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The Special Sovereignty of the “G1”

Most People Prefer Being No.1 to Being No.2

Every once in a while, I get a blog idea that I save for a later date, and then another one comes up and I repeat the process.

And then, through some serendipitous process, it dawns on me that I can actually combine them into one post, and benefit from some interplay between them.

It doesn’t always work out the way I planned, but I’m willing to give it a shot. 

Why Can’t I Be My Own G1?

The first of the ideas I decided to write about concerns the way that people who work with wealthy and enterprising families like to label their generations.

We always start by talking about the first generation, known as G1, and then their offspring are G2, their grandchildren G3, and so on.

The fact that we all do this makes even the family members become unwitting participants in this game, without thinking about how absurd it can seem to some.

The label of G1 typically gets assigned to the person (or couple) who “started the business”, also known as the founder, the wealth creator, or patriarch/matriarch.

Why This Can Be Sub-Optimal

Of course these people did not simply fall off a turnip truck, they presumably had parents of their own, for whom they would be G2, and grandparents for whom they were G3.

The way we begin the story can overemphasize the input of G1. Yes, in many cases, even most, the role that person plays is in fact outsized and shouldn’t be minimized.

There are plenty of examples, though, where the G1 portion of an enterprise’s existence was a modest success, and it was only in G2 or even G3 that things really took off in terms of success.

Couldn’t those responsible for that restart the labelling process and dub themselves “the real G1”?

“We Want to Be Our Own G1”

I had a call recently from a G2 who explained that he and his wife were interested in “starting our own G1”.

Their family had already done a lot of work on family governance where G1 and G2 set up structures and traditions to preserve that family legacy.

And, now that they’ve seen that success, this couple is interested in recreating a new start as G1, with their own children, who are currently teenagers, as G2.

What About the Sovereignty?

Let’s switch to the other blog idea now, which came from a session at a recent conference, where a couple of dozen of us were working with and learning about an interesting tool to use in our work with families.

During a debrief towards the end, one of the participants, whose work I’ve admired for a while, said something in a way I’d never heard.

Speaking about some of the challenges of those in G2 or G3 of many wealthy families, he stated “some of these people don’t have a lot of sovereignty”. (Thanks Scott)

Hmmm, sovereignty! What an interesting way to phrase that.

Let’s take a closer look, shall we.

Google to the Rescue

I already had my own meaning of sovereignty in mind, but for the purposes of this blog, let’s see if Mr. Google can shed some light on this.

     Sovereignty:

  •      Supreme power or authority
  •      The authority of a state to govern itself
  •      A self-governing state

These definitions don’t automatically lend themselves to individuals, but there are certainly parallels.

Who enjoys being in situations where you’re unable to “govern yourself”?

When G2 Wants to Reclaim Sovereignty

When the couple called me and stated their wish to be their own G1, it was the first time anyone had approached me like this in the decade I’ve been doing this work.

It was exceptional, in the true sense of the word.

It was, though, from my viewpoint, a perfectly natural and healthy way to think about the progress this family is hoping to make as they transition from their G1 to G2, towards their own, new G1 to their G2.

The good news is that this doesn’t have to be (and shouldn’t be!) an “either/or” question.

It’s actually a wonderful opportunity to create a “both/and” scenario.

This family branch of G2’s will continue to be an active part of that family, while also co-creating new realities for their rising generation, who, someday, may wish to begin anew as their own G1.

Wouldn’t that be great!

 

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Finding the Solution in the Mirror

It’s Often Right in Front of Your Nose

Although I personally try to shy away from using a simple “see problem, find solution” mindset, I recognize that many people do default to that way of thinking.

There’s no shortage of folks who prefer this shortcut way of looking at situations and trying to find a way through a challenge.

Dealing with complex family situations as I often do, a bigger picture, longer term, systems view of what they’re facing, typically yields better results for me when guiding a family.

There’s plenty of nuance in my work, and I also try hard to not present myself as the bearer of simple solutions to problems.

Inspired by a Tweet, Uh, I Mean, an “X”?

While I love using LinkedIn for professional interactions, I’m still a fan of what used to be called Twitter, although I spend less time there than I once did.

This week’s blog was inspired by a post I saw recently on X, from Dr. Nicole LePera (@Theholisticpsyc) a psychologist with over a million followers there.

Her post read simply:

                    If I am the problem, I am also the solution.

As you might imagine, I was intrigued and needed to process this more, but on the surface it held promise as inspiration for an eventual blog post here.

It’s so simple, and there are many ways to ponder it.

I immediately emailed it to myself and saved it in my “blog ideas” folder.

Complex Situations Have Multifaceted Problems

Back to the complex family situations I often learn of, and sometimes get invited in to assist with, there are always many people interested in finding a solution.

Not that many, though, immediately jump at the opportunity to look at the part that they themselves play in the perceived problem.

If (and when!) they do, they can eventually see how at least a part of the resolution is right there in front of them, when they look in the mirror.

While it isn’t usually easy to get anyone to the place where they even feel like taking that glance in the mirror, it is almost always a necessary step that needs to be taken.

As you might imagine, it’s also typically not something that only needs to happen for one member of a family, because any complex situation naturally requires some “adjustment” by several people.

Spreading the Responsibility Around

Challenging family situations affect many members of the family, and are also affected by many family members too.

Getting each family member to understand and accept this fact can take some time, but that “buy in”, to get everyone focused on doing their part in getting to a better place is crucial.

This work requires a “systems view” to be able to see what’s going on, and it also requires the guidance for each person in the system to make the necessary adjustments to get to a better place.

Getting a family to understand that there’s a shared responsibility at play can calm the whole system down as well, and that’s a huge piece of making progress.

The More and the Less of It

Families can benefit from making small, gradual adjustments, which can happen once some family leaders step up and show the way, by modeling such behaviours.

I’m talking about learning to practice more forgiveness and less blaming.

Nobody likes to have fingers pointed at them, even when they may internally acknowledge some of the fault for where things are.

Knowing that others are in a forgiving mood can become contagious, for the benefit of all.

Instilling an attitude of more gratitude and less lamenting one’s fate is also quite beneficial.

Benefits of the Mirror

Helping family members think about their own role in things, and getting them to think in terms of “I-statements”, as opposed to “you are to blame”, goes a long way.

Getting a family to a better way of being together requires an attitude of more self-efficacy, that gets everyone out of finger-pointing mode.

There’s typically a kind of culture to the ways families act, that can set in an add to the “stuckness” that sometimes exists.

Getting a family “unstuck” doesn’t usually happen quickly, and rarely in one step.

Taking the time to work with each person individually, to get them to understand and accept that everyone holds part of both the problem as well as the solution, is always worth the trouble.

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Another Rocky Mountain Connection High

RendezVous’23 Raises the Bar (Again)

Every summer since 2014 I’ve looked forward to the annual RendezVous of the Purposeful Planning Institute, which is regularly the best week of my professional year.

I’m writing this at the Denver airport as my flight home has been delayed. 

This conference, along with other PPI activities throughout the year, has provided more blog inspiration than anything else over the years.

As our closing keynote speaker noted today, this is not a conference, it’s an experience. He was bang on, as I told him as I hugged him when he was done. 

I lost count of how many hugs I was involved in over four days.

The Inside View of the “Village” of Work

Many readers know that I’ve been involved in one way or another in the preparation and planning of this event over its last 6 iterations, which included 2 “RendeZoom” versions thanks to you-know-what.

Last year we got together in real life once again, and the experience was among the best ever, which many chalked up to the fact that it had been 3 years since we’d all been together.

The bar from RV’22 was therefore already high, and yet everyone I spoke to agreed that we’ve raised it once again.

Survey feedback is yet to come, and of course there are lots of things that can be improved, but I for one still have a long way to come down from this annual Rocky Mountain high.

The Joy of Connection

Last year’s theme was “The Fundamentals of Human Connection” which was quite à propos considering its post-pandemic timing.

We followed that up this year with “The Joy of Connection”, and I cannot recall ever making so many connections at a conference, and not just shallow ones.

As many of us admitted, working with families on the eventual transition of their wealth from one generation to the next can be very emotional work, which is ironically often lonely for those who practice in the area of professional guidance and facilitation.

This is the one week each year when so many of us come together to share our experiences, learnings, challenges, frustrations, and dreams of what’s possible, with so many of our like-minded and like-hearted colleagues, many of whom become close friends (hence all the hugging).

“You Have to Experience It to Understand”

It would be impossible to do justice to the experience in just one blog post, so I won’t even attempt that here.

In previous years, I’ve written some kind of summary or highlight blog after returning home.

This year I just want to share my gratitude for the PPI Community who are truly my “tribe”, which I’ve known for nine years now.

I’ll surely circle back on some of the topics we discussed in future posts, over the coming weeks and months.

One comment I heard from a few attendees, as they related their difficulty in conveying what goes on at RendezVous to colleagues, was “It’s really hard to describe, you have to experience it to understand”.

Amen.

So Much Work, So Much Reward

As noted above, having an inside view of some of the committees (called “expeditions” in PPI-speak”) involved in preparing this annual extravaganza, I’ve seen first hand just how much work is involved.

Thankfully, the “many hands make light work” proverb applies, and we know that it truly takes a “village” to pull it all off.

The organisation itself (PPI) continues to evolve and mature, along with the field of working with wealthy families that we serve.

Since our fearless founder, John A. Warnick, convened the first RendezVous in 2011, the leadership has evolved as well, and is now about to pivot to an even more distributed model, much like what some of our family enterprise clients face when the founding generation cedes its place to the rising gen.

Light On Content, High on Vibe

Apologies for those who read my work for content, as this post is light on that.

I’m trying to convey the vibe of this group, who continue to inspire me and my work.

The conference is NOT light on content, even though much of that content is focussed on process, as in how we work with family clients.

As one presenter noted, the process is the product!

If you think this group might be for you, get in touch and I’ll gladly fill you in over a Zoom call

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When the Parents’ Dream Becomes their Kids’ Nightmare

Just the Way “WE” Always Wanted It

In many ways this post has been a long time coming. I’ve run into versions of what I’ll be sharing this week for years now, but never felt compelled to devote a whole post to it.

Some confluence of cases in my head, from the past and from current discussions with clients and prospects, has resulted in my finally deciding to tackle this tough subject.

In other ways, though, it’s so simple to describe, that even those who know little about family business can easily relate to such stories when I share the basic fact patterns.

Every parent says they want what’s best for all of their children, and every single one of them believes it when they say it.

But they sometimes overestimate how much they know, as well as what they can control to make that happen.

Building the Dream Family Business

The closest I’ve come to writing about a version of this was way back in 2016, with When your Greatest Desire is also your Greatest Fear.

But that post was about the fact that parents hope to get to a level of wealth that makes the lives of all their family members easier, and then end up “overshooting” that level, and suddenly realize they’ve got a whole different challenge on their hands, often labelled as entitlement.

This week we’re looking at parental desires again, but from different perspective, and with a whole other kind of downside.

Unlikely Business Partners

The simplest way to describe the phenomenon is to consider a family business with just one person or couple in charge, who have more than one child together.

They will often want to bring all of their offspring into the business with them, and run things together as the prototypical “one big happy family”.

And this can work for a time, especially while the senior generation remains in place, to mitigate any sibling issues “in the bud”.

The problem comes later, after the exit of the parents, when the siblings end up in a situation where they’re now unwitting partners together.

They’ve worked together for while, but at a lower level, with less at stake and possibly less ego involvement.

Eventually they realize they’re stuck in a partnership with people with whom they never would have entered into business together of their own free will.

“Plans that Don’t Include Us”

Too often the parents make plans with professionals regarding their estate plans that include an operating business, and because they’ve long dreamt that what they’ve been building will continue on with the whole family at the helm, those plans end up creating sibling partnerships that really don’t have a high likelihood of surviving long term.

See Why Succession Planning Fails

When the cart (the legal structures) is put before the horse (the relationships of the offspring expected to work well together), things are set up for failure more than for success.

And it happens all the time.

Hopefully it can be caught in time, plans can be modified, and a new plan, this time including input from those most affected, can be put into place.

If not, those who end up “stuck as partners” risk having their family relationships damaged because they can’t live up to Mom and Dad’s dreams.

We’re Better Than Our Parents!

I’ve even seen versions of this where a parent hopes to have all of their offspring continue together despite the fact that they previously worked with their own siblings, and quickly realized that was not a good fit.

They couldn’t work with their own sibling, yet they expect their heirs to successfully work together; presumably they believe their own parenting skills are far superior than those of their parents!

Parenting skills are just one variable in this equation, and the human desire for some independence is typically stronger than whether your parents taught you to play nicely together.

Playing nicely as children is one thing, working together as adults is quite another.

Time for a Reality Check

When a family calls in someone like me, it’s often an opportunity for a reality check on those dreams we were talking about.

Assessing the likelihood of success is a large part of what I do, and in many cases (most?) some modifications to “Plan A” are required, to increase the likelihood of their success.

Success looks different for everyone, but continued family harmony is at the top of my list.

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Looking Family Enterprise Advising in the Mouth

Serving the Needs of “Enterprising Families” Varies Greatly

There are some subjects related to working with enterprising families that many of us don’t really ever think about, but that are always kind of there in the background somewhere.

This week we’re going to look at one of those, thanks to a new book that I just finished reading and that I highly recommend, which made me realize one of these issues actually does exist.

It got me thinking too, and when I do that, I typically try to find an analogy or a metaphor to help explain it more clearly, and so I’ll be trying out this new thinking here as well.

I bet you’re wondering what book I’m talking about.

Wealth 3.0 – The Future of Family Wealth Advising

I’ve known that this book was due out soon and was pleasantly surprised to see that it’s now available.

The authors, Jim Grubman, Dennis Jaffe, and Kristin Keffeler are all veterans of the field who I’ve known for years, and I’ve interviewed each of them of the Let’s Talk Family Enterprise podcast in the past couple of years. (Episodes 11, 29, 45)

They are mentors and colleagues and have each already authored other books on areas of this subject matter individually.

I think you can imagine why someone like me, who writes regularly about family wealth transitions, would’ve been eagerly awaiting its publication.

Business, Enterprise, Wealth

I could never do the book justice with a full review in this blog space, but I do want to share my thoughts on the new distinction that it clarified for me.

It’s a book about advising families about their wealth.

It highlights the fact that the field of family wealth advising is not very well defined and urges those who participate in this field professionally to do more to organize and advance it for the good of the families we serve.

(Image credit: https://www.vitatanden.se/)

 

It also contrasts the needs of wealthy families with those who inhabit the world of family business.

The family business advising world is, in many ways, ahead of the family wealth advisory space, and is also distinct from it.

That was the “A-Ha” moment for me.

Some Families Make the Journey

My own professional journey in this ecosystem started with me working for my Dad in the family business he started before I was born.

I then found my calling to this work while enrolled in the Family Enterprise Advisor program.

And I now sometimes work with families who have significant wealth, without ever having had an operating business to speak of.

Even the term “family enterprise” feels a bit clunky, because it was essentially concocted to try to cover the fact that families often sell the operating business that made them wealthy, and then still have many of the same issues to deal with, despite no longer being concerned with the operation of a business.

The Family Firm Institute, started in 1986, has been playing a leading role in advancing and professionalizing the field of family business advising.

Wealthy Families Come in Many Forms Now

The Ultra High Net Worth Institute, for its part, has yet to see its fifth birthday, and they seem to be working hard to play catch up.

All three of Wealth 3.0’s authors are part of the UHNWI faculty.

While many of the world’s wealthy families have had a successful business as their main wealth driver, there are now more non-business-owning wealthy families than ever.

Entertainment celebrities, world class sports figures, tech billionaires, and even well-compensated executives can easily end up in the Ultra High Net Worth category.

When these successful people end up with more money than they could ever spend, and they have families, they then face many issues that they hadn’t even realized before.

Do You Need a Dentist or an Orthodontist?

So as I contemplated all of this, I began to think about family business advisors as dentists.

They help business families with lots of little things, many of them mundane, and work with them to help keep their mouths healthy.

Maybe family wealth advising is more like orthodontics.

They still concern themselves with your mouth, but they look at things very differently, and help with more specialized services.

Orthodontics surely evolved from the field of dentistry and then took its own course of professionalization.

Every orthodontist needs to study dentistry first, and then move on to that specialty afterwards.

Perhaps family wealth advising is now beginning to follow a similar path?

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Supporting Roles in the Family Enterprise

Not Everyone Can Be the CEO

In the world of family enterprises and their ubiquitous challenges in transitioning from one generation to the next, there are a number of misconceptions that continue to plague those trying to help families get things right.

A pervasive one that’s a pet peeve of mine, is the focus on finding that one singular person who can take over the top job, let’s call them the CEO.

When you think about a business founder, the person who’s the “G1” (first generation) head of the family business, you typically imagine certain traits and characteristics that they likely exhibit and even exude.

I suppose it’s natural to assume that once they’re no longer around, the ideal replacement for them would be a clone, or the person who is most like them.

And that’s the first part of the misconception.

Not Everyone WANTS to Be the CEO!

Fans of TV dramas like Succession may believe that the members of the next generation of every family business behave like the fictional Roy siblings.

Now I’m not saying that their portrayal of the battle to succeed their father is completely unrealistic, or that the efforts they each made to try to outmaneuver one another never occur, but they are surely the exception, not the rule.

Additionally, as a Family business goes through each successive generational transition (G1 to G2; G2 to G3, etc.) those qualities of the original founding CEO become less and less important.

Already by G2, the leadership that works best is often very different from that of the founder.

And not everyone even wants to be the CEO.

Sticking with the Hollywood Theme

Having mentioned a TV drama, I guess I can stick with the Hollywood theme a bit longer, and invoke another misconception, or actually probably more like a “misquote” or “misnomer” that gets used far too often.

Whether it’s the Emmy awards for TV or the Oscars for movies, awards shows always honour two different categories of actors.

There’s one category for the “lead” actors and another for “supporting” actors.

But that’s not actually what they’re called, even though that’s the way most people say it.

It’s actually best actor in a “leading role” and “supporting role”.

OK, not a big deal, right? Or is it?

Maybe not in Hollywood, but what about in a family enterprise?

Playing Second Fiddle to your Sibling?

Let’s get back to the sibling drama situation we touched on earlier. These kind of superiority contest plays do happen, especially when they happen in an environment where there’s a “winner-take-all” mentality.

When things are seen as a contest to find the best person, and all others are less good, that “winners or losers” dynamic isn’t helpful at all.

While you can’t always make it disappear, there are ways to try to frame it as more about the roles than about the individuals.

Many Roles in Large and Complex Families

There’s something that I recognized after entering this field a decade ago that I hadn’t appreciated until I began working with several large and complex families.

It isn’t something that most people would consider, and even those in such families often need to have it pointed out to them before they eventually say, “Yeah, that’s true”.

I’m talking about the fact that there are usually several major roles that need to be played as a family enterprise moves from G2 to G3 and onwards.

Not Just the Roles in the Business

Besides the roles in leadership in the operating business, there are other key roles that someone from the family can, should, and hopefully will take on.

Governance roles are so important, and exist in various places and forms during the evolution of a family business becoming a family enterprise.

Family office roles, ownership council leadership, being the family champion and taking on leadership of a family council, leading a family foundation, being part of the board of directors, leading the education committee and being the Chief Family Learning Officer all come to mind.

These roles don’t start with a job posting and typically evolve as a family matures from one generation to the next.

They also come with various advantages and disadvantages, suit different kinds of people during different life stages, and are sometimes compensated and other times not.

Helping families recognize this is the first step to finding the right spot for each person who wants to participate.

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How Do We Serve Thee – Let Me Count the Ways

Experts Playing in Many Different Sandboxes

During the decade since I had my calling to work with families on transitioning their wealth from one generation to the next, I’ve met hundreds of other professionals who also serve families hoping to achieve that goal.

This work is typically quite complex, and there’s often a lot at stake for the families, so it’s actually quite normal that many experts will serve any given family over the years, as the family and its needs evolve, along with the businesses and assets they own.

The past few years have also seen an increasing recognition that we experts must learn to work together if we hope to properly meet the needs of such families in a holistic way.

See: From Multi-Disciplinary Field to Interdisciplinary Ecosystem.

In addition to the work we do serving these families, there are many other ways to help this ecosystem evolve, and many different “sandboxes” in which some professionals play, as part of advancing the greater good.

An Abundance Mentality Helps

I’ve been blessed with meeting so many others who share the abundance mentality that’s required for professionals to agree to share their knowledge with others, while understanding that trying to “corner the market” isn’t really the best way to go in an emerging field like this one. 

See: Spreading the Gospel Vs. Cornering the Market from 2013.

 

 

I had a recent exchange with a colleague I’ve known for years that caused me to reflect on the various ways I’ve been participating in this ecosystem, which I somehow (selfishly) imagined was common knowledge. 

I share my thoughts about my work and the industry regularly, and this has gradually seen me develop a following that continues to grow.

The fact that this colleague I’ve known for years seemed unfamiliar with my work made me realize that not everyone consumes my content, and many go about making contributions in lots of other ways too. 

It also made me grateful for those of you who do follow my contributions.

Peer Organisations Are Prevalent and Front and Center

There are three main peer groups that I’ve been involved with since I began this work, and there are others I’ve not joined, because, well, you can’t do everything.

I found this work via Family Enterprise Canada and their Family Enterprise Advisor program, and I continue to contribute to that organisation as an ambassador, podcast host, and member of their editorial committee. I’ve also MC’d their annual Symposium the past two years.

See: Let’s Talk Family Enterprise podcast

Then there’s FFI, the Family Firm Institute, where I also enjoy interacting with peers in the field. I’m in a global virtual study group there, and a faculty member in their Global Education Network (GEN Program) where I’m one of the instructors for the Family Governance course.

Last but not least, PPI, the Purposeful Planning Institute, has resulted in some wonderful professional relationships and great learning.

Their annual RendezVous in Denver is always a highlight for me, and I’ve been lucky enough to serve on the Wisdom Expedition, charged with planning and selecting all of the breakout sessions for that conference.

Activities, Content Creation, Teaching, Serving Families

For those entering this ecosystem, there are so many ways to learn, get involved, and interact with other, like-minded professionals.

I’m grateful to those who’ve made great strides already, leading the organisations I’m part of as well as everyone who also creates content, does webinars, teaches courses, and organizes events so we can meet and learn together from one another.

So many people have been thoughtfully sharing for years (even decades in many cases) and this is beneficial to all of us who work with families, and of course ultimately to the families themselves.

Career Life Cycles, Like Families

In a “meta” kind of way, it’s noteworthy that the industry has career life cycles, not unlike the families we work with.

The elders lead and are eventually replaced by those who learned by following their footsteps.

Professionals all contribute differently based on their strengths, priorities, time commitments, and career cycle stage.

I continue to enjoy the parts I play, and realize how lucky I’ve been to follow many of the great leaders in this space.

It’s also a pretty small world, kind of like a big family, in many ways.

Post Script

I recently learned that my blog ranks nicely on this list of the Top 45 Family Business Blogs, and they asked me to share this link, so you can check out the others too.

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Stewardship for Enterprising Families

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New Labels for Three Circles with Similar Results

Family-Business-Ownership Has Its Limits

The ecosystem of professionals who work with enterprising families is naturally quite diverse, as this work has become more interdisciplinary than ever before.

This week we’re going to look at some of the models these experts use to think about and explain the complexity involved in doing this work well.

My exposure to this began with the venerable Three Circle Model from Tagiuri and Davis, which I first wrote about here in Three Circles + Seven Sectors = One A-Ha Moment.

If you check the date on that post, you’ll see that it’s now over a decade old, so it stands to reason that some of my views on this have evolved in the intervening years.

From the Family Office World

Let’s start with something I’ve seen a couple of times now from some thought leaders from the family office space.

I’ve heard about the “MLF ratio”, as in the percentage of the time spent by those who work for the family office that’s spent in each of three key areas.

It seems many family offices have a ratio of about 70 / 20 / 10.

What does that mean?

That 70% of people’s time is spent on the Money, another 20% on Legal matters, and then a final 10% is spent on the Family.

Those I’ve heard talk about this are typically in favour of finding ways to increase the Family number, to at least double or triple where it typically falls.

From the Trustee World

I recently saw a similar triumvirate that I think stemmed from the world of trustees for wealthy families.

This one looks at Assets, Documents, and Relationships.

 

The assets are what the family owns, the documents are the legal papers that explain who owns what (and who’s allowed to do what), and oh, yeah, let’s not forget that there are a group of family members that are being served here!

And isn’t it always the problems in the relationships of those family members where most of the problems arise?

Again, I think that those who speak about this trio are those who are in favour of finding ways to increase some of the thinking about the relationship questions on the front end of decisions, as opposed to having to then clean up a mess that resulted in poorly thought out “documents”.

From Other Family Wealth Experts

I also recall hearing someone recently noting that heirs don’t only inherit wealth, they also inherit structures.

So if we wanted to turn this into a three-point model, it might be “heirs, wealth, structures”.

Once again, we look at the wealth/assets/money/business (what) as one leg of the stool, the family/relationships/heirs (who) as another, and then the legal/ownership/documents/structures (how) as the third.

Doing Away with the Circles?

At this point, we can even do away with the circles, for the sake of simplicity.

What the Three Circle Model does so nicely is to highlight the overlaps for some of the people, because in the family business world from which it emerged, the issues caused by family-employees and family-owners versus family members who are neither (or both) are often front and center.

But as a family’s wealth increases and the portion from an operating business decreases, these other ways of looking at things often make more sense.

Who and What Aren’t Enough

The one thing that doesn’t change is that more often than not, the balance of time and effort is way off from what it should be.

Regular readers won’t be surprised to hear that I think that too much focus is put on the money, the business, the wealth, the assets, while too little focus is put on the family, the relationships, the heirs, and all things related to the human capital.

Likewise, those in charge of the documents, the structures, the legal arrangements, the ownership (beneficial and otherwise) are given far more attention than they deserve.

In its simplest terms, it boils down to Who gets What.

It is very important that all of this be spelled out properly, especially when so much is at stake.

However, there are a couple of other questions that shouldn’t be forgotten along the way.

Let’s start with some WHY questions:

  • Why are we doing it this way?
  • Why don’t we involve our heirs?

And let’s add a big HOW question:

  • How is all this actually going to work, with our family?
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Leaving a Legacy They’ll Be Proud Of

You WILL Leave a Legacy, Like It or Not

This week I want to tackle a topic that many people talk about, but don’t always mean the same thing when they use the word.

Legacy is a big word, despite it only being six letters long.

I’ve been paying attention to people who write and speak about it for about a decade now, and while I don’t consider myself to be the authority on the subject, I definitely have some strong feelings about some parts of it that I want to share.

I also want to give a bunch of tips of the hat to some of the people from whom I’ve gleaned some of the wisdom I’ll now attempt to spout.

This Is NOT Optional 

My first hat tip is to David York, whose words have inspired several of my weekly posts over the years. See, for example, Striving for the All and Nothing Inheritance.

York talks about the fact that leaving a legacy is not optional, i.e. you will leave one, whether you like it or not.

Will it be large or small? Will it be positive or negative? Will it last centuries or fade within months?  These are perhaps the questions you should concern yourself with, but some sort of legacy will survive each of us.

Once we understand and accept this fact, hopefully it’ll help focus some of our actions in ways that ensure that the legacy we eventually leave will look something like what we’re hoping for.

Wealth Is NOT a Legacy

My next hat tip is to David Werdiger, for reminding me via his most recent newsletter, of a quote from the man who deserves thousands of hat tips from all of us, James E. Hughes Jr., aka Jay Hughes.

Werdiger quotes Hughes as saying:

            “Founders Create Wealth, but Heirs Create Legacies”

We’ll get more into dissecting the second part of that in a minute, but for now let’s concentrate on the founders and the wealth.

Too many founders believe that the wealth they created will be their legacy, and hence the more wealth, the greater the legacy.

They then continue focusing on making their proverbial pie as big as possible, on the mistaken assumption that quantity and size are what are worth striving for, in order to ensure a long-lasting legacy.

That’s a short-sighted view.

There’s no such thing as a fortune that’s “too big” to screw up. In fact, there are plenty of examples of “positive correlation” on those scores.

Don’t Forget the People Part

My final hat tip is to Tim Belber, who inspired this post way back in 2017, called Is Your Continuity PAL in Danger? 

Belber’s argument is framed as an equation: P + A = L.

People, plus assets, equals legacy.

What he means is that while anyone’s legacy will involve the assets they accumulated in their life, there won’t really be a legacy, unless there are people who care enough about it to carry it on into the future.

I sometimes talk about the fact that when we’re babies, someone changes our diapers, but at the other end of life, sometimes diapers are again needed, and now instead of changing the diapers of our children, it’s likely our offspring who will be in charge of changing ours.

If you want them changed with love (and in a timely manner), best make sure the relationships with your offspring, who may be calling the shots, are properly maintained and nurtured.

Preparing the Heirs for the Assets

All of this falls nicely in the category of preparing your heirs to receive the assets they’ll eventually inherit.

So much effort is typically put into the other end of that equation, i.e. preparing the assets for the heirs.

What wise people and families are finally realizing is that the time and effort spent on preparing heirs is never wasted.

Back to the Title of this Post

As I thought about the title for this piece, I stumbled into the idea of pride and whether or not your heirs will be proud of the legacy they inherit.

I don’t think it’s an exaggeration to think that this is the key element required in  the legacy one leaves.

If more people lived their lives with this type of “top of mind” motto, “I will act in ways that enhance my legacy. knowing that my children will be proud to keep my legacy alive”, that would probably be a good thing.

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