Wealth vs Family: An Expert’s View

33:21There's this current of behavior that's bordering on entitlement as a standard in the family. The kids might be jockeying for position, like who's going to be mom's favorite or dad's favorite or who's going to get the top job at the family business. So all of those little flags, we would say, are opportunities for the family to say, okay, let's hit the pause button. We happen to have an assessment that's based on our research of the 3 ,000 families where we can say, what's your likelihood of success based on the three core variables that we know successful families do well? The first is trust and communication.

34:13They know how to have a difficult conversation and have it go well. The second is air preparedness. They have the same standards for what it means to be a prepared air. That doesn't mean they know how to balance the checkbook. It means they know who they're becoming. And then the third piece is we're all on the same page about what our values and purpose is of the wealth, the purpose of the wealth. So we can benchmark a family in terms of the likelihood of success for those three core variables. Once we've got everybody saying, okay, yeah, this I think is worth an exploration, we then bring everybody together for the first family meeting.

34:58And in that meeting, we are not talking about how much they're going to get and when. We're not even talking about how much wealth there is today, or even the different divisions of the company, or what happened in the sale. All of that is asset related. We're talking about how do we have a difficult conversation and have it go productively. What do we mean by this word trust? What do we do when we feel that judgment? What happens when we want to say something to mom and dad, but we self edit? Why are we stopping the conversation? So we do a lot of work on how to become what we call relational Jedis.

35:44How do we get really good at managing relationships because communication is built on relationships. Wealth transition is built on communication. So we have to back it up a little bit and say, how do we speak truth to power? How do we navigate conflict productively? How do we build, manage and repair trust if trust has been broken? And we worked with a family where there was they made quite a bit of wealth. They sold the business. It's a name you might recognize. First generation, three kids, two were in their 30s. One got married. The other was trying to figure out a path forward, working, but not really enjoying his work.

36:36And then the youngest one was playing way too many video games in the basement. And he'll put him at about 23. degree. So we have the first family meeting, the 23 year old doesn't even show up. And so I called him because we interview everybody before the meeting. And I say, Hey, what's going on? And he said, you know, I don't think it's worth it. What's not worth it? I said, he said, every time I show up at a family meeting or in some family conversation, everybody tells me why I can't do what I want to do. Because I'm the youngest, everybody tells me what to do and nobody listens. And then when they do listen, they shoot the idea down.

37:14So I, you know what? I'm good in the basement. I got a great dog. Maybe I'll pick up a hobby, but I'm okay. So not okay with the rest of the family. So I say, okay, come to the meeting tomorrow and let's have a conversation about that. And he said, what? I said, how nobody listens to you. So he shows up, we put him at the front of the room. We say, Hey, if conversations were happening more productively for you and this family, what would that look like? And he said, oh, well, people wouldn't shoot my ideas down or they wouldn't tell me why I can't do things or they wouldn't tell me why what I should be doing.

37:51And then I said, so if there was something you could do right now that you'd like to give it a shot. He said, real estate. And everybody said they did what they do. They said, no way. We've never done real estate. We only know people who lost a lot of money in real estate. We don't have any background in that. We don't even know people in that whole thing. And I go, OK, time out. That's the pattern. So then the spouse at the end of the meeting said to this guy, hey, you know what? I'm in construction. If you want to come and walk around the site, see who you can meet, maybe you can shadow someone.

38:25Come on down. about five years later that kid and his son are doing some really exciting real estate deals together so the breakdown wasn't that he didn't have motivation or that he was entitled that was the assessment that people had about him but it wasn't true people think their assessments are truth and that is really where the division starts to happen so the the opportunity was naming the dynamic and then inviting the family to solve it themselves. We're coaches, not psychologists. There is a really valid place for psychologists in these families. Often that work has to do with the past.

39:11How do we reframe the past? Our work as coaches is very different in that we're looking at what are the skills? What can we now learn that we didn't have in our toolbox before? and where do we want to go? How are those skills going to get us where we want to go? So as coaches, we're not in there doing it for them. We're teaching them how to do it themselves. So that's a big difference. When we work with a family, it's really about skill development more than anything else. Yeah, that's brilliant because I find the same problem in all areas of our lives when we suddenly become, you know, exited founders and we have to deal with wealth and this whole new world.

39:59And of course, dealing with the family also requires skills. And most of us don't appreciate it because we think we have all the skills, but we don't. We don't. And we learn the hard work. But Amy, let's talk about another scenario. So a family in their early 40s and kids are still young and suddenly a company is sold and the father, let's say father, because it's just more typical, is suddenly at home, very willing to be there for the family, very hungry for that kind of connection that he didn't have before. And that usually triggers There's lots of different questions. How do we now raise these kids?

40:47And we feel that responsibility, they are still small. How do we do it right to avoid exactly the scenario you described to me before when the kids are already adults and you have to address it later? What would you tell a family like this in terms of the steps they should be taking? So the steps they should be taking to, let me make sure I understand your question, to reconnect with the children. No, to make sure that the family is not negatively affected by the wealth. And also now we're talking about a situation when both parents, which is very typical for my audience, are at home very willing to do it right.

41:30Yes. But not having the skills from their own past naturally. Right. Yeah. So there's two aspects to your question that's interesting. One is what they're doing. And the other is who they're being while they're doing what they're doing. Okay. I like that. And I think the fundamental piece that kids pay attention to is how they feel when they're around their parents. right and so if mom or dad let's say they built a great business they sold the business and now they're wondering well what's what's my next mount everest right the joy of that pursuit the joy of building up something again um including the kids in those conversations about hey what brings your joy about what's what's exciting to you about what just happened with this business.

42:29So the first step in my world is really having those open and honest conversations about what they now see as possible that they didn't see before. It's almost like treating the kids as adults and taking the money hat off, taking the coach hat off, and having a really honest conversation about, here's what brought me joy. Here's what I'm excited about. This is what I would like for you. So step one is really going for a walk and having an honest conversation where the hearts are facing in the same direction and not so much talking about what you've done or how much money you've made, but the contribution it has been, how it brought you joy.

43:25because in those conversations, you're starting to build a sense of the values and the character that's really fundamental to who these kids are becoming. Sometimes it's useful for families to talk about their parents. What are the values? What drove them to build this business? What are they most excited about? And have a conversation on that level, not on what they're doing. The other thing I would do is I would really look for places where they could start building more skill around how to have good conversations, around how to build, repair, manage relationships. If I had one piece of advice, the number one thing that I see in every family is when there's a bit of tension, people start to distrust the intention of each other.

44:25They start to think, oh, dad doesn't trust me. So I'm not going to talk to him. Or dad thinks, you know, I try to get my kids attention to go out to dinner and they keep blowing me off. So they must not want to be around me. So they distrust each other's intention. And the breakdown there is that it's a false assessment. It's a false interpretation of what's going on. And so when they can look at the tip of the spear and say, hey, you know what, son? I often text and invite us to go spend some time together, but it feels like you're always busy. Do you have any suggestions on how we could spend some time together or what's happening there?

45:08Right. So you name the dynamic. you go straight into the tip of the spear and you say how it is for you here's my experience is there a way we could find a way to spend some time together and uh so i think it's it's talking about what brings you joy i think it's naming the dynamic as a second level piece and then it's building the skill it's learning new conversational Jedi moves that you don't already have in the toolbox. That's probably the trickiest part of our work, Anastasia, is that people come to us and they're already wildly successful. So they're like, well, what do I have to learn about communication?

45:51I'm already an expert. But the truth is, as the wealth grows and the family expands and the kids get older and things get more complex, you need a new skill set. The same money, I'm sorry, the same skills that built the wealth are not the same skills that give it away or transition it. That's a whole different skill set. And the families who successfully transition wealth, ones that do this well, they take the time and make the investment on saying, hey, how can we become a high performing family team? what else can we learn about how we coordinate action together? How do we manage our mood around each other?

46:34How do we manage judgment? What could have us go from being a great family to an even better family, right? So that we have more confidence that this wealth is not going to divide us. Every family that ends up in a divided situation did not take the time to learn these skills. And that's just a fact. Yeah. So Amy, a rather typical situation happens with younger exited founders, because these days, especially in the technology world, we have people who exit in their 30s, and it's common early 40s as well. So these people often want to go back to building, go back to business. And they face a dilemma because they feel guilty that they haven't been there for their children for years while building the first business.

47:28Yet they have this journey to do it again because they're still very young and full of energy and they're interested and maybe their genuine motivation has transitioned to this desire to contribute to the world and it's painful not to. so the dilemma is very complicated and and part of that dilemma also is the fact that these people want to model hard work and the desire to contribute to their kids through work so how would you how would you advise someone like that who doesn't want to go through another stage of not seeing their family for years, but wants to integrate the family life and business in a wiser way second time around.

48:20Yeah. I mean, that really is a question of balance. And the way that we stay balanced is we stay attention. We keep our attention on what we care about, right? So there's this place where I care about building another business that brings me joy. And I learned the first time around that I want to do that in a way that I don't break relationship with those that love me most. There was a 23 year old or 24 year old that said to Warren Buffett, what's the one lesson you really learned through all of this process of building all this wealth? And Warren Buffett said, you know, it's that those who you want to have love you, love you at the end of the day.

49:06Right. And so in those moments where mom and dad are making a decision to go to a board meeting instead of somebody's baseball game, that's the place to go. Hmm. What am I committed to here? What do I really want to take care of? So the wealth may not grow at the same speed, or maybe it will, maybe it'll grow even faster because they're moving from a place of center. They're making decisions on their terms, not in the wild chase for more. We often in the tiger meetings, we'll go around the room and say, what's the purpose of your wealth, guys? What are you organizing around as you're building it?

49:51Nine out of 10 times, they say, making more, right? Making more. That it's the chase of bringing in more money, building a bigger portfolio. That's the purpose. And so then we, the next question you can guess is, well, what's the cost of that? Right. It's nearly, nearly, let me say, I'd say 80 % of the families somewhere in there, there's a conversation where mom or dad are apologizing for not being present while the kids were growing up. we had a family where the the dad said I just you know I don't get why my kids don't want to hang out with me they're they're 28 30 they live next door but I never see them and I said well do you take him on vacation he said yeah we all went to London and I said what percentage of your time while you were in London were you on your phone he said I got it right right and so um it really is it comes down to what am what am i committed to but in terms of the balance between the desire to model hard work and contribution through entrepreneurship and being there for the kids because i think for many people in in our community that's the real question it's not actually the question of making more mindful it's the question of i found my purpose, I want my kids to share the value and see what it means.

51:23But how do I do that if I'm not fully committed? Right. I think really you're asking the question, what does fully committed look like in this family? I interview many kids that have anorexia, that are on medication to manage anxiety and depression that are turning towards technology as an escape. Every one of those kids have worked themselves to the bone, trying to recreate or get their parents' attention by working exceptionally hard. Just last night, had a conversation with a globally recognized physician and he's concerned that his son who works in the investment banking world is working too hard right so how do it's more important to model the balance that's what they want to pay attention to that in the in the place of where the kid there's an interpretation and assessment that the child's not working hard enough that's a conversation because our generation grew up with, hey, shoulder to the wheel, work harder, put in the hours, make it FaceTime, make it matter.

52:45Where today, chat GPT can save people an awful lot of time. There is a way that technology is saving time. There is a way that these kids have learned just by growing up with technology, how to use networks. Many of them work, looks like they're working part-time, but they're in the gig economy and they have four or five different revenue streams. So what does working hard really mean? At what cost? So to balance it, it's really, yeah, mom and dad have to set the standard, but it's also a conversation. Is it about the hours or is it about the impact? And is it about impact or is it about efficiency?

53:30So really having conversations about those aspects, those levers of productivity that I think are really important. So you mentioned that you ask people, in particular in Tiger 21 meetings, about the purpose of wealth. In your experience, those families who are successful in handling wealth as a family, what their purpose of wealth commonly is? Yeah, that's a great question. You know, when we work with families, we get to that point after we've done some work of these skills and we've worked on actual live conversations that the family wants to have using those skills, right? Because we know that unless we're practicing, we're not really learning.

54:19We eventually get to that place where we look at the values and we look at the mission statement for a family. Nearly every family has some of the same pieces. It's education. It's family unity as the purpose. It's generally like caring about the future of where everybody's going. It is philanthropy might be in there. Growing the wealth might be in there. So it's not usually one purpose. It might be a paragraph that has a few aspects of here's what we care about as a family. Then the work is really how are we living that mission? So, for example, we had a family where one of the kids had a child that required special education, an infant.

55:20And she wanted to hire a French speaking nanny so that the mental development would start to expand and they'd learn not just French, but they'd have a better shot at having more linguistic capability. She went back to the family because at this point, when you build these family mission statements, it's not just mom and dad making those decisions. Now the whole family makes those decisions. And she said, I would like a certain amount of distribution every year so that I could afford the French speaking nanny. And the kids all sat back and they said, boy, you know what? We have decided that what education means in this family is that it's accredited.

56:02It's got a fixed amount of time that it's a certain GPA, that it's a coach ticket back and forth. It could be technical, but it's accredited. A French speaking nanny doesn't fit in that. So as far as we're concerned, we don't see that that that kind of education warrants a family funded distribution. And so, you know, maybe this is a conversation she has with her father about how to how to handle this situation. But it's not something that the family says, hey, that's not what we mean by the values of this family. It's not what we mean by education. So the important point that I'm making here is that when you build out this purpose, that you have action items and it's a recurring North Star, you come back to that paragraph to say, how should we make decisions here?

57:00we worked with another family where the mom thought the purpose of the wealth was to put it into a foundation and she said i would love for the kids to run the foundation together and so we said great let's interview the kids and of course one is a fisherman and he works very hard and he is a devout catholic and really uses very little of the family wealth and invests what he does have. His sister, on the other hand, is a volunteer at an LGBTQT facility that she runs and more than happy to use the family wealth and really an atheist. And so those two work together to say, you know what, our values are so incredibly different, there's no way that we could make decisions together.

57:50And so through the process of learning how to have meaningful conversations, how to address some of the tension that was happening in the family, they ultimately realized that what they are both committed to is young people. The son wanted to do missionary work and the daughter wanted to fund suicide hotlines. And so as they explored what really mattered to them, what they cared about, they realized they have very common values. They're just expressed differently. so they ended up hiring a third party to run the foundation but they come together every six months to talk about what they're up to today the daughter got married and she invited her brother to be the godfather of her of her child so it may look like a family is far apart but actually if you really get underneath the trust and communication you find out the values are very similar and then you can start living them by paying attention to them.

58:54So Amy, these successful families, how do they go about allowances? That's really different for every family. In some families, it's a fixed number by taking care of certain chores. In other families, it might be matched. If you save this much, I'll match it. Or if you make this much, it's milestones in other families. Like if you get a certain GPA, you get X amount. If you get promoted in a year, you get X amount. So some families, they'll have a investment portfolio and they'll say, let's meet as a family to talk about how we're investing and how we think about that. And as that grows, I'll match it.

59:44So there's lots of different ways. It's not, it's really something that's best organized from within, as opposed to some model laid on top of the family. And I want to make that point, Anastasia, that many times families will come to us, they've worked with some of the best consulting companies out there, and they've put in state-of-the-art governance. The challenge and why they come to us is that they can't execute the governance because they don't know how to have the conversations in a way that are productive. So it's not like, here's the solution. It's more like, how do we, if you say to the kids, guys, I'd love to incentivize you, what would be meaningful for you?

1:00:29We had another family, what meaningful for them was a trip to Hawaii. It wasn't money at all. right and it usually isn't money to be honest so a very wise man who has six adult children and they have amazing relationships in their family once uh gave me an advice which i uh which i have been using successfully for a few years now with my older kids and the advice was that it's very important to know when you switch from a parent to a mentor and i'm very curious how you feel about that? And do you know, I love the question because a long time ago, my mom, and still today talks about Hayam Janat, a psychologist that she read about while she was raising us.

1:01:19And the mantra was treat your kids as adults. And so for us, it's useful when When you can name the hat that you're wearing as your mother, I'm going to say this as as a advisor. I'm going to say this as a friend. I'll say this. And so naming the hat that you're wearing is a really powerful way to align the relationship or create a context there. So in families where the children work in the family business, important especially for the parents to be able to say, hey, as the business owner, this is the way this needs to be. As your mother, I'm concerned that you're not showing up on time. What worries me about that is the identity that you're creating.

1:02:14But that's speaking as your mother. as the head of the business. Hey, you're late to another meeting. We're going to have to dock your pay. So it's a different conversation depending on what hat you're wearing. But naming the hat is important. I like that. That's really cool. I'll use that. Okay, good. So you've mentioned mission statement as something that you consider very important. How should families think about mission statements and why is it important? Well, the way to think about them is that they should be based on the family values. So a mission statement is not unlike a mission statement for a family business.

1:03:04This just happens to be for a family. So it creates the North Star for how the family is going to make decisions. It's built on everyone's values. For us, that process is actually two days. We spend the first day on five core areas, psychology, intellectual, financial, social. and I can't think of what the other one is, but there's these five core values and we invite everyone, spouses, the most of our families, the kids are over the age of 16 minimally, but each person has an opportunity to answer some really great questions in these five domains to learn how they see the world, to express what matters to them in those domains.

1:03:59And when the whole family hears it, they start to build a strong foundation of where the common areas are. Honestly, 99 % of them are common. They're just expressed differently. So then they build this mission statement based on those values. And then that key piece is, okay, great. We've got this beautiful mission statement and here it is on a beautiful color image. What are we going to do? How are we going to live it? So as I said earlier, a lot of families will put family unity in their mission statement. Then it becomes a question of what does that mean? How are we going to live family unity?

1:04:42I've heard everything from, hey, no more criticism in the family. Criticism is unacceptable and it's not going to happen. To we're going to take a wild vacation every year and each of us are going to have a chance to name where we're going to go paid for by the family so then it becomes great does that mean nannies are included who pays for the nanny does that mean um is that money coming out of the trust fund or is it funded independently what happens if you can't stay the whole time is it obligatory what happens when we're there do we have to show up for every family dinner or is this something so how do we actually live what we're trying to create and if you listen all of those questions require a certain amount of skill to coordinate action as a family how do we speak truth to power how do we have my voice heard How do I carve my own path inside this family?

1:05:47Brilliant. We have a program that we're launching now. It's called the Next Gen Leaders Program. And it's pretty exciting because in this instance, we're working with just the next gen across multiple families. So they're able to have these conversations about who am I, who am I becoming? Is my voice heard? how am I carving my own path? How am I leading the company differently from my father? How am I creating a name for myself? How do I invite others into that vision? Those skills that we teach with families are super important, but when we bring the kids, the next gen together, and they have an opportunity to learn from each other without the influence of mom and dad in the room, it's an extremely powerful opportunity for them to gain those skills and to build their own network with other wealthy next-gen family members.

1:06:48I think it's a great idea. So it's a group exercise. Yes. Yeah, brilliant. I love it. When we do it with families, we include the spouses and the kids over the age of 16. It's very powerful practice for them. It really, it sheds a light on the values that have created the wealth. What's different is before this process, those values were operating in the background. But once we identify them, now we can name them, we can observe them, we can manage them, we can have conversations about them. And that is really what makes the difference. Amy, what are some of the most common and the most dangerous mistakes that people do?

1:07:34Great question. You know, I think the most dangerous mistake is not talking about the fact that you're wealthy. That cat and mouse game of hiding it only builds distrust over time. I think the second mistake is people talking about how much money they have before there's a strong relationship that's built. Because once that cat's out of the bag, it's very hard to put it back in. Honestly, I personally don't think that they need a number. I think they need a neighborhood, you know, maybe to say, yeah, we have generational wealth here and it's a big opportunity. And then I would say to them, hey, what does prepared look like to you for you to have a sense of how to contribute to something like this?

1:08:38What do you think is important? so that leads me to the third mistake is is not asking the next gen questions right so they come to you and they say hey how much money am I going to get and when am I going to get it that's the moment to say hey that's the wrong question how do you flip the question and how do you see you could be a contribution here? I would say another mistake is focusing on being right, not being in relationship. So if you look at the construct of conversation, when mom and dad come across as certain, that will usually drive the next gen into pretense. Like it's not worth the conversation here.

1:09:35Like the kid who didn't show up for the family meeting, they just sort of give up and they quit and they just, the relationship gets further and further and there's less and less opportunity for meaningful conversation. The only way to shift that is to go into a conversational space where you're asking questions. You're curious, not critical, right? You're asking about perspectives. Why does that matter to you? Tell me what's important. What am I not hearing that you want me to hear? And when mom and dad can shift from certainty to getting into this place of exploration and curiosity, then we have a whole different conversation happening.

1:10:20Then people feel like they matter and they feel like what they care about matters. That is a whole different conversation that leads to a level of connection in families that's heartfelt. Do you feel it's important to have regular scheduled meetings for the family? I do. I think they should be annual for sure. The mistake families make is that those meetings are one direction, top down, and they focus on assets. They don't focus on the people or what people really care about. To build a good family meeting agenda, I would interview each family member and say, hey, if you were going to lead this meeting, what would you want to make sure is on the agenda?

1:11:08So the mistake is the conversations are in these family meetings are one directional and they're too focused on assets. Amy, thank you so much. This has been so amazing, really, really valuable. Is there anything else you feel you would love to share with my audience that maybe we haven't touched upon? You know, if you were to ask me, what's the common theme that allows families to shift from being uncertain about the impact of wealth on the family to having more confidence or trust that it's going to go well? It's that they've learned the skills to have conversations so that they can trust themselves in the conversation.

1:11:56In other words, these skills become embedded and part of a new fabric so that when they're in that place where they feel obligated to do something or take some action or pay for the Uber or to say yes when they want to say no, they have a toolkit available to them that lets them say, no, actually, I'm not going to go to the board meeting. I'm going to go to the game. so they've learned how to trust themselves to manage the relationships from a place of care yeah who they are becoming who they are being for their family members is a bigger conversation than what they're doing amy are there any books or people to follow besides you obviously and and I will include links to all your work, that you would recommend to people in our situation?

1:12:55You know, there are so many great books out there, and there's new ones being written every day. I really, I do think that obviously our book, Bridging Generations, is one of the best because it gives actual family examples, and it talks about ways families can start to manage these conversations, they can get them started on their own. Um, there's one, there's a number, Jay Hughes has done some great work. One of the Bibles for him is family wealth, keeping it all in the family. Uh, his, I think that book is one of the best out there. Um, he also wrote another book called the complete family wealth wealth is wellbeing.

1:13:46I think that's, that one is good. A long time ago, a guy named Charles Collier wrote a book called Wealth and Families. And I know that's one of the early books right out there with preparing heirs from Roy Williams. So I would take a look at some of those, but there's enough out there you can find. they're all good the the yeah that's the problem they're not all good they're not all good it's never the case right i suppose they're better than others we're not we're not going to read dozens but um it's very helpful hearing from you which ones actually are worth reading this is very helpful my favorite part about doing these podcasts is our work um what we love about this work is that we have the opportunity to keep great families together so that their wealth can be a force for good in the world.

1:14:47And the fact that families are increasingly reading about this, how now that I've done this great work of preparing assets for the family, how do I get educated on preparing the family for the assets? To be proactive in that conversation is vital. And it's I'm so grateful for the opportunity to be able to speak on that level. If one of your listeners gets proactive about how to prepare their kids, I know we've done good work here. No, absolutely. Amy, thank you so much again for your time and sharing your wisdom so generously. You're very welcome. Thank you. Thank you for the opportunity.