This week I was privileged to be invited to a lunchtime speech by David Lansky of the Family Business Consulting Group. Lansky is based in Chicago, but being a Montreal native, the good folks at Pembroke Private Wealth Management invited him to speak to their clients in Montreal and Toronto.
His presentation was entitled “Family Wealth Continuity”, and I went into it fully expecting to nod my head up and down throughout, and he did not disappoint. I am not a big “note taker” when I attend presentations, preferring to be fully attentive lest I miss something while I am jotting stuff down.
Occasionally though, someone will say something that I just have to write down, and then it almost always gets turned into a blog post.
So here is, from page 10 of his Powerpoint deck:
“What benefactors most want…they also most fear.”
Wow. I had never heard anyone put it that way. Let’s walk our way through this a bit.
People work hard to create wealth for their family. We all know many families who have done an extraordinary job of doing just that. We don’t often ask them why, because the answer seems so obvious.
They work for their wealth so that their family can be happy, have nice things, live in a safe place, go to nice places, have access to great healthcare, and lots of smiliar reasons.
They want their children to have a great life, and very often they don’t want their kids to have to work as hard as they did.
So far, so good. Somewhere along the way, though, especially in families who have done a really good job of creating more wealth than they could ever use in several lifetimes, some doubts creep in, and these parents start too worry about leaving their kids too much money
This brings back a memory of a great quote I recall from a CAFÉ Symposium a couple of years ago. Mike “Pinball” Clemons, a CFL Hall of Famer and winner of Grey Cups as both a player and head coach said, “Make sure that your family members are the beneficiaries of your family business, NOT its victims”.
Sometimes there is “too much wealth”, sometimes there are disputes between family members, sometimes both of these things are present, along with a host of other complicating factors.
Unfortunately, the fact that wealth can be a blessing or a curse will always be with us.
I have been running several questions through a model that I am working on to help explain and simplify things, and its basic elements are What, Why and How.
Allow me to try to demonstrate not only my thoughts on this important topic, but also use the three-stage model.
We start by looking at the What, i.e. what we are trying to do, in simple terms. We are trying to pass our wealth down to our children.
Now, we need to step back and ask ourselves Why we want to do this. So we talk about the things I mentioned off the top, having nice things, living in a nice place, making sure our kids don’t have to worry about money, etc.
Now comes the hard part, the How. At this point we have to look into the future and step forward and figure out all of the details around How we can do What we want to do, and have these details be aligned with the Why we want to do them.
My main point is that families can and do pass wealth down to their children without the fear that other families experience.
The major difference with the families who do that well and many others is that they are very careful with the How, and they take the time to talk with the entire family about the What, and the Why, and the How.
It is not always easy to have these critical conversations, but having them is what separates the successful families from the ones where the fear is justified.
It can be done, but it doesn’t just happen by itself. But then again, nothing important ever does.