Searching for the “Goldilocks Zone”
These weekly missives have been inspired by a variety of sparks over the years, and this one is sort of a “mish-mash” because it comes from a number of places.
I’ve long wanted to incorporate a great quote from a colleague into a blog, and I’ll finally do it in this post.
I love it when some social media interaction on one of my posts creates a new spark, and that’s also the case here.
And, when I speak with potential clients about situations that concern them, that also makes me want to share my ideas here too.
So let’s dive into the deep end and look at some liquidity issues for families (see what I did there?).
An Old LinkedIn Post Gets a “Yeah-But!”
My social media folks schedule regular posts from my accounts on LinkedIn and Twitter, which weave in both my new weekly posts along with plenty of “recycled” content from days gone by.
I continuously create regular content, which I enjoy, but if you only post and repost the same piece several times over and over each week, it may not be as well received as when you share more variety.
Recently, a post about liquidity from a few years ago sparked a comment that seemed to take an opposite view to one of the points I made. See Liquidity Events in a FamBiz – Pros & Cons.
They took issue with the fact that I suggested that it can make sense to not share too much liquidity right after a business is sold, for a variety of reasons.
The alternate viewpoint is also quite valid, of course, as there are cases where a family has plenty of wealth and yet most family members will wait years or even decades before they will see any direct benefit from it.
“It’s Great That We’re Wealthy, But…”
This made me recall that great quote from my friend and colleague Travis Harms, another guy who regularly creates great content for this field.
He shared with me the way one family member put it to him:
“Yes, thanks, it’s great that we’re wealthy.
But, can we also have some money?”
Bang! Drop the mic! What a great way to summarize the way so many rising generation family members feel.
Imagine living in a town where everyone knows that you are part of the family that owns an extra-large enterprise.
Everyone knows that you’re wealthy, and yet they look down on you because you appear “cheap” more often than not.
Little do they know, you may own a portion of a large asset base, but you’re still working your butt off each week just to pay the mortgage on your modest house.
An Apple a Day – And Then the Orchard!
That brings me to a family I recently heard about, where the parents were quite wealthy yet were successful in keeping secret the extent of their wealth from their sons.
One son was being modestly supported to a certain extent due to some personal difficulties, yet he would eventually stand to inherit way more than he could reasonably spend in his remaining lifetime.
As I thought about a metaphor for this, I landed on getting an apple a day from your parents, because they didn’t want to spoil you.
You ate that apple every day, kept the doctor away, and then after the parent’s funeral, you discovered that you now own an orchard!
All along, you knew they had a few apple trees in the backyard, and assumed that was the extent of it.
Lots of Planning, Lots of Sharing, Lots of Transparency
The “answers”, if there are any, to these situations are never simple.
However, when there is a lot of planning, a lot of sharing, and a lot of transparency around what the leading generation is hoping to accomplish with the decisions they make, things generally go better than when the opposite track is taken.
When there’s no planning, no sharing, and no transparency, it’s a recipe for disappointment, mistrust, confusion, and conflict.
Taking Advice Versus Co-Creation
Too often, such parents blindly rely on the advice of certain professionals whose viewpoint is conflicted by their desire to remain part of the picture in managing the wealth of the senior generation.
Once the offspring are mature enough to understand what will eventually be coming their way, I recommend they also become involved in co-creating their future as stewards of the family wealth.