Transition of Wealth

Embracing Change with Feisal Alibhai

In this episode, Feisal and Steve discuss the transition of wealth using an “all and nothing” approach, and what are some things that all parents strive for as they imagine the inheritance they will leave for their children.

About Steve Legler:
Steve Legler is a family legacy guide and advisor who helps families turn their dreams into a workable plan, using a step-by-step method to get everyone on the same page and ensure that the wealth transition goes smoothly and the legacy continues.
Steve is a proud FEA Designate (IFEA) and holds ACBFA and ACFWA certifications (FFI), in addition to having an MBA (UWO-Ivey) He is also a CFA charterholder (CFA Institute), and the author of Shift your Family Business (Friesen Press, 2014)

Alright, hello everyone. Welcome back to the webinar series of bracing change. This is pre recorded unlike all the other ones we’ve done so today is our first and then we have Steve Legler all the way from Montreal, Canada. Thank you Steve for being with us. And I know it’s pretty funny for you and evening for me so I had my dinner I don’t know if you’ve had your breakfast but and then obligations exit Thank you very much for taking the time.

Thank you for having me. So, I have my breakfast. I’m having my coffee.

Alright, sounds good. So you’re ready and fully charged. So Steve is a second generation family business member. He joined the business and shortly thereafter, there was a sale right? Do you exited the business? And then a family office was created of which Steve was either designated or volunteer to take care of management of awareness that your dad went and started to choose to do something different. And from there, life took a few turns and today you are the founder of family legacy guide and my family advisors to various families in North America and financial incorrectly. And so today, Steve, it’s okay with you. We’re gonna talk about the transition of wealth and money. What does that mean? You know, to begin with, right, and what are the different options that you’ve seen, as you’ve been there to advise families with that topic of what do I leave something nothing? And if so, how much and how do I do that? I know it’s easier said than done. So I’m sorry. What is transitioning?

Well, first off, I want to say thank you for using the word transition. Too many people use the word transfer to me, like if you say, Oh, you got to transfer me some money. I’ll do a few clicks here with that and boom, have transferred it and like tomorrow morning it’s in your bank account, which is more of an instantaneous transaction. And too many people I think, too many families, other advisors think of this subject as well, today, Mum and Dad own wealth, and then at some point, probably after a funeral, then the next generation will own the wealth and we’ll go from 100 zero to zero and 100. And I think that’s the worst way to think about it. And I think transition is a much better word, because it’s it has a connotation of a more gradual of a more process of a longer period of time, which is what I always try to advise my family clients is don’t try to do this quick. Take your time with it. And if you can have let’s just ignore the the financial part, but let’s talk about the leadership and the management of the business or the family office. If you can have the younger generation start to assume a role and the older generation start to let go some of those responsibilities and then gradually over months and years and perhaps even decades, that that flips from this way to that way as opposed to the transfer then that’s usually better because it allows you have to learn from each other learn to cohabitate, learn to manage at the same time, gradually adjust and do all your little trial and error on every monthly basis of how this is going and adjust so that when you look at this later in the rearview mirror, you can see that okay, and that year, you know mom and dad started to let go of this responsibility and JR and Susie came along and started to do this and then eventually those things across just like they do in our lives. Right when you were born, your mother changed her diaper. At some point. Your mother might need diapers and you will probably be paying someone to take care of her so but that doesn’t happen. You don’t flip from one up one down overnight. So why should the transition of the wealth be any different that this should be a gradual thing? And so whenever you can do to make it more slowly but surely let’s get there as opposed to Okay, Friday, I’m leaving the office on Friday. I quit. I’m never coming back Monday you come in and you’re the boss and nobody knows who you are. But let’s just start with you. It doesn’t make any sense.

So what I’m hearing is slow and steady wins the race. It’s gradual, its transition quantitating you know, one one day at a time, but at the same time, it is still a transition of actually doing that. Now, again, some are choosing not to give some are choosing to partially give and some are choosing to give it all right. So what are you seeing and what seems to be working and I know people saying well, it depends on the DNA of the family and you know, all of that. But let’s let’s get, you know, maybe with examples, right

of what you forgot one, actually, and this is one where the younger generation actually buys the business. And that’s, that makes sense when there’s an operating business, if it’s past the point where there’s an operating business and it’s family wealth, it’s it’s harder to have somebody buy a portfolio so that their siblings don’t have it or whether it’s an operating business. And I remember when I was working for my father, it was like I was I didn’t want to buy this business. I wanted to get it for nothing. And I never realized until much later that there’s a lot of good reasons why that doesn’t make sense, especially in situations where there are several offspring. Don’t use the word offspring rather than children. Because children is fine when their age is in single digits or in the teens. But once they get 20 something I don’t like to call people children because then that that moniker usually sticks, and then they become the children when they’re in their 50s and 60s and you’re dealing with parents in the 70s and 80s. And I’m talking about the kids, the kids but the kids have their own kids and maybe even their own grandkids. So it’s perfect calling. So when you have several offspring, and not all of them are going to work in the business. There are a lot of reasons why it makes sense to have those who will be running the business to buy the business from their parents. They’re not going to buy it typically at the same 100% 100 cents on the dollar that if the parents sold it to an external buyer, right, if your business is worth $10 million, that you could sell it, and now your son comes to buy it, you’re probably not saying well give me the $10 million. There’s usually some kind of family discount involved but there needs to be some sort of skin in the game where these particular offspring among all of them are making this choice and putting something down to say I want this. I’m investing in this I’m going to take care of this as opposed to the one who never had anything to do with the business. They walked in the front door no one would even know they were related to the owners. Those people don’t have the same blood, sweat and tears claim on the business. And so there are reasons for treating your offspring differently. And there always are and there always will be now you still want to treat them equitably. But that doesn’t equal and fair is not the same thing. Okay, so there are ways so so that was a little sidebar about the part about our function about Yeah, now the leaving everything is typically I think the way most people are playing and I know we hear stories about these billionaires with the giving pledge and they say they’re going to give away half their money to charity and all that’s pretty big. And you hear about people like Bill Gates say I’m not gonna I’m only gonna leave my kids a million dollars and all the rest is gonna go to charity. And for them, that’s a nominal amount, the million dollars for a lot of people that would be a lot and for Donald Trump who keeps saying he got a small loan from his parents, but I don’t want to talk about him anymore. He’s hopefully yesterday’s news. No, I think what you’re getting at is that I look at this more from the parents point of view. And what are your offspring capable of handling and do you? Are they ready to be stewards of everything that you’ve created? Because that’s what often happens is usually with the Creator generation, sometimes with the next generation who has grown and even bigger, they end up with a lot of financial wealth. That entails a lot of responsibility and stewardship. And then they worry that the offspring that they’ve raised may or may not be well prepared and ready and want to now continue taking care of all that wealth that come that they will be inherited. And so they often try and with with good intention, and getting advised by people who are, who are well paid and well trained to do this to say, Oh, well, you can’t just make all that money for your kids. They’re gonna do it. So you need to create this kind of trust or you need to create this so that they don’t screw it up. But you have these parents who are saying, I don’t want my eldest well to screw up my kids and I don’t want my kids to screw up all the wealth. And so they look for solutions. And they go to their lawyers and their trust people. And they all say, Oh, well, I have a hammer. So everything I see looks like a nail and I know how to take care of these issues. And we create these legal structures so that your kids can’t blow their mind. Okay, fine. Parents see that and say, Well, this is what they’re telling me and and then of course, that advisor says, you know, Bob Jones won’t the big company there and the other guy across town, you know, that’s why I did the same thing for them. And if it was good enough for them, it should be good enough for yourself. The parents who don’t really know what they should be doing or could be doing, they follow the advice of these experts, and they go and they do what people this is best practice. This is what people do and I think that that’s kind of backwards in many ways.

And that too much work is done to prepare the assets for the offspring, but not enough work is done to prepare the offspring to receive the assets. And that’s where I like to focus my attention is on what are you doing with your offspring to help prepare them to assume the roles that you know that they could very well be playing someday? And if you have this many assets, and your offspring are prepared to receive this many assets, you’ve got an issue. And if you can prepare your offspring to receive whatever, you’re in a much better place. So too many times I’ve seen this where parents are so focused on working in the business and making the pie as big as possible. They don’t get to the point of their life where the switch flips and they say, Okay, wait a sec, this pie is big enough. I really got to figure out how am I going to transition this pie to the people telling me Hi. And I should switch my focus and my efforts to making sure that that is taken care of rather than saying, Well, you know, if I’m going to leave my 100 million dollars, they can’t possibly blow that and they’re like, fine, so so maybe I’ll work to make it 150 or 200. Well, it’s not the amount it’s not the number of zeros after the dollar sign that makes a difference. It’s how well prepared, the people are to follow through they want to are they able to do they care? And that’s the part that gets neglected. And these people come to their lawyer and they say, oh, you know, when they talk to they limit one of their children, and they’re referring to them as children because they’re less capable and they’re certainly went down. Oh, you know, my son just did this again or whatever. And so they are preparing those experts to even go further into making restrictive structures for them. And that sort of compounds it and I’m trying to, I know this kind of message doesn’t resonate with all families, but for the ones for whom they’re actually looking for this because it is that they do trust the ones that they gave birth to that they are now raising. I think more people should be looking at the human side of the wealth transition as opposed to just the financial.

Alright, so let’s get tangible. So why don’t you help us share three to five things that you have families begin to or mandate to write politely, that helps them prepare from the human side, right to manage and be prepared to protect, manage, and maybe grow wealth.

Well, the simplest, and when I say simple, please note that simple and easy are not synonyms. And so when I say it’s simple, that doesn’t mean it’s easy to do. However, if you ask me for one thing, that families who have done this well have instituted as a regular thing that they do that others who are not successful, I’m not. It’s having regular family meetings. And when I say regular family meetings, I mean meetings of the family, where the main point of discussion is the family and the well being of the family, and where that family and the humans who are a part of that family of their own individual individuation and maturity and finding their own path where those are the subjects that people and how the family’s wealth or business impacts the family. And so you have a lot of often, some of the people working in the business and there’ll be tempted to talk mostly about the business and it is important for the ones in the business to share with the ones who are not in the business so that they understand are a little bit more current with what’s going on in the business. Because often there’s this information asymmetry problem where you have the ones in the business know everything and then they come to the family dinner and they’re talking about the business and everyone’s gonna they all they got. You need to have at least occasionally, hopefully quarterly at least a meeting with family gets together and talks about family stuff and checks in on each other as family where they also talk about the relationship with the businesses, the business doing well. Is the business not doing well. Is there anything the family can do to support the business when it’s not doing well? Do we have to expect less dividends? Do we have to can we go in and help in some way that this there’s just there needs to be a forum a regular forum whereby the family comes together and allows this discussion to take place. Now, at first it kind of feels awkward. Why are we doing this? And some of the quieter members of the family especially if they’re not involved in the business, they might feel uncomfortable and say why are we doing this? After my words after three or four meetings once they realize now this is a regular forum where I can come in I’m being asked to participate, they will start to have more questions, they will start feeling more comfortable offering their input. And they will know that if a month after a meeting, something happens they’ll know oh well at the next meeting will be my opportunity to bring this up in the right place and time to talk about these subjects. And those subjects are always there. It’s just that if I’m the outsider, and I know my brothers running the business, or my sisters running the business with my dad and my uncle, I feel like it’s not my place. But if you give me a time and a place and every once in a while you ask me so what do you think? Do you understand you have any questions? You have any concerns? Eventually, you get to hear all the voices and you can look at things as a family, and I think the family is more important than the business. There’s there’s a family business and there’s the business family. I like to concentrate more on the business family because I think too many people spend too much time focusing on the family business.

And is this facilitated or is this done as a family on its own or does it begin facilitator and then transition like what is

well I think that’s yeah, that’s I think the ideal one is it begins facilitated, and then they run it on their own like my one of my favorite clients I had was one where I started working just with the rising generation. I hadn’t even met the patriarch until about six months and they just hired me to work with them to help them learn to work together. But there was there was not a very clear mandate, but it was fine. But these are the kind I like it. Let’s figure it out as we go along. Let’s co create. And after a couple of years, we have created a family council whereby the four offspring were running meetings, they were inviting the parents to come to the meetings. They were alternating, who was the chair of the meeting between themselves so we had one one of them was the chair and one of their siblings was the secretary and then three months later, the one who was the Secretary would come and chair the meeting and the next one would be the secretary we’d rotate through and the parents would show up in the meetings and they would meet the agenda here would be their offspring running the meetings. You should have seen the smiles on the faces because this is exactly what they wanted. They wanted to know like most families do that the the other generation, their victory Sunday, we’re not going to be here and these other people are going to be running this will they be able to do it? Will they be able to work together without fighting and leave and share this responsibility? And if you can get to the point where the parents are still in their 60s then now their offspring who are in their 30s are already assuming this role. Now you know you’ve got something now it takes a while to get there. I can tell you about a man who had a family meeting for his business family and I think 85 I was there I was the son. My dad called a family name because he had heard from consultants, people like Nina saying you should have Unicode with me, but he wasn’t the kind of guy he’s gonna hire someone to come and run directly. We’re gonna run his own family. So we went up north for a weekend and I don’t remember much except that my father did 98% of the pocket and downloaded a bunch of information on his thoughts to us. There was no sharing, there was no asking there was nothing. And we did not have another family meeting until 2006. Now 21 years between family meetings is not the ideal interval. Like I was saying quarterly, maybe semi annually. And the 21 years was only because of his cancer diagnosis. And so now all of a sudden, you know, Oh, I better have a family meeting because now maybe my days are numbered. He lasted another two years, but we had another family. Now what went wrong in that for a family man, first of all, like I just said he was just downloading. There was no, there was no exchange, there was no dialogue. We left the meeting without having scheduled the next meeting. That’s my little secret. I know every time I go to the dentist before I leave, they give me my next appointment because otherwise I’m gonna forget to make my chiropractor does the same thing when you when you turn the back. So it should be the same thing for a family maybe Hey, we’re all here. All your agendas. We’re going to do this so now it’s late February so we should be looking at May everyone else that second week of May look into that we do it on you know, do that, put it on the calendar. Make sure people know that there will be another one this is not a one off. I I was sharing this with someone the other day. It’s not that you know, when I was a kid, I went fishing with my grandfather, once it’s my grandfather used to take me fishing. I don’t remember very many particular fishing trips. I remember doing this. It was a habitual it was a repeating thing. Now that was not a regular schedule. But you can do this with family meetings. And when everyone knows that there is a time and a place to come together to discuss these things, then they don’t fester. Or you know, when you have this conflict and you bury it, it doesn’t go away. It gets worse over time. So that little conflict that happened in 2012 If you dealt with it in 2013 It’s better than if you wait until 2022 Because who knows the story is different that people are telling themselves over the 10 years, you need to have the time and place to clearly enter and and things happen. And actually the best example of this was that when the pandemic it definitely was almost two years ago. But I remember somebody saying that the pandemic was a fantastic test of family governance for a lot of family businesses. And what that what that means is the pandemic ends analysis sudden business as usual is no longer business as usual. And companies have to make decisions. So companies family business, where they already have some governance, the crap hits the fan, they had a little meeting and say, well, we got to do this. What are we going to do like we need to are we gonna keep paying employees are gonna shut down and how are we gonna do this? They would do that and they go on other companies where they didn’t have much of a governance, one person made a decision and said, Oh, we’re gonna do this, and I think we should do that. And then in the following weeks and months, the siblings or the other family members, hey, who said you’re allowed to do this or you made this decision? I never would have gone along with that. So when when things are going normal, it’s fine, but when when stuff pops up like a pandemic. It’s good to be able to know that you have a place to come to when you have business partners, even if they’re not in the business, but their owners or their future owners of the business, that part of the family when big decisions are being made. They like to be aware or consulted or a part of it. And so if so those families who did have a place to come to where they knew how to get together and everyone was sort of hurt with what’s going on and and could actually add value within those businesses did a lot better. The ones where one person made a decision because of whatever and the rest of the family was like, wait, I wouldn’t have done that. Why didn’t we do this or why didn’t you ask me or who gives you the authority to make that decision? These can become flashpoints later on so having a place for the family to come together regularly to talk about things is the single biggest difference between the families that do well versus the ones that don’t.

So what I’m hearing is having that process but very importantly having consistency, right persistency and also with the option like when there’s an emergency, pandemic that everybody is used to recall them to be able to participate in major decision making so that we are aligned and that there’s no surprises or any misunderstandings or blame right after right that’s what I’m hearing okay. So that’s that’s the first place and then in most cases begin with facilitation on like 1985 and so that there is a actual check in so that there is a safe space to begin the conversation. There’s acknowledgement people are heard people are seeing people are celebrating, right, and there’s a balance between the family and the business side so that it doesn’t feel like an imbalance for those participating or not participating. And it could be a family office. We’re in some balance between the wealth and the management of wealth. These will be the actual family members and their well being and you’re speaking to our whole life is about health and wellbeing, family dynamics. So okay, so that’s the first step. What would be the next item on the agenda?

If you asked me what is the biggest challenge that many of the families that I work with, are facing it’s that there are a lot of Now Jen as opposed to next gen current generation leaders who feel like they, they are the best person to run the business now and forever. And they entitled and they don’t have something else to go towards and so they want to they want to stick around longer, and maybe subconsciously they are not allowing those coming behind. them to flourish because they want to justify the fact that they want to say that those are the toughest ones where you have, you know, you look at Queen Elizabeth who just doesn’t want to get off that escalator and as the escalator gets to the top it feels like she’s taking a step backwards. And meanwhile here comes the one behind him and eventually, you know, there it’s what I call sticky baton syndrome. Like they’re supposed to hand it off, but it’s stuck to their head. And that’s a real tough one, because the younger ones coming behind. You don’t want to be pushing them because that will make them resist more. It’s almost you need to find ways rather than pushing for them to be pulled towards something else. Often the spouse if there is one of the pitcher can be useful in that but in helping them identify different places where their current skill set and other experience could benefit others and at the same time. You need to be able to demonstrate that those coming behind are actually ready to take.

The question is that it’s about identity right that Who am I is the question, right? It’s a definite rebirth. And we work with a lot of, you know, CEOs that become chairman or a lot of you know, like you said active become advisory or people who like your father sold their company. And then you know, they’re transitioning to family office, you know, there’s there’s basically who I am and becomes who I was and if their identity is attached to that role. It’s actually a death and rebirth. Right? And that’s the whole process that you’re referring to, is that how can you help facilitate that transition? Now? So how old is the Now Generation you’re referring to? Just out of curiosity? Well,

it varies, but I mean, when I think that if they haven’t started to plan, where they’re going when their age lips to start with a six, they’re probably too late. And if it starts with a seven and they’re still not starting to phase out, there’s a problem too.

Okay, so that means that next gen will call the Next Gen is already in their late 30s 40s and even in some cases 50s Yeah, okay. Okay, so that’s where you see the more challenging experience now what about are they at least teaching them how to manage the money, or they’re not even teaching them how to manage the company,

they’re all They’re all different, but we know the worst ones are the ones that think that they know best, and nobody can ever do this as well as me. And I always scratch my head when I see those people and when I get to talk to them, I asked them a lot of questions about wouldn’t it be better for you to prepare, because it almost feels like they would prefer that after they leave, everything falls apart. So they could say see, I was the only one who could? Who could do it. I don’t understand that mentality. It probably comes from some scarcity mentality when they were growing up or needing to prove themselves. There’s a lot of work that can be done with people like that. It doesn’t always succeed. But I prefer not to talk about those nation’s situations. There are there are a lot of people but as you say it’s their identity. You need to help work help them work to the point where they can see a bigger and better and a different identity in a way that they can have something that they wake up in the morning and look forward to doing

it because we’ve seen that don’t have that and they are forced or they they do it out of obligation or because they’ve been advised sorry, safe to do so. And I’m not preparing for the next stage. Many times we’re not right when I say mental I mean physically, mentally, emotionally and only house right. So but I hear now with with longevity, right? There are cases where there’s three generations in business. Right? And so the frustration of third gen. And I mean religiously the number right now. It could be six by just third. You know, watching that their parents or their mother or father didn’t have the baton to sleep upon him but yeah, right. They’re just showing up.

Well, you know what, in theory, what you’re saying is a bigger problem. Right when you see now there’s the escalators really going back up. In practice. I’ve heard anecdotally that it’s actually not as bad because grandpa, usually grandpa and grandma maybe going forward it’ll be more grandma more often, but might feel a lot more affinity towards the grandchild and training them and explaining things because that grandchild never had to get grounded or never, you know, there’s that there’s that extra generation in between where some of that transition and training and mentoring feels more natural. Now, that sometimes leaves that middle generation getting squeezed out. And sometimes that does happen. Sometimes that second generation person when they’re when they get to 55. And they see, you know, that’s still in his late 70s and still coming to work and he’s still putting in 60 hours a week and I don’t want to work 60 hours a week when I’m his age, so I just sort of loud rather skip my turn and pass it to my son. Okay, so when that can happen, it doesn’t happen that often. But I’ve heard stories like this and I get why there’s like it’s a simpler way. But what all these require is that somebody actually takes a personal inventory and says, What am I doing? What do I want to do? How long do I want to keep doing this? And can I remove myself from this so that others can flourish more and so maybe it’s not the G one at the top? They cannot do that maybe the G two has to say you know what, I’ll step aside so that someone behind me to come

in. So I think I think what we’ve done right now is talk about transition of wealth and closer business. I think that’s clear. It’s not just the wealth, the wealth as in dollars and cents and bonds and real estate but of wealth overall. Now, what about the money side like the actual liquid assets? Like what are you seeing in practice that is working from the liquid asset side, or even maybe real estate, which may be classified as a liquid but it’s still an investment in business, how are you prepared?

You’re talking about a subject that in the field that that I’m in that we’re in it there’s not a linear curve of what it is but it basically it starts with family business, typically on the smaller end from the mom and pops up to like the billion dollar families that are financial families or legacy families or dynasty families where a very small portion of the wealth isn’t an operating business that they’re dealing with. And so, a lot of people like me, I started from a family business meeting. Now I’m kind of moving graduating towards more of the wealthy families where it’s more financial. And it’s interesting what you can learn from one that applies to the other. And I think I will say that the family business ones are more there’s more meat on the bones. They’re more in a different in very different ways because different family members are playing different roles where you get to the other extreme, gets a lot more homogeneous. Once you get out of the operating part and more of they might still control a major family business, but nobody in the family actually works there. Right. They’re their owners, their board members. And so those families gets a little more homogeneous. So there’s a little more you can learn from what other families have done. They usually have no shortage of really well paid advisors who take care of all the structural parts, again, where things fall apart sometimes is more on the human side. Right and, and making sure that you have done things for your family as opposed to the the wealth. So if you look at the three circle model, you have the business if you substitute the business for the dollar sign, you still have the family and the ownership circles. You want to be not neglecting the family circle. And in fact, we theoretically have more resources available to help that family circle to help them with health to help them with mental health to help them with learning and flourishing and creating a career that isn’t dependent upon the family. But that can be supported by the resources that the family has, whether that’s going away to school, whether that’s helping them start some entrepreneurial business, whether that’s helping to support some cause and do it in a philanthropic way, or in some kind of impact investing. There are ways that I don’t think are being exploited as much as they could in some of these wealthy families to take the financial resources of the family and invest them in the human capital of the family members. I think that’s the there’s some low hanging fruit out there and some families that I think the industry is going more towards that and a lot of talk about a chief learning officer and having families involved in in personal projects where each family member to be able to fulfill and do what what drives them as opposed to be held as Okay, here’s your trust fund and you’re gonna get this quarterly distribution, and try not to blow at all and you know, and if you have to go to rehab, we’ll find you a good rehab place and just don’t bother us. We’re busy managing these billions. of dollars. It’s more of putting the onus on let’s make sure all of these family members are supported to be able to become the best selves that they can be.

Okay, so talking about self actualization, and speaking to what Iran should kind of talk about in terms of the circular economy, how do we leverage you know, all the family members and their contribution and their capacities and capabilities to be able to do differently? And when I’m hearing and the undercurrent you spoke to and I want to clarify clarification, is that you feel that the circle of the family when there’s a family business versus the circle of the family when there’s $1 sign, which is a family office of sorts, there is less emphasis on the human capital. Is that what I’m hearing or is it is it

I don’t know, if it’s less than it’s hard to generalize. Let me let me turn it around a bit. I think that when it’s just $1 sign as opposed to an operating business, it’s theoretically simpler to actually access those resources and put them to work for the family members. And so the missed opportunity when they don’t do that is more noticeable to someone like me, when I see a family that everyone in town knows this is like the wealthiest family in town, and you find hear stories about their teenage kids that are young adults, and they’re doing things that like wow, there was some parenting that could have turned this around and made it very different and more of a positive of this family has wealth, and they are using it for good for the good of all the people in the family, which will then in turn become for the good of the community in the neighborhood and society in general. And that’s where I think that the younger people these days have a much more open attitude towards you know, what’s good for the planet and long term. So I have a lot of hope. When I see young people today, I’m almost always impressed and say, Wow, and I took myself back when I was at age and there’s no way that I was that like, enlightened as to what’s going on. So I have a lot and so when I see young people who are part of these families, and I see the potential I get excited about it. And when I see young people and bear kind of dithering and they’re not sure, and they happen to be from a family like that, I’m like okay, we can some missed opportunity here. How can we help who, who in the family office or somewhere who can get this family to realize that hey, there’s some human capital there that we may not be doing as much as we should? To support and hopefully it’s not too late because a lot of things get formed when people are young. And and if you wait too long, sometimes it’s really it’s a lot harder to turn people around.

Alright, so going back to the first piece on family meetings, I mean, at what age are the next gen 30 is showing up at these meetings? At what age

as soon as they are? I would say I’ve heard people use different ages 1614 And then sometimes you can have a 12 year old who’s more mature than than their 18 year old cousin, right? So it’s hard to put an age. But I if you ask me, give me a day I’d say 14 As long as they can behave and you don’t have to have them for every meeting for the whole meeting. But to start to let them know that, hey, this family has meetings. And here are some of the things we talked about and we’re not going to hide them from you. So please come to the meeting. So you don’t think that we’re talking about you or are hiding things from you. And if you have an older brother or an older sister who’s 14 Go into meetings and your wealth, you start to figure out hey, in a couple years I’ll be there and and it just becomes a natural thing. So so much of this is all about just making things a regular thing, right? It’s not about having that one conversation or that one meeting. It’s those 101 minute conversations that take place over weeks and months that you need to people always ask me oh, you know, how do you get your kids to learn about business and put on a t shirt like Shark Tank or dragons den or whatever, and sit there watch with your kids and say here this person has this idea. And they’re asking for so much money for this percentage of their business, you know, positive I used to do this my kids were like 1012 And then somebody say I want $100,000 for 10% of a company and I would pause the TV and say so they think their business is worth how much a million dollar business okay, let’s watch it see if it feels like it’s worth a million dollars. You’re driving down the street you see a billboard for McDonald’s and something whatever you talk about, oh, wow, look, they have this happy meal. And they’re charging this much. I wonder what would that cost if you bought those things individually? Oh, well, you know, there’s always chances to talk about money and business and life with with your kids. And now I’m using the word children and I’m talking about them when they are still small, and to get them to understand about how the world works, that this is normal that people talk about this stuff and especially if you are from a family where there is a lot of financial wealth. I know it’s not you don’t you don’t have to talk about where the richest family in town look. I’m not saying to do that, but but to make talking about money, something that you can talk about as a family. And it’s not taboo. It’s not like you don’t talk about sex and people say oh, when you have that talk with your kids and talk about the birds and the bees. I will say you know what the families that that are on a farm, they’ll have to have the discussion because they’ve seen that the horses or the sheep or the cows and they’ve seen the killing and it’s like, Okay, well that’s what they’re doing. So that becomes a matter of fact,

what about what about the sharing of the actual figures that depend on the family and 14? Is there some kind of censorship that is happening in terms of the numbers because revenue is one thing bottom line is one thing net worth is one thing, right? So is there anything of that nature that’s happening or, or is it you know, let’s hope and pray that doesn’t get to anybody. So,

usually usually, that becomes a gradual thing. So people always talk about, you know, when do I tell my kids how much money we have, and often this this, they’re already into their 20s and 30s. And they already have a pretty good idea that you’re flying around on a private jet, where you have three vacation homes, they already know that you have more than everybody else in town. So it’s not it’s not a huge secret. And it’s very easy to Google somebody’s name and quick net worth and get some kind of numbers. They’re probably wrong, but they’re probably in the right ballpark. This is where I like to talk about the dimmer switch instead of the light switch. So people who have a lot of wealth and they keep it secret from their kids, and they wonder when is the day where I’m going to now take them from the dark to fully into life. That’s yeah, I like gradual, right. So you don’t you don’t make them drink from the fire hose and you don’t have them in the garden and put on all the floodlights. And blind. So you bring them along slowly and you start to share general without without the dollar signs, but you give them an idea and you turn on the light the dimmer switch a little bit then you illuminate them and then if you come back three 612 months later and share a little bit more now you’ve seen how they have reacted have they have they absorbed that well? Did they have a huge reaction, did they you know, and then you can share more and more as it’s age appropriate. But But yeah, so many people say, Oh, I can’t share that information. Because they’re thinking of it as a binary. Would I rather have them know zero or everything. It’s very easy to say zero is simpler. Let them know nothing because I’m not prepared for them to know everything. But you don’t have to go from zero to 100 in one meeting, and I don’t think you should. And I think the smart families don’t know there are ways to do it the target in percentages or ballpark numbers or you use a pro forma of a related business where you say these are not our numbers, but other businesses like us run like this, and here are the kinds of margins and here’s the idea and so if we could increase this this allows us to do that. We’ve invested so much in this new plant give them some idea so that they can start the process the level of the numbers as opposed to oh my god, Mom and Dad you make $5 million last year and you only give me $10 allowance.

So coming back to, you know the concept of how much do I get in your classroom from you in the beginning was that most people that you see if transition most of the wealth or the wealth to the next round, right? Now when you see the assumptions on the ones that say I’m only gonna give one bond with your bucks and bucks and the rest I’m giving away, right? What are the what are the things you see as minimums, right? You see people saying nowadays cuz that’s what I’m hearing is okay, I want to at least secure a home and then moved to apartment or some kind of shelter and there’s a saying I want to secure medical insurance right under the safe because they’re seeing that there’s certain things that are becoming unaffordable even though they don’t give them enough right to do something but not enough to do nothing right. That’s what I love that

one. Yeah. I want my I want them to have they can do anything they want. But they can do nothing.

And then the other one when I click on it recently, obviously is that you know the two things, you know, wealth can be cut by your freedom. At the same time, it can be a curse, but it’s only a recipient. If your next gen or your offspring as you put it, don’t learn how to earn and don’t learn how to suffer. Right? These are two things that they need to be able to do from which brings agility adaptability, right. But there’s still certain things that families want to give us a minimum do have.

A lot of people use they there’s an acronym for it and I forget what it is. It’s health. Anyway, there’s there’s there’s a few categories that people say well, I want them to have a health, education, lifestyle and I forget what the acronym is, but there’s, I’m sure there are different ones out there. But of course, if you if the family says I want to make sure I’m providing for this, this and this that makes a lot of sense. And they could do that for all of them equally right to say here is we will fund this and we make some rules and hopefully you co create it with them as opposed to just downloading it to them. Right if you can say this is what we want to do what makes sense. And I always say if you can involve the people for whom you’re making these decisions, if you can involve them at all, even if you don’t like it’s not you’re asking and tell me what you’re just involving them in a dialogue. So you are co creating what this will look like with at least some of them so that they have some buy in the chances of me standing up long term are much better than Well, this is what dad decided and told his lawyer and this is when the will and now that he’s dead, we have no choice but to live with it the way it is. And even though we don’t like it, and then make the fight so if you can get them involved in creating what it’s going to look like. How can they do it? You’ll often be surprised at how resourceful and how creative and how fair they are with each other, that sometimes the parents or we can have that discussion with them because it’ll cause a fight. I think they usually that’s wrong. But if you just bring them and allow them to come to the table and frame the discussion appropriately, you’ll actually get a lot from them. It’d be pleasantly surprised at how how mature and how good they are at sharing amongst each other. I know that’s what

I see. As you’re talking about co creation, you’re talking about involving them. You’re basically talking about having them accountable for their own future by being participating in that decision making that there’s no blame, right? There’s no blame game after because they were part of the process.

We’re having them having them be involved in everything, not the family, figure out what the family wants, what’s good for the family. And then when you need to have that now put into documents and structures. Then you go and see your lawyers and your accountants and say this is what we want. Write it up for us to make it stick and make it legal. But what happens too often is the parents go see the lawyers and the accountants and they say what should we do? Those lawyers and accountants all they know is what they’ve done for other people. So they recycled somebody else’s solution and said, and hopefully they remember the change all the names and all the data, they regurgitate. And then they say here, this is what you should do. And then it gets them tries to get retrofitted to that family and then it doesn’t work so well. But now you’ve already paid for it. It’s already there. It’s gonna be good enough and then the problems invariably come up later. And so, I know I know why it happens that way. I wish it wouldn’t have been that way so much. And I always try to say when I meet a family that already has something great. So let’s see what you have. Now, does that really fit? Usually they realize right away there’s already things that don’t fit. And that’s what I’ll say, Well, why don’t we go? Let’s leave this aside. Let’s figure out what if we were starting with a blank slate. How would we create it? And then usually there’s a way to say okay, can we can we change what was already there to this new way that actually fits because the family has been involved in putting together what makes sense. My dad always used to say, there’s a difference between what to do and how to do it. And so let’s figure out what to do and then if we need experts to figure out how to do it, but let’s for ourselves, figure out what we want. And that’s still usually a more solid way to do things, although it’s still more often the exception than the rule, unfortunately.

Alright, see, we’ve got about five minutes left. Before we almost almost to the hour. So is there something we didn’t touch on? The topic of the welfare, transition to welfare, anything else that you’d like to share so that the people can can reflect or think about what we can debate, you know, whatever, whatever fields that you like, I’ll go

back to but I’ll revisit the part about how this this should take a while. To often families think I want to get this over with I want to be able to say if not right, I want to be able to we’re going to go and we’re going to get the lawyers and the counselors. We’re going to sign it and then we want to think about it again. That’s that’s not the best way to think about this. This is a constant. It’s a transition and things will evolve over time. So if you go and you take that attitude, let’s go and we’ll sign this and we’ll do it and it’ll be done. I promise you that five years later, if you’ve done nothing in between something or things will have changed and what you did five years ago, will no longer be perfectly appropriate thing that you would do if you were doing it again. So do not treat this as a Okay, it’s done and I forget it, treat it as a let’s keep this alive and make sure that we’re talking about it so that we can continue to tweak it, adjust it, change it. Bring it up to date for what our family’s needs are just like you know when you rent your will and you shouldn’t wait too many years before you at least look at it again to see Oh, wow. I had someone someone there. They’ve been there for a year. And so people do the same thing with this even more important because there’s more moving parts and you want to be able to trial and error and be flexible. You know, we set this up in this way because we thought it was gonna work like this now two years later, we realized that didn’t work so well. But oh wait, we had this other thing that we didn’t think was gonna turn in anything and that was how do we rebalance? How do we readjust. There are weights and when you have regular family meetings, you have a place where these things come up. And even if it’s not the leading generation that’s bringing them up. As the rising generation starts to take more place at the people. They hopefully will be the ones who bring this up because eventually then it’ll be younger. We really should modify this ideally that that says yeah, Junior you don’t want to be called above the lawyer and talk to him about changing as rather than making me do it because you actually know what you want it to look like. So transitioning yourself out, like keeping things alive, empowering the rising generation to be taking the appropriate bigger roles at the table. I think this is what you want to see and again, it’s easy to talk about. It’s not always that easy to do. But once you get started, get started. I will say be in a hurry to get started but don’t be in a hurry to finish. So hurry up and get people to the table and then once you’re there, let that train go down the track as slow as it wants as long as it’s going down the track and making progress and you’re all you have the right people on the train. You can move the people around into the different seats, but you’re making progress. But you don’t have to be in a hurry to get to a destination customers don’t destination. There’s no destination. It’s all journey. If people wouldn’t adopt that mentality, that it’s a journey and my journey will end and there’s other people behind me their journey will keep going even after I’ve been kicked off the train. And if people could develop that attitude, I know it’s hard because people don’t want to picture that train going on after they’ve been kicked off. But if you look back on where that journey came from, there were people that were there that were older than you that are no longer on the train and the train is still growing. And so it’s gonna keep going after you’re no longer there. So what can I do while I’m still here, to make sure that the rest of the journey even after I disembark will go as low as possible for these other people who were on the train with me that I care about. And I don’t know where that train analogy came from. But because I’ve never used it so I can use it again.

So what I’m hearing is for that we didn’t touch upon this. So we had to write the acceptance that we are the custodians of this wealth. Right and we always talk about custodians of wealth intelligence, right that we have a much larger responsibility because of that construction. And I think that’s what you’re talking about is that word custodian on this train, as long as we’re on the train, and when it’s time to go, it’s time to go and then the next historians and the train continues. So I think the word you’re referring to is concerning trek, which I think is something that we need to learn or consider to Excel that it’s not we don’t own it, we just hold it right and carry it until to pass it on or transition indoor.

Yeah, I like that word custodianship i The one I hear the synonym stewardship, but but the whole idea and the difference between the founder wealth creator is that they see it as my wealth that I’m going to bestow right. Whereas once you get past that person and you then then it becomes more of a stewardship because they have received it so they understand that there’s an act of receiving and then there’s an act of passing on, and hopefully that will continue, right. So it’s harder and that’s the key baton is more often with that wealth creator that founder, but once you’ve done that’s why it’s like driving a standard car like getting on a first year is the hardest, but once you’re in the second and third shift, the gears are simple, but it’s that first one that’s that’s the toughest. So when you get to the point where it’s already transitioned, you know you’re dealing with someone who was already at least understand that there is a I’m just one link of the chain, then so it’s often easier to deal with them. But not always. Because as you go down on one generation to the next, you also end up with more people, right? And if you haven’t prune that tree to different branches, it could get unwieldy with the number of people so then that becomes sometimes the biggest challenge is you’re dealing with cousins and second cousins, and now they don’t know each other so well, but they’re still supposed to act together even though they barely know each other, but they’re related and a co owner so you have different challenges.

Alright, Steve, thank you very much. Absolute pleasure, honor. Thank you for again for waking up early in the morning to be with us today and sharing a wealth of wisdom as a second gen. As an advisor now to many families in North America, and to discuss this topic of the transition of wealth in a broader sense, right and with the different nuggets that you shared. So once again, they do thank you very much

for having me. It was fun. I hope people found something useful in your discussion.

And thank everyone. Like I said, this is the first of a number coming next. You will have TC coming in next week and we’re gonna talk about the Bucha transition from from Africa to be able to share the value of that tradition and how that can impact and support families going forward in terms of that concept. So thank you, everyone. Thank you for being with us. And we’ll see you soon in our next pre recorded webinar. Yeah, of course. Watch I know

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