This page contains a Flash digital edition of a book.
SUPPORTER’S REPORT


before coming into the family business “to develop their own abilities and discover their own talents which they can then bring back into the business”. As a very successful entrepreneur quoted (who runs


a global business): “I stuffed up by bringing my son into the business too


early. He resisted me all along and I ended up having to fire him or else I would have lost the respect of my management team”. That same client confesses his son rejoined the


business a decade later and has earned the respect of everyone in the business (bringing in new skills that he acquired in outside roles). There is a common lesson here: children resist being


taught by their parents! So, my view is to let your children learn from cuts and


bruises inflected by non-family bosses. Just like they do when they are coached to play on the sports field (it’s OK for the coach to yell at your child from the sidelines, but it’s not quite OK for you). Family harmony is far better preserved!


It is different for women All wealthy women I interviewed talked about difficulties in their marriages because their husbands felt some- how inferior. A Chinese-Australian lady told me she was


continually told by her parents she would get nothing because “she must live off her husband”. She confessed to me that she grew up worrying about finding a husband capable of supporting her, otherwise she would be penniless. Many Asian families still believe that wealth should


not flow to girls because when they marry, they become part of another family and money should “stay with the family name”. These Asian themes are synonymous with past


Western culture (recall the primogenitor system where the eldest son inherited all). Sadly, it is more and more likely that these issues will be played out under the rules of Family Law Courts, not in accordance with the rules or wishes of the parents. My personal view is that it is harder for wealthy


women to find love and enjoy happy relationships. I therefore encourage open conversation with daughters so they know they need special safeguards and protection, but most importantly, that it is normal and that they will talk about it openly and seek help.


Philanthropy is a great aid to education Most people confess a desire for their children to be grounded and to recognise that they are fortunate, not superior, to have wealth. An introduction to philanthropy, whether it be via a


family foundation, or otherwise, can be a great way for children to recognise how privileged they are and how wealth can be used to better humanity and society. Volunteering by parents can also set a great example for children to follow.


84 FAMILY OFFICE: THE FUTURE


A family foundation, in particular, has great benefits


in teaching children about managing portfolio wealth. They learn, with the aid of investment professionals, about maintaining a diverse portfolio, due diligence, liquidity, risk, volatility and process. They learn to become a member of a Board. Being continually ‘hit up for money’ they also learn how to say ‘no’ through processes of due diligence, strategy and formality in bequest programs. All of these skills can be transferred to other aspects in life. Think of friends wanting financial support, being approached to invest in the latest business at a party. Children will develop tools and understanding to say ‘no’ through process, rather than ‘yes’ through pressure and guilt. I quote more than one person: “The family


foundation continues to be one of my greatest sources of pride”.


Interestingly, all families I interviewed recommended that children pursue outside education and training before coming into the family business “to develop their own abilities and discover their own talents which they can then bring back into the business”.


Give children some responsibilities that promote learning. I actually learnt about my family wealth when I completed my training as a Chartered Accountant. My father thought he could save money and said, “here, you can do the family tax returns”. I certainly learnt about the family wealth and it was in a structured and process driven way. A positive experience in my view. Several clients encouraged giving children a small


portfolio to manage themselves, but only after they have demonstrated suitable maturity, and as one matriarch stated, “only after they have graduated and completed their first full year of work”. Offering board positions (after requisite training) is a


great way to educate your children about structure and process. They learn to listen to other people’s views and when they see the respect that outsiders have for their parents, that can enhance the child’s respect for you.


In conclusion My personal and strong view is in favour of transparency (evolving and tailored to the circumstances of each child). For without transparency, you cannot build the structures and process to protect wealth. And it will ultimately be the structures that protect the family from the wealth! I can’t sum it up any better than this third generation


patriarch: “For a well balanced child, the revelation of wealth should have no impact”.


Sean Cortis is a chartered accountant and a partner at Chapman Eastway chapmaneastway.com.au +61 2 9262 4933


FOOTNOTES: 1. SEI Wealth Management as reported in the Wall Street Journal


2. US Trust’s Insight on Wealth and Worth Series


3. US Trust’s Insight on Wealth and Worth Series


4. US Trust’s Insight on Wealth and Worth Series


5. T. Rowe Price 2012


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112