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Joanie Bronfman
So, Don't Talk to Your Family About Money |
Why not?
Reason 1: Knowing about the family's millions will destroy the next generation's will to turn those millions into billions.
Reason 2: The next generation will remain children well into their 60's, or is it 70's, maybe 80's. One of these days, we might tell them...
Reason 3: With no education at all, the next generation will be well prepared to drive the family wealth - while texting AND tweeting.
Reason 4: Successful wealthy people pass on the good financial genes to their children; that's all they really need.
Instead, reality intrudes:
Megan was in her 30s and happily employed by a real estate agency when she picked up a voicemail from her mother after work. In the voicemail, her mother asked her to call the family's private banker as soon as possible. Megan had no idea what was going on and called her mother back for more information. The only thing her mother had to say was that the banker would explain everything.
(Read more from Joanie Bronfman and add comments.) |
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David Bentall
Make Your Life Richer by Giving |
Family philanthropy is a wonderful arena through which families in business can develop many skills. Governance and financial literacy are two good examples. In addition, families can learn about group decision-making and how to constructively deal with disagreements. It is hard to imagine a safer or more productive way for a family to learn how to collaborate than having them wrestle with whether or not to donate funds to cancer research or to a children's hospital.
Through discussions like this, families will develop the capacity to discuss the "un-discussable" and these skills are essential for family members who will also be co-owning assets together in the future. Conversations regarding charitable giving may also be very challenging, but it will be much better for a family to develop these skills through discussions regarding what they will give instead of what they will get. As an added benefit, family members may be able to think more about what they are responsible for rather than what they are entitled to. (Read more from David Bentall and add comments.) |
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Ana Maria Romano Carrao
Differentiation Between Business and Family Can Help to Assure Survival of the Family Business |
Adapting management concepts developed for large, publicly-owned companies to the universe of small family businesses is an ongoing challenge.
Let's start this reflection by looking first at the classic issue of the overlap between the business and family systems. In small family firms, when almost all workers belong to the family, the overlap is often complete. As the company grows, the business system and the family system become more differentiated, and the company develops its own personality.
The survival of the small family business depends considerably on the capacity of family members to recognize and accept this differentiation between the family system and the business system. The search for a peaceful balance between the rationality of the business system and the emotional sensitivity of the family system should be an important goal for family members.
However, there are some requirements which are necessary to reach this goal.
(Read more from Ana Maria Romano Carrao and add comments.) |
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Greetings!
"Don't talk to your family about money." Joanie Bronfman starts out with this tongue-in-cheek admonition -- and goes on to make the point that parents who actively speak with their children about family wealth can help them to develop the skills and values needed to create a meaningful life. The "new philanthropists" Aron Pervin talks about are living their own values and demonstrating an entrepreneurism and tech-savvy approach to philanthropy which is markedly different from their parents' generation. David Bentall describes how family philanthropy not only helps others, but can also help the philanthropic family to develop important values and skills. Communicating and educating about family wealth -- or about any of the many topics of importance to family enterprises -- does not necessarily come easily. Edouard Thijssen provides a number of practical ideas for successful communication and education. Denise Kenyon-Rouvinez describes a strategic and comprehensive approach to assessing and developing competencies across the family firm. Ana Maria Romano Carrao makes the case that the next generation should not be invited into the family business unless they have developed the appropriate competencies. Taking this approach requires a clear differentiation between the business and the family. Christian GG Stewart provides some excellent ideas for how to manage the boundary between the business and the family and the boundary between owners and managers. No one ever said that managing a family enterprise or family wealth was easy -- but there are many lessons which can be learned from the experience of others -- and the authors for this month's newsletter have provided lots of good ideas and guidance to help along the way. |
 | Aron Pervin | |
A Big Conversation for the New Philanthropists
 The philanthropic landscape is evolving to the next level of impact and many of the old guard are struggling with the shift. The Millennial generation is not content to wait around; they are more confident and self-directed in constructing their own hands-on solutions for the planet and its people by finding solutions to social problems. They are innovative, entrepreneurial, technologically-savvy, sophisticated, educated, collaborative, demanding and seek purpose through measurement. They already make philanthropy and other social engagement more satisfying and effective. Based on ideas such as the 5Ps: planet, people, profits, purpose and performance, they apply business principles and embrace grass roots initiatives as a start-up with a hand-up!
These wealth holders are both inheritors and wealth creators and according to Jonah Wittkamper, co-founder of Nexus Youth Summit, they are "the most global, transparent, interconnected, and interdependent generation in human history....the most aware of both its ecological footprint and the needs of the earth." (Read more from Aron Pervin and add comments.) |
| Denise Kenyon-Rouvinez | |
Family Business: Competence is Key
 Family businesses have an outstanding record of long-term performance, and the smartest of them know that the competence required is not simply inherited. Yet it is still rare to come across a strategic and comprehensive approach to building competence across all parts of a family firm. Partly, this stems from a difficulty in articulating clearly what competence is. It covers technical ability, such as scientific research, finance or marketing. It also encompasses people skills such as a talent for leadership and networking, and even more intangible qualities such as the competence to keep alive a strong corporate culture. In addition, different families may want to focus on different competences, and different types of businesses may require different sets of competence and skills. The types of competence required will change as the business grows and adapts. It is therefore important that families spend time exploring what capabilities are needed in their businesses, and that they make them explicit to all: family and non-family managers and directors alike. (Read more from Denise Kenyon-Rouvinez and add comments.) |
| Edouard Thijssen | |
The Importance of Communication and Education for Long-Term Family Business Success
 Most of the families and advisors around the world are familiar with the saying "Shirtsleeves to shirtsleeves in three generations". The first generation builds the wealth, the second generation preserves it and the third generation enjoys it. Extensive research and statistics show that rather than just being a mere expression, 'shirtsleeves to shirtsleeves' is in fact a very real and widespread problem in many family businesses today. Only 10% of business families manage to maintain the family business and/or the family wealth for more than 3 generations. If you take the 100 wealthiest families in the USA 100 years ago, you will see that most of them have disappeared from the rankings or have been replaced by new more successful families. These findings beg the question: why is it so difficult to stay successful as a family in the long run? When you ask a family what they hope to achieve in the long term, most families tend to answer that they want to keep the family together and aligned with their business interests, and that they hope to maintain their shared wealth. So why is it that even if the ambition is there, most families fail? (Read more from Edouard Thijssen and add comments.) |
| Christian GG Stewart | |
Dealing with Outside Shareholders in Asian Family Firms
 In Greek myth, the Trojan war ended when the invading Greeks built a great wooden Horse which the Trojans took inside their City Walls. While they slept, the Greek soldiers came out of the Horse, let in the rest of their army, and sacked the city. However their destruction was so great the Greeks offended the Gods, and as a result, most of them never made it home again.
In many Asian family firms, the family members in management roles (the "Managers") seem to be operating from the principle that their "outside shareholder" siblings or cousins need to be kept at a good arms-length distance from the business. Any suggestion that perhaps there should be "more engagement" with the outside shareholders is often seen as a recommendation to bring the Trojan Horse inside the city walls!
Typical explanations from family Managers for their stance include:
- "What if they asked us to sell the business?"
- "What if they want to change things?"
- "They are not qualified to comment on the business!"
- "We don't want to waste time answering all of their questions!"
- "I need to demonstrate that I am a strong decisive leader for the business!"
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