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intergenerational wealth Archives - Page 23 of 25 - David Werdiger

Conflict of Interest

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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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What Next?

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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…

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Talking about Money

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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,…

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Rich kids relying on rich parents

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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…

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Politics and Family

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With the recent US midterm 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…

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Advisor Transition

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With all the talk about intergenerational wealth transition, another very important topic doesn’t get the attention it deserves: transition of trusted adviser relationships. The baby boomer generation of advisers manage a third of all client assets, and they too have retirement plans. Firms need to manage the succession planning of these advisers, and this means both advisers and families need to manage the transition of the relationships. In my family, we’ve had relationships with banks,…

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The kids aren’t interested …

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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…

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Purpose in Retirement

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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…

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What is the ‘value’ of wealth?

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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…

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Intergenerational Altruism

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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…

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