One of the biggest challenges in wealthy families is when/how to talk about the family wealth to children. There are a number of factors to consider: 1. Being aware of other ways children will learn about it themselves, e.g. from the media, direct research, and from friends (it’s a bit like sex education). Would you rather your children find out about the family wealth from reports and rumours that are laden with assumptions? It’s better…
Can you have the best of both worlds? Family businesses have to tread a fine line: they must compete like any business, while also maintaining harmony amongst the family – both those who are involved in the family business and those who are not. There are a few common themes that help families maintain this balance: 1. Trust is essential, and what builds trust are good communication and transparency. Anywhere information is not provided, people…
The term ‘retirement’ evokes a certain scenario: someone spends their working life in employment, accumulating savings along the way, then ceases work (perhaps in their 60s or beyond), lives off their savings and enjoys a life of leisure instead of work. While that scenario may fit for a large proportion of people, there are many for whom it is completely meaningless and foreign. Plenty of entrepreneurs ‘retire’ after a business sale, quickly get bored, and…
Sudden change of any type is risky. When someone’s personal wealth circumstances change quickly, it can lead to all sorts of adverse and unintended consequences. Here are some examples: * after being drafted, sportsperson gets a huge contract * winning the lottery – research shows most lose it * entrepreneur sells business for huge gain * ‘sudden’ inheritance Specialist wealth managers have emerged to support people through such transitions. Once the shock subsides, recipients sometimes…
A ‘family business’ is more than just a business owned and operated by a family. In addition to being a vehicle of wealth creation and entrepreneurship for the family, these businesses can bring other non-financial benefits – known as “socioemotional wealth” or “social capital” – to family members. Being part of the family enterprises brings feelings of pride, personal reward and satisfaction, and can constitute a part of family members’ identity. These additional intangibles are…
While I abhor the “generation wars” narrative that pops up regularly, the article below is about a novel – Boomer1 by Daniel Torday – that captures this generation wars zeitgeist, and tells the story of a frustrated millenial who takes his fight to the internet, complaining about boomers who refuse to retire and make jobs available to those of his generation. The article makes some great points about this ongoing debate, and postulates as to…
A common challenge for family businesses is when the rising generation have no interest in taking over. This can be especially common in sectors like manufacturing or farming which may be considered an attractive or exciting career path for younger family members to join. There are two concerns for the family members currently in control: (a) who will look after the business? (b) who will look after the customers? Both of these are important, because…
As a wealthy family, what is the most valuable thing you can give your children? One sure way to find out the answer is to ask (too often parents don’t bother). According to a Wells-Fargo survey of Millennials, more than 90% of children say they want to inherit their parents’ values, not their wealth. Some 84% want top sustain and build on their family’s legacy. This should be very heartening news for parents. In a…
Philanthropy can be a great way to engage different generations in a wealthy family, and for family members to find purpose where there is no imperative for paid employment. It’s worth keeping in mind the intergenerational differences and trends in giving so that the family giving experience can be as positive as possible. The Blackbaud Institute’s report on the next generation of American giving has some useful insights. Giving priorities differ by generations, but health,…
The essential problem family businesses must deal with is conflict of interest, which arises when people have multiple roles – in the business, as an owner, and as a family member – that can potentially conflict. Thinking about the issues of a family business in this way is a good path to mitigating the challenges they can bring. Establishing explicit rules is a good start, and this article covers several good ones: only put family…
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