David was interviewed on the Disrupt Radio program Moolah to discuss relationships within family business. “Don’t hire whom you can’t fire” is one of David’s favourite pieces of advice to businesses. Listen to the full audio below.
The post Interview – Family & Business appeared first on David Werdiger.
source https://davidwerdiger.com/2023/09/interview-family-business/
In most places today, people have both a given (or first) name and a family name, but the order of those names is culturally based. Some Asian countries like Japan, China and Korea, as well as several European countries put the family name first. When a son is named after his father (and this predominately happens with males), he might take on a Jr or a Roman numeral as a suffix, and royals and popes are known by a first name and a numeric suffix.
These different ways of naming and using names are reflections of the relative importance of the given vs the family names. Having a well-known family name can be a double-edged sword. It immediately identifies you to others as part of something larger, something that preceded you (and will likely succeed you), and all the ‘baggage’ that comes with that: family reputation, history and expectations.
The family name can open doors that would be closed to others, and also give you respect (or notoriety) that may have little to do with you personally. People may rush to assumptions and prejudices about you because of your family. They may invite you to participate in something with ulterior motives, or not take the time to get to know you as an individual.
Most of us are both individuals and part of a family. Having a name like John Smith IV can often be an impediment to discovering who you really are.
Consider This: To what extent do others make assumptions about you based on your surname? How do you deal with those assumptions? Has the decision to take a different surname (e.g. a married name) been influenced by the baggage of your birth family name? In your family, what is the relative importance of family vs individual?
Further reading: https://www.campdenfb.com/article/philippe-j-weil-complexity-being-born-wealth, https://www.tatler.com/article/uhnw-inheritance-educating-kids-money, https://www.seekerstime.com/the-family-dynamics-of-wealth/ https://www.fa-mag.com/news/some-parents-say-their-finances-are-none-of-their-kids–business-67185.html https://www.ft.com/content/8a7fcfe3-44c4-4888-b33d-440b7e60691d, https://www.fa-mag.com/news/3-misconceptions-about-wealth-52854.html
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.
The post Surname, First Name appeared first on David Werdiger.
source https://davidwerdiger.com/2023/09/surname-first-name/
This is the conundrum of wealth creator parents: they want to raise children to value the hard work that helped them create wealth, but at the same time pass them wealth that means they never need to work. Talk about mixed messages!
In order to actually do this, one would have to live well below one’s means, and/or withhold access for children to the family wealth so that they can live it ‘tough’ for a period of time until they were deemed ‘ready’ for the wealth. This is not just difficult, it can have serious unwanted negative side effects.
Instead, it might be better to seek to instil the value of ‘stewardship’ within the family: that the family is blessed with wealth, and what comes hand-in-hand is the need for responsible and conscientious management of the family wealth towards a higher purpose than consumption.
One cannot start early enough with the right kind of messaging as attitudes to money and spending are formed as early as age five. Children are often aware of the family’s spending, but don’t always have a view of how much the family saves, invests, and gives back. We can prepare children for a successful relationship with money by telling family stories and talking about values.
Consider This: When did you find out your family was wealthy? How did you find out? Was that experience positive or negative? How does your family talk about wealth or answer questions from children about it?
Original articles: https://bigthink.com/the-present/ultra-wealthy-parenting-paradox/, https://www.fa-mag.com/news/helping-the-heirs-of-super-rich-families-become-global-stewards-69108.html, https://www.jdsupra.com/legalnews/are-you-living-in-the-shadow-of-wealth-6126950/, https://www.morganstanley.com/articles/family-wealth-planning-meaning-of-wealth, https://www.dmagazine.com/sponsored/2022/04/dollars-and-cents-having-the-talk-with-your-children/, https://www.wealthmanagement.com/estate-planning/whose-money-part-1-prepare-heirs
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.
#familyoffice #wealthmanagement #conflictresolution #strategicmanagement
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship
The post Raising Responsible Heirs appeared first on David Werdiger.
source https://davidwerdiger.com/2023/09/raising-responsible-heirs/
Family philanthropy is the act of a collective rather than an individual. It is rooted in the values of a family, carrying forward its name and legacy, and engaging its members.
That makes it about a lot more than just writing cheques. It needs people from multiple generations working together, and that needs to be driven by a purpose and strategy.
Two important surveys indicate that this is not happening effectively. According to a global study, only 30% of family offices have documented strategies to deploy wealth in a truly meaningful way. In another study, 76% of respondents said they are likely to give to different causes and non-profits than their parents, but 82 percent of parents believe that they and their children share the same philanthropic goals!
Sometimes philanthropic priorities are driven by “wealth guilt”, for example fossil fuel dynasties where the rising generation are committed to climate change and sustainability. For some families, their giving can even be a form of reckoning with the source of their wealth. Seeing philanthropy as a rejection of their ancestors’ legacy is very negative.
There are signs of potential conflict and confusion within families over giving priorities. It’s important to get ahead of this by having family discussions about purpose and values, and using this to articulate a philanthropy strategy.
Consider This: What is your family’s philanthropic mission and strategy? How is it communicated within the family? If you don’t have one, how can you get the process happening?
Further reading: https://www.campdenfb.com/article/multigenerational-philanthropy-aligning-family-values-impact, https://www.philanthropy.com/article/wealthy-donors-want-their-giving-to-be-different-than-their-parents-new-study-says, https://www.wealthmanagement.com/high-net-worth/four-lessons-patagonia-founder-yvon-chouinard-giving-away-company, https://ssir.org/articles/entry/the_future_of_family_philanthropy, https://www.jta.org/2022/07/25/united-states/their-fortunes-come-from-oil-heres-how-these-jewish-philanthropies-deal-with-climate-change
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 The Act of Family Philanthropy appeared first on David Werdiger.
source https://davidwerdiger.com/2023/09/act-of-family-philanthropy/
Most families have them, and all families need them. The trusted non-family members who have worked within the family enterprise for many years. In addition to their formal roles, they might be confidantes for family members, and informal mediators and channels for tricky conversations. They know everything important that is happening within the family. They can also serve as a bridge between the family and rank-and-file employees within the family enterprise.
They are not blood or married-ins, but in their own way they are considered “part of the family”. That has implications for how they are monitored, managed and rewarded. Their high level of trust is a double-edged sword – if the relationship with them ever soured, that could pose a huge risk for the family. They may not ever be rewarded with equity, but for some roles shadow-equity or profit share might be appropriate, as well as the opportunity to co-invest with the family. Understanding their motivation to be “part of” the family is essential in creating a suitable package.
Their role within the family should also be acknowledged by giving them a seat at legacy discussions such as strategy and succession. They can provide very valuable input as an external and can say things at the table that some family members may find hard to say, but that need to be heard.
Consider This: Who are the trusted non-family members within your family group? What distinguishes them from other employees? How are they rewarded for their roles?
Original articles: https://www.forbes.com/sites/forbesbusinesscouncil/2022/10/06/involving-your-non-family-executives-in-succession-planning/, https://www.campdenfb.com/article/considerations-family-businesses-recruiting-non-executive-director, https://chiefexecutive.net/for-family-run-businesses-heres-the-key-to-competitive-recruiting/
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 Non-Family Member Roles appeared first on David Werdiger.
source https://davidwerdiger.com/2023/09/non-family-members/
Research indicates that more than 70% of heirs will fire or change wealth advisors after they inherit. Clearly this poses a huge risk to advisors, but it says a lot about how advisors are currently dealing with family groups. It’s also worth considering the risks of this situation to families themselves.
A significant proportion of wealth advisors to family groups do not appear to be engaging with the rising generation, and certainly not taking the holistic and family-wide perspective of wealth that families need. When the wealth is a family and legacy asset, the client isn’t just the incumbent, but the whole family. If the advisor (and their firm) wants to stay in their role for a long time, they need to engage with multiple generations, and be relevant to them and listen to the concerns and needs of multiple stakeholders.
From the family’s perspective, changing wealth advisors can be disruptive and risky. If the rising generation are not part of (and on board with) the family’s long-term investment strategy, they may have a long learning curve when it’s their time to take the reins. Any shift in strategy should happen at the appropriate time rather than be triggered by a change in control. So it’s also in the family’s interest to have a wealth manager that is engaged across multiple generations.
Consider This: What is the involvement of rising generation family members in the family’s investment goals and strategies? What relationship do they have with the family’s investment advisors and/or family office professionals? What would happen to any of these relationships in case of the sudden death of a key family member?
Further reading: https://www.advisor.ca/my-practice/conversations/advisors-must-improve-how-they-work-with-wealthy-families/, https://www.bizjournals.com/albany/news/2022/08/18/what-makes-a-good-intergenerational-wealth-managem.html, https://gulfbusiness.com/how-wealth-advisory-must-be-customised-for-the-new-generation/, https://www.wealthprofessional.ca/news/industry-news/why-advisors-must-work-with-next-generation-of-business-owners/363811, https://www.internationalinvestment.net/news/4034632/financial-advisers-warned-most-heirs-change-inheriting-wealth, https://www.nasdaq.com/articles/help-clients-on-their-life-journey-youll-both-win-2021-01-15, https://www.prnewswire.com/news-releases/64-in-jcf-study-point-to-nextgen-inheritors-lack-of-knowledge-about-their-own-family-wealth-as-major-obstacle-301178504.html, https://www.ftadviser.com/investments/2019/02/05/how-advisers-are-missing-out-on-billions/
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 My Parent’s Advisor? appeared first on David Werdiger.
In a recent survey on family wealth by the Private Wealth Network, nearly 71 per cent of Australian family offices surveyed tried to hide their wealth. David was interviewed in the Australian Financial Review to comment on this and other trends within family offices. The story was also reported in the Daily Mail, and David was interviewed on Libbi Gore’s Disrupt Radio program – Enterprise Breakfast.
The post Why Australia’s wealthy hide their true riches from friends and family appeared first on David Werdiger.
Q. How much extra financial support should we give our children?
A. This is one of the great balancing acts parents need to perform. Too much and kids might end up spoiled or entitled. Too little and the wealth is not there for them when they actually need it (and if it’s not, then what’s the point of it?)
We all have a particular psychology of money, and these attitudes are formed in our early years and deeply ingrained, sometimes on a subconscious level. Children who see parents always fighting about money might end up feeling money is a source of conflict, and find themselves unable to hold on to it. Some wealth creators feel their children should struggle financially like they did because it made them tough and resilient. I’ve used the word “feel” deliberately as these views are more based on emotion than logic.
Warren Buffet famously said “enough that they can do anything, but not so much that they can do nothing”. Given this discussion is about additional support (rather than wealth transition), the bigger risk is around “doing nothing”.
My view is that children in wealthy families ought to learn an important life skill: making financial trade-offs. While at some point in the future, they may not have to, it’s a good thing to know as it’s healthier to treat money as a finite resource.
A financial trade-off means sacrificing some of X to get more of Y. That could mean a better vacation at the expense of a nicer car, or a restaurant dinner at the expense of an outing. Note that you may want policies to ensure your children do not make certain financial trade offs, such as for medical expenses.
It’s also important not to set policies in stone, and continue to monitor (while respecting our children’s autonomy) and adjust as needed.
Consider This: Does your family have formal policies on distributions to family members? How flexible are these policies? Do you have open discussions with children about money and spending?
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 Q&A. How much should we help? appeared first on David Werdiger.
The recent Vanity Fair expose of the Ritossa FO conferences gives us pause to reflect on one of the most important sources of value for families: our networks.
Our networks are a source of deal flow – families like to co-invest and always look to what others are doing. They also are an important step-up for our children – helping them with education, employment and more.
Membership organisations and the event/conference circuit play an important role in helping us curate and extend out networks. While the companies that run these purport to filter who is allowed to join/attend, their due diligence may not be sufficient for family members who attend. Those who are “sell-side” will do whatever they can to gain access to “buy-side” families. And sadly, there are no shortage of crooks and predators in the world.
There is a principle in the security industry: always assume the first line of defence will be breached. And this one from the investment world: don’t rely on someone else’s due diligence (unless your criteria are fully aligned).
I was invited to speak at a Ritossa conference some years ago, and something about it felt a bit funny. I asked a couple of trusted friends (who are mentioned in the article) and they confirmed my suspicions. Phew!
Developing a ‘sense of smell’ takes years. Taking people into our trusted network should be done very carefully, and always considering the risks against the potential gains.
Consider This: What protocols and due diligence processes does your family have for new business and personal relationships? Are rising gen family members educated as to the value of their networks and the risks of networks and relationships being compromised?
Further reading: https://www.vanityfair.com/style/2022/10/inside-wealth-conference-con-man-anthony-ritossas-wild-web-of-lies, https://tfoatx.com/publication/family-office-networks/
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
The post Due Diligence; a sense of smell appeared first on David Werdiger.
source https://davidwerdiger.com/2023/09/due-diligence-sense/
In this article on &Simple, David takes a critical look at ‘rich lists’.
The post Navigating Wealth Beyond Rich Lists appeared first on David Werdiger.
source https://davidwerdiger.com/2023/09/navigating-wealth-beyond-rich-lists/
David Werdiger 