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SUPPORTER’S REPORT


Self esteem is more important than money “Wealth is secondary to self esteem. You will do more damage destroying a person’s self esteem than by destroying their wealth.” – a (very wise) patriarch. I couldn’t agree more. Wealthy families are at


an advantage when it comes to applying wealth strategically, not only for education, but as a foundation to achieve something meaningful. A conversation about family wealth could be directed into helping children to ‘climb their own mountains’ and develop self-esteem along the way.


Wealth predominantly tied up in the business makes a big difference to the conversation I was often referred to stories along these lines (this story quotes a matriarch who inherited significant wealth): “When I was growing up, there was never any


discussion about wealth. Rather, I recall stress at the dinner table when mum and dad were talking about troubles in the business. The whole of the wealth was the business and we never saw any money. If there ever was a trace of money, it was reinvested back into the business.” Wealth in a business is illiquid and subject to


volatility. There is no comparing a business worth $100 million to an equivalent investment portfolio of stocks and bonds. Wealth in a business can also be much harder to


hide. On the internet, children can find information about businesses and form their own conclusions about family wealth (which might be grossly incorrect). When a business is central to the wealth, issues


of succession in the business and grooming the next entrepreneur in the family to take over, come to the forefront of conversations. Consider complex estate planning goals as well.


My view is that the family patriarch or matriarch should


articulate their vision for the future of the family. This vision is often encapsulated, formally, in a family charter document.


Keep it low key Children learn from your behaviour. “Example is not the main thing in influencing others. It is the only thing.” – Albert Schweitzer Most of my families referred to the negative impact that an ‘over-the-


top, ostentatious lifestyle’ may have on the next generation, sometimes even referring to themselves. “I under indulge the children so they don’t get a sense of


entitlement.” – a respondant. “My parents were paranoid about spoiling us. They wanted to stamp


out any sense of entitlement or superiority.” – one of the very wealthiest family members. Think about the negative impact on your child’s ability to build


meaningful relationships with their peers, if those same peers perceive them to be arrogant by way of the attitude of superiority.


Take the example of a son being groomed to take over and steward the business for future generations. Is it fair to equalise this value with other children? Maybe. Maybe not. What would you prefer? To gain control of the family business which was last


valued at $100 million and which employs 500 people, carries debt, is highly illiquid and needs you to work an 80 hour week (and has an expectation of surviving for another three generations); or Take a cheque for $50 million? At a recent conference, 90% of an audience of


80 voted for option 2. My advice is simple, engage in conversations that


will have the outcome of keeping differences off the children’s ledger cards. A transparent conversation about succession of business assets, explaining why an equal financial split might not achieve equity, an understanding of what you consider to be fair ‘rules’, will help alleviate a family dispute that will, in turn, destroy wealth, and maybe the family itself. Interestingly, all families I interviewed recommended that children pursue outside education and training


FAMILY OFFICE: THE FUTURE 83


INVESTMENT, WEALTH & SECURITY


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