As we enter the third year of this pandemic, it’s worth reflecting on the theme of resilience.

By retaining their long-term view, family businesses have been able to not just weather the storm but also grow and thrive. Their resilience comes from other factors as well: the entrepreneurial spirit of innovating in times of crisis, and the emotional and social bonds that exist both within the family and within the wider family business group and its stakeholders.

These strengths of family enterprises are built on a foundation of shared values and good governance. As it becomes clear that we are not yet ‘over’ COVID, it’s important for families to remain vigilant and keep these foundations strong.

While they differ significantly in terms of scale and scope, it’s interesting to contrast the response of family enterprises with that of countries. For every new COVID variant, existing policies are quickly overturned and new policy is developed on the fly. Many countries have also seen an increase in social unrest and polarisation in response to government decisions. In the absence of strong shared national vision, this is inevitable in times of such stress.

Consider This: Has your family formally reflected on the impacts of COVID? In what ways has COVID shown up resilience (or lack of) within your family?

Further reading: https://www.vaughantoday.ca/a-report-reveals-that-family-businesses-have-weathered-the-epidemic-better/, http://www.campdenfb.com/article/family-business-valuable-model-resilience-extraordinary-times, https://www.worth.com/family-owned-businesses-thrive-crisis-covid-deloitte-private/, https://www.scotsman.com/business/how-family-businesses-can-deal-effect-coronavirus-2896231, https://www.forbes.com/sites/robertglazer/2020/04/01/covid-19-will-permanently-change-the-way-every-generation-lives-heres-how/#1844e046493b

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 
#successionplanning #workfromhome #governance #leadershipdevelopment

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Financial advisors are an ‘old’ bunch – with an average age in their mid-50s and a big bulge of advisors now in their 60s and 70s. If that didn’t already pose a risk to their clients, the COVID-induced recession means that many of them will leave sooner than expected – either by choice or otherwise – and may choose to retire completely in the current economic environment.

Merrill Lynch, perhaps in response to both issues, is seeking to shift the age balance of its advisor ranks. Certainly larger wealth advisory firms are in a better position to develop succession strategies for their advisors than smaller firms and sole practitioners. But that doesn’t mean they are doing so, or that they are doing so well.

Some 37% of financial advisors in the US are expected to leave this decade, and they represent about 39% of wealth managed by US advisors servicing the retail market.

For families, this is a mix of key person and supply chain risk, and needs to be on the agenda.

Consider This: What are the key advisor relationships for your family? What is the plan if one of them leaves, retires, or falls ill with COVID? Has your family considered these risks for all categories of advisors?

Original articles: https://www.investmentnews.com/merrill-lynch-next-generation-advisers-succession-planning-193904, https://www.wealthprofessional.ca/news/industry-news/coronavirus-crisis-puts-advisor-succession-planning-in-focus/329694, https://www.cnbc.com/2019/10/29/financial-advisors-need-succession-plan-to-benefit-clients-and-firm.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 
#successionplanning #workfromhome #governance #leadershipdevelopment

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During a crisis, having a family business can be a double-edged sword. On one hand, there are often family elders with experience in overcoming previous recessions, support from the family unit, and the fact that family businesses tend to be more risk averse and therefore in a better position to weather the storm.

But some of those very attributes can also manifest as weaknesses. For example, family businesses have a concern for a wide range of stakeholders, including employees and customers, rather than a single-minded focus on shareholder value. Also, family tensions brought to the surface under pressure can often expose underlying stress fractures and exacerbate conflict in relationships, which may lead to more divisiveness.

How to capitalise on the strengths and avoid the weaknesses?

• Be in regular communication with all stakeholders and be extremely open – this builds trust
• Draw on family leadership, shared values, and governance
• Be open to learning from others, e.g. military approaches to VUCA (volatile, uncertain, complex and ambiguous) environments

Consider This: How has your family business responded to the COVID crisis? Has it shown resilience or weakness (or some of both)? Have you considered what family members can be doing to help (aside from specific operational matters)?

Original articles: https://www.forbes.com/sites/francoisbotha/2020/03/31/family-business-challenges-the-3-issues-families-cant-ignore/#664087f23cf4, https://insight.kellogg.northwestern.edu/article/family-business-coronavirus-crisis, https://hbr.org/2020/05/what-family-businesses-can-learn-from-the-military, https://hbr.org/2020/05/4-tensions-in-family-businesses-and-how-to-work-through-them

Actionable Generational Wealth Succession 

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 
#successionplanning #workfromhome #governance #leadershipdevelopment

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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 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

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
#successionplanning #workfromhome #governance #leadershipdevelopment

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With the 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 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

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 #successionplanning #workfromhome #governance #leadershipdevelopment

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When family wealth is controlled or owned by a single person (usually the wealth creator), things are simple. But at some point, the wealth will likely pass to more than one person – the wealth creator’s children. In respect of the family wealth, the members of the family are bound together through three circles of involvement: family, business and ownership. That adds a huge degree of complexity, as no decision gets made in isolation.

Strong governance establishes a process for decision-making and conformity within the family. Clearly defined policies and processes for governance, in line with a formal family vision and mission statement, can reduce the potential for conflict.

Family governance can also focus on strengthening the non-financial capital within the family – working on these can ensure it’s not “all about the money” (because usually it isn’t anyway).

For some families, there may be an advantages to separate ownership and management. This can ensure the sustainability of the family business and wealth through its management by professionals with the diverse skills needed. The family members govern (set policy, monitor), and others manage.

There is an emotional side to effective family governance which is often overlooked by the first generation. In order to be effective, family governance needs to take into account all interested family members in the planning process and to be consistent with the existing family culture which is likely to have evolved over multiple generations.

Consider This: Who owns and controls your family’s wealth? Who will own and control it in ten years? How many ‘hats’ (business, family, owner) does each family member wear? Are you aware of the diverse interests and aspirations of each family member (across multiple generations) in respect of the family wealth?

Original articles: https://www.bizjournals.com/sanantonio/news/2020/04/27/effective-governance-strengthens-family-unity-and.html, https://www.forbes.com/sites/francoisbotha/2020/04/29/the-importance-of-separating-ownership-and-management-3-steps-to-get-families-started/#f7efd62655b1, http://www.campdenfb.com/article/carlos-arbesu-governance-and-succession-family-business-boards, http://www.mondaq.com/jersey/x/873496/wealth+management/Avoiding+rags+to+riches+in+three+generations+family+governance+in+the+Middle+East

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 
#successionplanning #workfromhome #governance #leadershipdevelopment

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Most wealth is created through entrepreneurship: taking a risk to start a business, and growing that business. Some families with generationally “old” money (i.e. more than 3-4 generations removed from the wealth creator) may have their family wealth in passive assets, and the entrepreneurial spirit that created it is long gone from memory, sometimes irretrievably lost.

For families that hold (or acquire) operating assets, it’s important to maintain that entrepreneurial spirit in subsequent generations, but that has its challenges. Rising gen family members born with spoons in their mouths often don’t share the hunger (or need) of wealth creators.

To do this, families need to tell stories of the bad times as well as the good, and create space for rising gen family members to become entrepreneurs of their own, rather than being in the shadow of others (external mentors can often help). Operating assets, especially those held by the family for a long time, need the governance that can facilitate regular strategic renewal (which may need entrepreneurial thinking) to ensure their long-term survival.

Consider This: Do family members know the story of how the family wealth was created? When was the last time an operating business you own did some serious strategic planning? Has anyone assessed whether there is “stale thinking” in the family business leadership?

Original articles: https://hbr.org/2020/05/is-the-next-generation-of-your-family-business-entrepreneurial-enough, https://www.stamfordadvocate.com/business/article/5-Factors-for-Planning-Your-Entrepreneurial-Legacy-15204834.php, http://entrepreneurship.babson.edu/barber-family-entrepreneurship-journey/, http://entrepreneurship.babson.edu/the-power-of-the-entrepreneurial-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. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#successionplanning #workfromhome #governance #leadershipdevelopment

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When it comes to advisors, I have two simple rules:

1. Get good advisors
2. Listen to them

Family advisors need additional skills because they must work with the various members or governance structures of a family, and key people & structures may change with time. They need to know about communication, in order to help the family members themselves communicate well.

They need to understand family dynamics, and get to know the ins and outs of the families they deal with. They may need to act as facilitators of family discussions and formal meetings, to help the family develop the ability to have open discussions and make collective decisions. To do this effectively, they need to be independent, and have the ability to say things that the family needs to hear (even though they may be difficult or confronting).

They, or their firms, need to be able to talk to multiple generations within the family, so as to maintain a parallel transition – as generational control passes within the family, the advisor relationships may also change. As part of that transition, it may be helpful to bring younger family members into advisor discussions.

In addition, they may want to be across emerging trends like impact investment, cybersecurity, and online reputation management.

A family advisor is so much more than a wealth manager, or the family lawyer or accountant. It can be rare to find all the skills needed in a single individual.

Consider This: Do you have an independent family advisor? Are you able to discuss anything the family needs with that person? Does that person have a relationship with multiple family members or across multiple generations? When did you last do an audit of your advisor relationships to ensure they are meeting the family’s needs now and in the future?

Original articles: https://www.forbes.com/sites/francoisbotha/2019/10/18/the-top-5-new-generation-advisors-every-family-office-needs/#586314691369, https://www.investmentnews.com/article/20191118/FREE/191119941/ria-consolidation-could-put-2-4-trillion-in-play-over-next-decade, https://www.ftadviser.com/your-industry/2019/11/29/advisers-urged-to-include-clients-families-in-meetings/, https://www.fa-mag.com/news/the-ultra-wealthy-prefer-multi-family-offices-to-wealth-managers-53825.html, https://www.forbes.com/sites/dennisjaffe/2020/03/18/family-wealth-advisors-need-skills-in-family-dynamics/#34154180ecb2

If you are a business owner, lawyer or accountant to them, my advisory services may be the perfect match to navigate the tough decisions in strategizing #intergenerational relationships.

There are a number of use cases where I have worked with families that may be adjacent to your practice. Let me help you:

· help family develop shared vision, charter etc
· mediate family conflict management
· mentor rising generation
· coach family through the emotional side of business sale – before, during, after
· help family businesses with ‘soft’ aspects of succession planning

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For years, we’ve been writing and talking about this trillion dollar wealth transition that is “going to happen in the next ten years”, ostensibly as baby boomers retire. But has it happened? The fact that we’re still talking about it as “happening” says plenty.

We need to ask: why were the predictions of so many people incorrect? and more importantly, what (if anything) should we be doing differently about it?

I’ve written previously about the “two speed” state of wealth – splitting by value rather than by number. Broad aggregate statistics do not tell the whole story. There are millions of relatively ‘small’ wealth transitions, and a much smaller number of very large wealth transitions. Within each ‘wealth band’, they work very differently.

My view is that one of the biggest impacts is increasing life expectancies. People (particularly those in business) don’t retire at 65; they can often continue to be productive for another 10-20 years or more. By that time, there may be two (or more) generations who are active in the family enterprise.

This can leave the rising generation as ‘waiters’ for a lot longer than they used to be. Does anyone want to be handed control of the family enterprise or inherit significant wealth in their 60s? Think of Prince Charles – born and raised to be king, and now 73 and still waiting for his turn.

With longer life expectancies, it’s time for a rethink on what intergenerational wealth transition actually means and how it should work. More on this theme to come in future newsletters.

Consider This: How old is the ‘rising generation’ in your family? Is your own family’s wealth transition plan on track as envisaged ten years ago?

Original articles: https://www.marketcurrentswealthmanagement.com/succession-planning-the-impact-of-skipping-a-generation/, https://www.washingtonpost.com/opinions/we-need-a-major-redesign-of-life/2019/11/29/a63daab2-1086-11ea-9cd7-a1becbc82f5e_story.html, https://www.denverpost.com/2018/07/15/improving-investor-behavior-longevity-and-the-fear-of-running-out-of-money/, https://www.heraldpalladium.com/features/generational-interdependency-has-grown-as-we-continue-to-live-longer/article_6b65e6e9-f9c2-5505-a9ac-c9f549092c9d.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 
#successionplanning #workfromhome #governance #leadershipdevelopment

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One of the great challenges of family wealth is raising children. And one of the best articles I’ve read on the topic (and I read a lot of articles) is the first link below, and I urge anyone for whom this is an issue to read it in full.

It’s very important to be aware of the unintended consequences of our beliefs about wealth and the messaging we convey to our children about them. How we treat our children can often become a self-fulfilling prophecy.

For example, if we are fixated on controlling the family wealth for fear that our children may lose it, this conveys the message that we do not trust our children, and that can lead to them not putting sufficient trust in themselves to become good custodians of the family wealth. If we fear that wealth is toxic and can spoil our children and therefore we seek to hide it from them and not talk about it, that can lead them to pick up on the negative feelings and carry shame about being wealthy.

For most every vicious cycle, there is a corresponding virtuous cycle. If instead, we trust and empower our children, that in turn can lead to positive attitudes around the family wealth, which in turn can help them develop into effective custodians and contributors to society.

Consider This: What messages are you sending to your children about family wealth? What messages are you getting from your parents about family wealth? Have you ever sat down and shared this (now might be a good time)?

Further reading: https://www.forbes.com/sites/dennisjaffe/2021/11/03/a-guide-for-passing-down-your-wealth-harmful-and-helpful-assumptions/, http://www.campdenfb.com/article/did-great-great-great-grandpa-have-ipad-how-teach-your-children-wealth-responsibility, https://www.kiplinger.com/article/retirement/T065-C032-S014-raising-wealthy-kids-to-be-socially-responsible.html, https://qz.com/293849/how-baby-boomers-ruined-parenting-forever/

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 
#successionplanning #workfromhome #governance #leadershipdevelopment

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