men and women? Who are the role models in your family and how have they influenced you?

Further reading: https://www.cnbc.com/2023/03/10/women-have-very-different-ideas-to-men-about-passing-wealth-on-to-kids.html, https://www.wealthmanagement.com/high-net-worth/creating-inclusive-pathways-next-gen-women-leaders-family-businesses, https://www.psychologytoday.com/us/blog/theory-practice/202210/invisible-daughters-in-family-businesses, https://www.businessinsider.com/sergey-brin-wealth-management-jeff-bezos-family-offices-women-cios-2022-8, https://www.forbes.com/sites/forbesfinancecouncil/2022/04/11/family-office-services-for-women-what-female-executives-and-business-owners-should-expect/?sh=3c2ffa685dd5, https://www.forbes.com/sites/avivahwittenbergcox/2020/10/25/building-back-a-workplace-with-generational-balance/?sh=2734e2781937

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com.

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The post Financial Mars & Venus appeared first on David Werdiger.

source https://davidwerdiger.com/2023/09/financial-mars-venus/