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Sustaining True Wealth Over Multiple Generations

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According to the Family Business Institute…only 30% of family businesses survive into the second generation and 12% into the third. A mere 3% make it into the fourth and beyond

Many sources cite similar statistics, pointing to an extraordinarily high worldwide failure rate in wealth transitions (generally defined as wealth remaining under the control of the beneficiaries). This begs the question, “Why does this happen?” One of the pioneering thinkers on this issue, attorney, James E. Hughes, Jr., focused on the lack of structure and governance in families. The article below suggests that lack of inter-generational communication and collaboration have been the primary causes of wealth dissipating over three generations.

CNN Money Article: Squandering the Family Fortune…Why Rich Families Are Losing Their Money

Consider the many advisors that families employ. There are attorneys, accountants, consultants, psychologists, life coaches, and various financial advisors from wealth managers, to insurance agents, to financial and estate planners all of whom, presumably in good faith, attempt to help their client families protect, preserve, grow, and sustain their wealth for multiple generations. Despite the collective best efforts of all of these professionals, their net effectiveness has been no more than 10% over three generations. What if Apple sold you a product that failed 90% of the time? Would you buy it? Yet, that’s in effect what families are doing when they continue to use traditional methods to plan for their families’ futures..

We cannot solve problems with same level of thinking that created them

– Albert Einstein

Thinking at a new, different level about the challenges of transitioning wealth, does not mean that the best work of attorneys, accountants, and other professionals isn’t necessary. Families need governance guided by the work of skilled attorneys. They need excellent tax and estate planning, wealth management, business consulting, work on family dynamics, and life coaching. Families need teams of professional service providers. Yet, how might these teams of professionals do things differently, more effectively?

By now, many of you know that we’ve adopted a mindset of Gratitude, “True Wealth”, and Leadership as core beliefs to address the “shirtsleeves to shirtsleeves in 3 generations” issue. It has been our experience that families must accept an attitude and a disciplined practice of Stewardship if we’re to sustain True Wealth over multiple generations. Our roles as advisors are to support our client families in this Stewardship undertaking. In other words, it’s to collaborate with our clients and each other in an endeavor that has historically challenged even the most intentional families. I will elaborate further on this topic of “collaboration” in future newsletters.

Avi Kantor

Too Busy to Do What Matters Most

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Marshall Goldsmith, a highly sought-after executive coach, has written books and articles around the idea that “what got you here, won’t get you there”. In other words, the methods, habits, ideas, etc. that in many instances have led to business and personal success, aren’t necessarily the path to greater success and especially greater happiness, fulfillment, and meaning in life. One of the major obstacles to further progress for many of the people we meet at the Certior Group is our busy lives.

It’s when we’re too busy that we can sometimes lose sight of what matters most. We can spend our time being busy, “putting out fires”, or falling back into habitual patterns of behavior. This is where I’ve found the Empowered Wealth Mindset to be most beneficial. And it begins with Gratitude.

We teach that Gratitude is the optimal response to life’s negative events, to those events and circumstances that aren’t adding to our happiness, fulfillment, or greater meaning. Seth Godin shares a story that highlights how Gratitude can transform the frustrations and anxiety of daily life into a better way of being:

I live fourteen miles from ground zero (the site of the 9-11 disaster in New York City), and there used be a cafe about five miles from here, near the train station. For a long time, there was a handwritten letter on the bulletin board in the café. It said “I was here a few weeks ago and I ordered a decaf coffee with bagel and butter. The idiot behind the counter gave me regular coffee, and put cream cheese on my bagel. As a result, I got all frustrated, and as a result he had to make it again, and as a result I was kicking and screaming, and as a result I missed my train, and because I missed my train, I got to the World Trade Center thirty minutes after the plane crashed into it and I am alive today. Thank you to the person who messed up my coffee order.”

More from Seth Godin on Gratitude

I’ve written previously about the Empowered Wealth tool, the Levels of Gratitude and how it can combat “entitlement”. Let me also reiterate what I’ve said before: we can give our children and others a gift that’s worth more than most of the “things” they think they may want in the moment. We can give them the gift of gratitude.

Please join us for one of our study group meetings or Empowered Wealth workshops where we teach the Levels of Gratitude.

Avi Kantor

Gratitude and “Affluenza”

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While driving drunk in June of 2013, a Texas teenager Ethan Couch lost control of his pickup truck at high speed, killing four bystanders and severely injuring several passengers in his vehicle. Couch is the son of a very successful – many would say “wealthy” – businessman.

“A psychologist testified that 16-year-old Ethan Couch, charged in the deaths of four pedestrians while driving drunk, suffered from the condition in which children — generally from richer families — have a sense of entitlement, are irresponsible, and make excuses for poor behavior because parents have not set proper boundaries.” – USA Today, December 14, 2013.

The tragic case of Ethan Couch drew international headlines and scorn from nearly all circles because of the leniency of the ultimate sentence (10 years of probation) and the lack of an apology from the defendant. At the heart of that scorn was the perception that entitlement is a deep, chronic character flaw of wealthy children and young adults. The common term for this condition is “affluenza”, a term that suggests that the pattern of behavior is like an incurable disease specific to children of wealth.

More on Ethan Couch and Affluenza

My experience, however, and the experience of many of my colleagues is that entitlement can be counteracted with gratitude and that, over time, gratitude can rewire a young person’s brain and transform entitled children and young adults into grateful ones.

Empowered Wealth provides us with a wonderful tool, the Levels of Gratitude. A way we might use this tool to combat “entitlement” would be to begin with respect for ourselves and for others. Can we demonstrate to our children that we respect our health and well-being, our family and others, and our faith enough to say “no” to destructive behaviors? Can we stay true to this gratitude principle if and when our children falter or rebel? Can we set limits and hold our children accountable when they cross the line into entitlement and disregard for others?

We can give our children and others a gift that’s worth more than most of the “things” they think they may want in the moment. We can give them the gift of gratitude.

Please join us for one of our study group meetings or Empowered Wealth workshops where we teach the Levels of Gratitude.
Avi Kantor

Working With Gratitude

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“Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos to order, confusion to clarity. It can turn a meal into a feast, a house into a home, a strange into a friend.”

– Melody Beattie

Principle #10 of the Certior True Wealth Design Team Manifesto is “We are guided by Gratitude in our thoughts and actions.”

What does that mean? More importantly, what might it mean to you as one of our clients or collaborators?

Adopting the model developed by Lee Brower and Empowered Wealth, Gratitude begins with respect and common courtesy. These are the rudimentary elements of a civil society; sincerely expressing “please”, “thank you”, and “you’re welcome” for the things others do and the goodness we experience, however large or small. This is how we always aspire to interact with our clients and collaborators.

Gratitude is also about appreciating the people in our lives, the opportunities we have, the material things that we have, our experiences, and the wonders of nature. This is what we teach and try to embody in our work and within our own families. It is only through deep and sincere Gratitude that good fortune and financial wealth becomes True Wealth.

Gratitude is about being inspired to express care and compassion; it’s about giving unconditionally as opportunities to do so present themselves. Whether it’s helping our clients, our colleagues, our collaborators, or even strangers, we aspire to let the spirit of giving inform our thoughts and our actions.

Gratitude by its very nature is empowering, just as ingratitude is disempowering. We all are susceptible to episodes of ingratitude; we’re human and can easily take for granted the people and things that are good and important to us. That’s why the regular practice of Gratitude is embedded in the work we do and the way we aspire to live our lives.

Read More About The Certior Group True Wealth Design Principles

Avi Kantor

The CERTIOR Group, LLC

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