Stewardship for Enterprising Families

[:26] Steve Legler welcomes David R. York to the podcast and asks him to talk a little bit about the subtitle of his latest book: Harnessing the Power of Stewardship to Elevate the World.

[4:21] David played “slug bug” as a kid, he makes a parallel with looking for and finding examples of stewardship in the world.

[5:50] Though we use and hear the word a lot, stewardship is rarely defined. David offers the working definition he came up with in his book as well as the opposite of stewardship: consumerism.

[8:36] Transcendence and investment characterize stewards, David talks about the ill-perceived trait of entitlement and shares his experience in a five-generation vineyard in Verona.

[11:49] Stewards have a unique perspective on the relationship with the past, present, and future. David shares the four key building blocks of stewards.

[13:55] David dives into the notions of equality of opportunity and cost versus value. He also touches on the four Ps: purpose, preparation, perspective, and participation.

[18:35] The insidious problem of snowplow parenting and the problem of perceived entitlement.

[20:11] The three critical questions David poses to help families surmount the biggest issues surrounding wealth transfer.

[25:16] Entrusted is right in the middle between entitlement and enslavement; Steve and David break down how to keep the balance through rights and responsibilities.

[29:04] David’s reading recommendations and his advice for advisors.

Let’s talk family enterprise explores global ideas, concepts and models that help family enterprise advisors better serve their family clients, brought to you by family enterprise Canada. All of us Information and opinions expressed during this podcast are solely those of the individuals involved and do not necessarily represent those family enterprise Canada.

0:24
Hello, and welcome to another episode of The let’s talk family enterprise podcast. My name is Steve Legler. And it’s great to be your host once again. This month we’ll be talking about the concept of stewardship, as it applies to family enterprises and to other areas of our lives. Our guest is David York, who I’ve had the pleasure of getting to know over the past few years at conferences in the US, notably the rendezvous of the purposeful planning Institute in Denver, as well as at the Institute for Family governance conferences in New York. David is an attorney and a CPA based in Utah. And every time I’ve heard him speak, I’ve walked away inspired. His most recent book is called The Gift of Lift, harnessing the power of stewardship to elevate the world. I read it when it came out last year, and I’m glad I finally reached out to him to be our guest on the podcast. We’ve got lots to discuss. So let’s welcome our guests and kick things off. David York. Thanks for joining us today. Welcome to the let’s talk family enterprise podcast.

1:25
Thanks, Steve. I always love talking with you. I’ve been looking forward to this one week.

1:29
All right. So let’s jump right in. And I read the title of the book, including the subtitle and that’s where I want to start is harnessing the power of stewardship to elevate the world can you give us I know that subtitles on books are not something you just you know, write one time, a lot of thought goes into that. So can you share with us a little bit of the thinking behind all the words that are in that subtitle?

1:56
Yeah, so you know, and even the title itself, it’s kind of funny. It took me longer to come up with and then writing the book itself, although it was a there’s actually like a six year process and it came from an experience I had with a client. And she’s allowed me to share the story, but name is Kyle Miller and owner of the Utah Jazz and several years ago we were working on a trust that was designed to keep and ensure that jazz would stay in Utah indefinitely. We’re we’re a one horse town here from a sports perspective and so very important to the community. And so we’re working on this trust and just in offhand, I was going over the terms of weather and, and I said, So how it failed to no longer own the jazz. And she just kind of paused and she said, Well, I don’t own the jazz and went back to redeem and I kind of Rose there you know, because I’m a estate planner and Gail’s one of the smartest, wisest people I know operating 70 different businesses and she knows the details on all of them. But you know, I’m still the estate planner. So, you know, I took a minute I said, Well, no, actually you do on the jazz. And I’ll just never forget she stopped what she was doing. And she looked at me and she said now, I’m a steward of the jazz. And honestly, it was one of the most profound experiences of my professional career because, you know, in that moment I saw someone who had a transcended ownership, I think in in society and culture, especially capitalist structures. For us, the pinnacle is ownership owning something and yet here’s someone who saw something beyond ownership and so it sent me on a on a multi year process of thinking about studying and researching looking for examples of stewardship. And I really saw the power that came from this mentality of stewardship, and how she really did use it to elevate those around her the communities that she’s in and the world as a whole. So the book is really a culmination of me spending six years trying to figure out what she had shared in just that one sentence.

4:18
That’s really interesting because I had a theory we haven’t spoken about this. But when I saw that you wrote this book about stewardship in the world, not specifically just in family enterprises. My theory was that you because of your work with families, this is where you discovered stewardship, and then you started to look at where it applies in other parts of the world. And it sounds like that’s what you did for six years is look for other areas of that.

4:46
Yeah, I really did. And this was going to age me but when I was a kid, we used to play a game called slug bug. I don’t know if they have that candidate or not. But you would look for Volkswagen bugs and first one to spot one could punch your sibling in the arm so but when it’s funny is once you start looking for him you start seeing them all over. Aha. And that’s kind of what happened to me is once I started once I understood what stewardship was. You start to see stewards everywhere. I think a stay at home parent can be a steward. I think a teacher I think obviously business owners, politicians, it’s a mindset. It’s not a position. And it’s so you you find and you see stewards in history, you find as the stewards in your neighborhood so what once you start to look for him, you see them all over, but yeah, I definitely the genesis of it was a family business.

5:47
So the audience for this podcast is essentially family enterprise advisors, people who have taken the FBA program here in Canada. And so we’re people who work with families and I guess we all hear about stewardship and family business, and aren’t necessarily sure what it means. But it sounds to me like if they can start to wrap their head around it, they’ll see examples, not only in family businesses that maybe can help them to talk to their family clients about it.

6:18
Yeah, I think that’s I think that’s true. And it is interesting because the we see the word steward used a lot we hear in environmental contexts. We hear it in a in a business context. We even hear it with our own personal resources, right? You know, am I good? Am I a good steward of the assets that I have? But it’s interesting to me that it’s a word that’s often used but but rarely defined. And so it can oftentimes have different definitions to different people. And so part of what I did was to come up with a working definition of stewardship. And so, for me, a steward is someone who’s fully invested in something bigger than themselves. And so they have to just critical components. They have deep investment, but they have transcendence In other words, they are all in about something that’s not about themselves. And you know, unfortunately, so often in society today, you see this especially when it comes to wealth transfer. We actually have the opposite. We typically require little to no investment, and rarely is there anything bigger than ourselves and what that results is the opposite of stewardship, which is consumerism. And unfortunately, I think we all see the effects of a consumer culture but a consumer culture is not about investing. And it’s not about anything bigger than ourselves. And I think one of the things I saw with people who were concerned about consumerism is they’d come to me and they look for ways to reduce distributions to kids or put on, you know, income matching provisions or limitations on what what heirs could receive restrictions, right, how it can be given. But what I ultimately realized is that the opposite of consumerism, isn’t less consumerism, you know, that’s just minimalism. It’s a lower form of consumerism, but the opposite of consumers ism is stewardship. And so it’s really about a different mindset than it is about just dialing down or putting restrictions on how wealth is consumed.

8:34
So you’re talking about the these two different important axes, I guess on your diagram here transcendence and investment, and you’re saying that the stewards are high in investment, and in transcendence, but most people, like maybe entitlement would be more on the low on investment and low on transcendence.

8:56
Yeah, exactly. And you know, and entitlement is a word that we throw out so often, in a state planning, wealth transfer. Oftentimes, it’s done in a derogatory sense. But the reality is we all have a certain sense of entitlement entitlement is about our rights. What are we entitled to when it comes to treatment when it comes to contracts, agreements, other things that we enter into? The problem is not a perspective of entitlement is when we have entitlement in the absence of responsibility. And, you know, we can see the opposite to right when you have only responsibility in the absence of any rights that creates a form of enslavement, but, you know, to me, stewards balance both rights and responsibilities, always with a mind or something that’s, that’s bigger than themselves. So, you know, to give you an example of stewardship, and again once they started looking for it. My wife and I, several years ago, were fortunate enough to get to go to Italy and we went to vineyard outside of Verona, beautiful vineyard fifth generation, family business working on their sixth generation. And I was talking with the daughter who was who was running the family business. There are in growing and expanding the winery. And I asked her, I said, What’s the secret of a five generation family enterprise and she looked at me and she said one word, and so you know, I’m scrambling in my head. What’s What’s What’s the magic word? Yeah. Is it is it love? Is it family? Is it alcohol, you know, like, what’s the CBO? Right? But she said, passion, but then I’ll never forget how she described it. She said, it’s a beautiful work, but it’s also very hard. So you have to look up and see the beauty, and then look down and do the work. And in that moment, what she was describing was stewardship. For them. The transcendence was the beauty, the beauty of the vineyard, the beauty of the product, the beauty of the wine, and what they were able to produce, but that beauty drove them to deep engagement and investment, in that, that deep engagement and investment, what did that do? That added to the beauty. So you create this somewhat of an upward spiral, right where the transcendence leads to the investment. The investment leads to the expression of that transcendence and those two actually work together to create something that’s better than than one or the other.

11:48
Excellent, that that yeah, the beauty or the passion? I mean, it all it’s like self reinforcing. And when a family has that, and you can see it and I think all of us who work with families, you have certain families that you gravitate towards because when you’re with them, you know that they have this passion and this this stewardship mentality of they want to keep the they know they have a good thing going. And it’s so important for them to want to maintain that so that they can pass it on to the next generation in better shape and then the way they received it.

12:22
Yeah, and that’s one of the interesting things about stewards is that they have a unique perspective between the past the present and the future. In other words, the past is what directs them. The President is what they’re engaged in and the future is what draws them. And so they’re looking not just at the moment today, but they’re looking at their predecessors and they’re looking at the people in the future and they they tie all that together, seamlessly is opposed to again, a consumer mentality tends to be a very much in the present in the moment mentality.

13:01
I think people wouldn’t think of storage, recognize the future part, but maybe don’t recognize the importance of also knowing the past. I know often we talk about families, with families about the importance of sharing the history so that everyone knows where they came from, and I never connected the fact that how important that is to the old stewardship thing. I want to move to somewhere about halfway through the book you talk about four key building blocks for stewards. And number one just jumps off the page at me and I know I’ve heard you speak about this, I’d like you to share a bit about the importance of equality of opportunity, because we often talk you know, with our clients and they want to be you know, fair versus equal and all that what’s fair and what’s equal. And you stress the fact that it’s equality of opportunity. That’s important. Can you share a bit more about that?

13:56
Yeah, you know, I oftentimes talk about the traditional model of estate planning is the four D model, dump divide different dissipate, right, we dump the assets down to the next generation. We try to divide them up equally, try to defer any potential taxes and ultimately, we dissipate the wealth. You know, if I were to put one of the biggest issues with traditional wealth transfer planning, is asset focused. It’s focused on the business, the the real estate holdings, the stocks and bonds and other things. Instead of focusing on where those assets are going, so I tried to emphasize with clients the importance of creating opportunity, because again, one of the key elements of a steward is cost investment. And at the end of the day, and 26 years of doing estate planning, if I’ve learned one thing is that we value things based on what they cost us. And when something doesn’t cost us anything, we simply just can’t value it like something right, the cost and so many of my clients so they earned their wealth, they grew their business through hard work. Risks, stress, sleepless nights. They highly value what they have, but I can’t transfer the cost, I can only transfer the resource and so when we focus on the assets, we oftentimes end up undercutting that value proposition. So instead, if you focus on creating equal opportunities for your kids, you allow them to bring that element of cost and best value. And so instead of the four DS, I focus on what I call the four P’s first is purpose. You know, the families that are the most successful multi generationally at their essence, they know who they are, what they value and what they believe they have, they have clarity of purpose. They have their why they have that transcendence that’s bigger than themselves. Second, it’s about preparation. It’s about creating education, tools and resources. Now, unfortunately, what a lot of families want to do is they want to create equal outcomes. And in doing so, they end up treating their kids differently. And that can create so many issues. And problems. And so when you provide opportunities and you do so fairly and equally, the reality is you’re going to have different outcomes. But if the goal is to create the ideal environment for relationship and to avoid issues and consternation you have to recognize that is going to be a potential outcome. To to equal opportunity is different outcomes. Third, it’s about perspective. Making sure that children have a clear understanding of the world around them. So often we can live in bubbles and myths. Think that how we live life is how everyone else lives life. And then last, it’s about participation. You know, a lot of my clients again, they earn their wealth through hard work, and part of what they want to do is to make life a little easier on the next generation and it’s a good noble thing to do. And yet the reality is it’s those difficulties, struggles and trials that we go through that actually helped to make OVR so I think an age appropriate ways creating responsibility, providing service back to the family earning funds, especially independently, are all just critical elements of of providing equal opportunity.

17:53
And I mean, you said a lot of things that I’m just nodding my head and I’m sure a lot of our listeners are because we all have clients who work so hard to create this wealth, and then want to become what are they call snowplow parents. So get get everything all the obstacles out of the way for their kids. So because they don’t want them to have to go through that. Not recognizing that the fact that what the parents had to go through was why they were successful, and they’re actually robbing their offspring of the of the opportunity to create their own and learn for themselves and not just have everything handed to them. Yeah, you mentioned Go ahead.

18:35
No, I was just gonna say I think that’s so true. And and one of the things that’s insidious about this, and I don’t think a lot of clients recognize or realize this, but one of the dangers of being that snowplow parent is that the children get the impression that they can’t do it themselves. And, you know, the reality is we typically don’t help people do things that they can easily do. themselves. We tend to step in and help people we don’t think they can do something. So oftentimes in our desire to help and assist our children or to make things easier on them, they begin to receive the message that they can’t do it on their own. And that can be a terribly disabling perspective for someone to have

19:27
the I can’t do it. So someone has to do it for me, or this has beneath me Why should I have to do this because I am a special person and and you’ve combined some of those together and now you get some entitlement that I think many of our clients are worried about, and like you said earlier they they then automatically go to finding ways to restrict what you know what what wealth or assets or money goes to them just because they’re worried they won’t be able to handle it as opposed to preparing the heirs for the assets in a way that you know that they’ll be able to, to handle whatever they receive. Exactly. I would be remiss if I did not get to your three critical questions because I’ve heard you say this before, and I’ve actually shared it with other people when I’ve been doing presentations, and people will stop and say wait, wait, can you say those three things again, so So I know that this is like a money quote from of all the things that I’ve heard you present. Can you share a little bit where this comes from and what these three critical questions are that that every arising Gen family member needs to know the answers to?

20:45
Yeah, I would say one of the biggest issues if not the biggest issue, facing families, when it comes to successful wealth transfer is ambiguity. You know, unfortunately, and I work with a lot of clients who know how to become wealthy. They don’t know how to be wealthy, or a lot of clients who they want to talk to their children about wealth, but they were raised by that that greatest Silent Generation. Talking money was a taboo subject and so and they’re afraid I’ve had clients look, I’m afraid if my kids knew how much money we had, that they may, they may think they’re just going to inherit wealth and it’ll affect their self reliance or self sufficiency, or I don’t know how to talk to the kids about money or whatnot. What people don’t realize is that our brains are not made for ambiguity. And when when children are in an ambiguous situation, they actually make up a story that may or may not be true, but it fits their understanding of the circumstance or situation. And so, I tell families if there’s one thing you can do for your children for successive generations, it applies in businesses. It applies in organizations, but specifically within a family. I think every child as early as possible, certainly by the time they’re in high school should know the answer to three questions. First question is, what can I expect? Because I’m part of this family. The second question is, what should I not expect? Simply because a part of this family and the third question is what is expected of me now I will tell you and the vast majority of high net worth families that I work with, the children don’t know the answers to those three questions. No, they

22:39
probably they they have their own answer to the first one which they made up in the absence of any information. And then the others. They probably it doesn’t dawn on them, but but now. So you are how do you get your clients, the parents to understand this and actually, well, I’m guessing that in a lot of cases, the parents have never thought of these questions. And maybe mom and dad don’t necessarily have the same answers to them. Is that part of kind of the first thing they have to overcome?

23:15
Exactly, exactly. And I would say that the reason that the children don’t know the answers is because the parents have never told them the answers and the reason they haven’t told them is they haven’t come up with the answers to those questions. And yet, they’re they’re foundational. You know, who of us would take a job if we didn’t know what we could expect? What we shouldn’t expect and what’s expected of us right? And yet we’re in these families. And we have this ambiguity that creeps in. And so and it is a process and it is something that oftentimes parents may have a bit of a different perspective. Not that they can’t get to the same conclusion. They’ve just, again, created their own answers to these questions. And so I always start with the parents where they can sit down and articulate this. I will say it was funny, I went through these questions with a client once and he said, You know what I’m gonna do because I’m gonna go ask my kids these questions and see what they say the answers. Some adults did some adult children. And he came back and he said, Boy, that was super enlightening. And he said, some things they answered, and I thought, boy, that’s right on. That’s right. And others. They were, he was like, wow, I’ve got some conversations to have. So it’s a simple framework. And yet what’s great about it is it balances both rights and responsibilities right? What can I expect is about what are the rights I have in this family? What should I not expect? And what’s expected of me are questions of responsibility, what are the responsibilities that I have and in the best relationships, you have a combination of both rights and responsibilities, and that’s, that’s the easiest way to avoid entitlement or enslavement is the appropriate balance of those two areas.

25:05
I’m glad you mentioned that, because I have this continuum that I drew on my notes to prepare for this and this is be a good way to so I have entitlement on one hand and enslaved on the other. And so this is the balance of rights and responsibilities. And so you want to find that happy medium where the rights and the responsibilities are, first of all, well understood. But that there’s that they’re kind of imbalanced and that you don’t end up with a whole bunch of rights with no responsibilities because that makes you entitled, whereas in some families, it’s the opposite. They have no rights, but huge expectations and lots of responsibilities and finding the middle ground, which I think is something you call in trusted. And that’s another book that you wrote a few years ago, that book called entrusted, which sort of talks about that that middle ground there where you’re you’re not enslaved, because you actually have some rights. And not just responsibilities. And you’re not entitled, because you have some responsibilities that go with the rights you have. How did I do on summarizing that?

26:14
Yeah, no, I think that’s great. And then, you know, I always say, and I’m sure you see this a lot, Steve, but I see even within families, you’ll have subsets so you’ll have some children, though, yeah, will feel only responsibilities and no rights and other children who have only rights and no responsibility. So the system might work as a whole because there’s a balance of rights and responsibilities, but they’re not equally shared by everyone. You know, you might have that proverbial oldest child is responsible for doing everything and the youngest child who has responsibility for nothing. And while it may work from an outside, like everything is getting dealt with, that creates a whole slew of internal issues. And so it’s important that everyone within the system, the parent, spouse, children, each have a balance of both rights and responsibilities. Or you’re gonna run into to long term issues, you’re gonna run into burnout. You’re gonna run into dysfunction or addiction. When when there’s not a good balance of those with everyone.

27:22
That is so interesting. I’d never thought of it that way. So parents can sometimes sort of feel like there’s this wonderful balance because they see the whole seems to be working but they are not looking at the individual people within it and some people are on one end and some people are on the other. And when mom and dad are no longer around, that is a recipe for disaster coming down the line because of that, so you really have to look at that. And that comes back to what you were talking about the equality of opportunity, but not just the so if somebody does if two siblings are given the same opportunity and one takes the ball and runs with it and does really well and the other one doesn’t do so much. It’s hard for the parents just watch that and let it happen but then if they try to like equalize things, ex post facto, they’re just going to make things worse.

28:16
Exactly. Exactly. So it’s both and you have to look at things from both a global group perspective but also individually.

28:24
And that’s that’s the fascinating part about doing this work and often people who come to this work that are used to working say with the parents generation, and are only starting to now get into family meetings with with the rising generation, this is something that we see and it’s like oh my god, I see this what do I do with it? But at least this your book with talking about the stewardship gives us some, some vocabulary and some tools to be able to figure out how to help the families have these conversations, which as we’ve been saying, it’s sometimes hard to get these conversations started. Yeah, I agree. David, this has been fascinating and unfortunately we need to start to wrap things up soon. So as usual, we always end that with each guest with a couple of final requests before we go. So I need to ask you for First of all, a book recommendation, something that you’ve read that you’d like others to know about. And then the last thing will be one piece of advice, which is a piece of advice from an experienced advisor like you, who works with families to others who also work with family. So can we start with a book recommendation, please?

29:35
Yeah, and to me that the best books are the ones that when you finish you, you start to read again because they make you think so much and minus think again by Adam Grant. He just does such a good job of really challenging how we think and assumptions that we have. So highly recommend that book. I think it’s a great one, especially in the day and age that we’re in right now. Where we just know so much even though a lot of what we know is wrong. So it’s it’s a way to approach information and beliefs and everything else in a really, I think constructive way.

30:19
Okay, good. Adam Grant think again. And so and he’s written a couple of books, all with about all about thinking right. And so yeah, yeah, give and take and a few other excellent books. So think again from Adam Grant. Excellent. So now one piece of advice for our listeners.

30:38
Well, I you know, got a quote and I have to explain it, but there’s a great website called despair.com. They have the opposite of the motivational posters. They have the D motivational posters, so they’ve got some really, really funny ones, but one of my favorite ones is a picture of a snowflake. And what it says is just like a snowflake, you’re unique, just like everybody else. Yeah. And what I love about that is, you know, I think it’s so so often we look at differences and we see how different everyone is, oh, our family is different. Our family is unique, oh, this person is different. That’s what makes us all the same. And so not that differences don’t exist, and we don’t need to recognize those. But the reality is, we’re human. So we have so much in common. And I think as advisors to recognize that while each situation is unique, and different, that’s what makes us the same and at the end of the day, there are some very, very basic, fundamental human things. Again, whether it’s just understanding expectations and responsibilities, they cannot apply to everyone. So I think it’s it’s don’t get scared by unique or different situations because that’s true of everyone. But recognize that there’s value that you can bring and that honestly, what makes us the same is much more similar than what makes us different. Excellent. And

32:11
as advisors to such families, we can bring value to them even though we’re seeing something in this family that we didn’t see it another family, just the fact that we’re offering them a different perspective. on things and we can be of great service to establish David York. Thanks again for joining us and sharing your expertise with our audience. Oh, good chatting with you. As always, listeners. If you haven’t already subscribed, please do so. Make sure to never miss any of these monthly episodes. Thanks again for joining us. I’m Steve Legler. Until next time.

32:48
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