Passing the Torch

Preserving Family Wealth Beyond the Third Generation

Ilze Alberts

• Publisher: Wiley
• Year: 2018
• ISBN:
  9781119486435
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Vermögensverwaltung

Sustain and grow your family's capital throughout generations

Families need to have vision and foresight to sustain the family's capital throughout generations. Unfortunately, many of them build wealth effectively but find, near the end of their lives, that it has little sustainability to prepare the next generations that will be the beneficiaries of their hard work.

Passing the Torch teaches high net-worth families how to foster a strong family dynamic to be truly generational. Inside, first-generation wealth creators will learn how to create a culture of sustainability and growth and endow subsequent generations with the tools and mindset necessary to prosper. Subsequent generations will learn how to receive the torch, sustain and grow the family's capital and pass the torch to the next generation.

• Discover the importance of emotional intelligence

• Learn to view generational wealth from a behavioral lens

• Transcend financial instruction to find a sense of purpose and direction

• Map out your family's legacy

Whether you're consulting an advisor or taking matters into your own hands, this is the essential reference you need to sustain wealth for generations to come.

CHAPTER 1
What You Perceive Is Missing Drives You

Every person has unfulfilled wishes and dreams. As human beings, if we keep on perceiving something is missing, we feel unfulfilled. It's the perception of emptiness, or a void, that becomes the driving force for a person to take some action or perform some service and gives it priority and importance. Without a perception of the void—the feeling that something is missing—people often will lack drive.

It's important for moving forward and for the creative process that people perceive a void in their life. The emptiness creates the driving force and the creative force of innovation. When individuals become truly frustrated with their circumstances and they know life can be better, creative forces enter the mind and innovation is born. Most of life's comforts and enhancements were born out of frustration with what is and the desire to have something better and different.

When you're content and successful, that can be the ceiling for you. But when you have a feeling of discontentment and a perception that you're unsuccessful, the driving force to make a change and to create a better life is born. From birth, our inabilities and discontentment assist us in our milestones. For a baby, the frustration of being immobile creates the desire for movement. For a young child, the frustration of not being comprehended creates the mastery of language. Whatever you perceive is missing in your life, you wish to have.

When a person is sick and has ill health or injuries, health and physical vitality become a priority of high value. When a person perceives himself or herself to be dumb or ill informed, mental empowerment becomes a high value. The man or woman with a perception of social isolation desires friendships and social networks. The person without a family or a couple without children often develop the desire for a family and having a family becomes a high priority. People without a vision and a life purpose seek meaning in their lives. When it's time to choose a career or a vocation, the search for service and finding a vocational purpose becomes of high importance. The search for money and the absence of money can become a strong driving force and a high priority for the man or woman who perceives lack of wealth as creating pain, suffering, challenges, and feeling unsuccessful.

Whatever you perceive is most missing in your life becomes that one thing you seek. Whatever you're seeking, you're willing to spend your time on it without hesitation, and nobody has to remind you to attend to it. You're thinking about it a lot and it dominates your thoughts. What becomes important to you, you wish to read about and learn about, and you have a hunger for knowledge about that topic. Anything you're curious about and desire to know more about will prompt you to put in the time, energy, focus, and dedication to learn about it. You'll have the intrinsic motivation to equip yourself with wisdom and knowledge on that subject. Just by watching what a person reads or searches for on the Internet, you can get a strong indication of what the most important priorities are for that person.

Perceiving a Lack of Money and What That Can Ignite

I've heard many people's stories over the years and I've read enough biographies, books, and articles about successful and financially empowered people to know that most of the time, a perception of lack and void is the innovating trigger for wealth creation.

A family who consulted with me shared their family story, and it echoes many other stories with similar narratives. The first generation (man or woman) moved at a very young age from one country, which at the time of exit was in a financially disempowered state, to a country with better prospects. Some of these émigrés are as young as fourteen years old. The young man or woman arrives in a foreign country—the proverbial promised land—with very little money, education, or possessions. The individual narrative will be different after arrival, but typically the story goes like this: They start working as blue‐collar laborers, learn to speak the language, and start to make an income. This humble beginning—and the dire need for money for pure survival—ignites in the man or woman the extraordinary character traits of survival, self‐growth, entrepreneurship, innovation, creativity, and perseverance.

The first generation—with the high focus, attention, time intensity, high drive, and dedication to fill an empty wallet—develops a highly concentrated and narrow focus on wealth creation. The struggle leads to the development of character, determination, the willingness to work hard, and perseverance. Many of them become larger‐than‐life figures. It's understandable that when a void gets filled and what has been missing is provided, the idea of ownership is an easy next step for the person creating the wealth. It's undeniable that what you perceive to be your highest, most important priority becomes your identity and your destiny in life. It's inevitable that your focus, intention, attention, intrinsic motivation, time intensity, and inspiration become part of who you are, defining your identity, what your life demonstrates, and what you're known for.

What are the most important mindsets and life‐long habits that these individuals develop when they focus their intention on creating wealth—first of all, narcissistically, for improving their own lives and second, altruistically, for improving the lives of their family? These mindsets and habits are recommended for every generation. Just as money can grow like a snowball in a family, the same is true for mindsets and habits. They can also grow like snowballs in a family until the mindsets and habits become part of the family's DNA.

They Have a Vision for Their Family's Wealth Creation

They know that the secret to creating and growing wealth for their family is to have a big enough reason to want to do it. The desire to grow and create wealth to buy more things is not a good enough reason, although wealth does make it possible to buy more things. A bigger reason makes it more worthwhile. They chose to create and grow wealth for their family to give them the best as well as to make the world a better place. Imagine how fulfilling it would be if you, like Bill and Melinda Gates through their foundation, focused on increasing health conditions worldwide. In Family Wealth, James Hughes says, “A family can successfully preserve wealth for more than one hundred years if the family governance and practices are founded on shared values that express the family's differentness.” This can only be done if someone is creating and holding the vision for the family—a vision for at least a hundred years.

They Adapt the Best Strategy and Priorities to Create and Grow Their Family Wealth

Whenever I ask a group of people, “Who wants to be financially independent?” most people put up their hands. The reality is that less than 1 percent will become financially independent. To enable you to be true to your heart's desire to create and grow wealth for your family, you need to develop the right strategy, mindset, and priorities to do it. Set your attention on it, spend your energy on it, read and learn about it, talk about it, think about it, and be inspired about it. Learn to create and grow wealth through great service delivery and a strategic building up of wealth. Forget about quick fixes and overnight success. Strategies build wealth.

They Adapt the Eighth Wonder of the World

Albert Einstein referred to compound interest as the eighth wonder of the world. They understand the eighth wonder and know their money grows, even while they're sleeping. They develop the healthy habit of saving. Saving is another way to look at paying yourself first. The wealthiest people in the world keep a big portion of their wealth portfolio liquid, another form of saving. The more you save, the more money flows to you, because money goes where it is appreciated. Your emotions, thoughts, and feelings about your wealth will be less volatile the more you save, as your savings acts as your cushion.

They Learn to Manage Their Emotions about Money

Warren Buffett is famous for his wealth accumulation and for saying, “Until you learn to manage your emotions about wealth, you will not get more money to manage.” Feelings of guilt, fear, shame, and uncertainty are not the feelings of a wealth creator for the family. Instead, they develop the skill to make swift decisions with certainty and listen to their own genius inner voice. They learn life skills to manage their emotions.

They Value Teaching Their Children Good Money Habits

They start when the children are young and make it their focus and aim to teach them good money habits. They know children learn the most by watching them. They neither spoil them nor become a scrooge. I have to add that the most powerful families that build generational wealth for the benefit of the family and society start with educating their children when they're very young. Many first‐generation p...