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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Serie: Bloomberg
- Sprache: Englisch
What matters most in managing the family enterprise Complete Family Wealth is a comprehensive resource for growing, maintaining, and managing wealth across generations. A successor to the classic Family Wealth, now in its 20th year, this book provides updated and expanded guidance to change the way you think about your wealth and legacy. This team of expert authors--who brought the field not only Family Wealth but also Family the Compact, The Cycle of the Gift, The Voice of the Rising Generation, and Family Trusts--ground Complete Family Wealth in a clear account of the "five capitals": human, intellectual, social, spiritual, and financial. The discussion covers the "what," "who," and "how" of family wealth management in clearly-delineated chapters that allow you to dip in as needed, from the principles of family enterprise to family governance, philanthropy, and more. Each family member plays a distinct role, and by exploring each member's responsibilities in terms of the family enterprise, this book provides insights and ideas for real-world families struggling with all-too-common challenges. Growth-oriented practices today lead to generations of family flourishing in the future. This book provides the answers you need along with guidance and strategy for keeping your family's complete wealth intact. * Understand the five forms of capital that comprise "complete family wealth" * Explore the roles of each family member in helping the family enterprise flourish * Learn how friends, trustees, and advisors contribute to family wealth management * Adopt specific practices that help families grow their complete wealth and ensure its survival through generations Family wealth can sometimes feel like more of a burden than a blessing. Developing the right understanding, character, and structures can improve family enterprise management and protect all your family's capital from whatever the world throws your way. Complete Family Wealth is a one-stop reference for ensuring a positive legacy for future generations.
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Seitenzahl: 270
Veröffentlichungsjahr: 2017
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Copyright © 2018 by James E. Hughes, Susan E. Massenzio, and Keith Whitaker. All rights reserved.
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ISBN 978-1-119-45321-5 (Hardcover)ISBN 978-1-119-45325-3 (ePDF)ISBN 978-1-119-45318-5 (ePub)
To my father, James E. Hughes, Sr., an extraordinary adviser to families and the wisest man I know;
to my mother, Elizabeth Sophie Buermann Hughes, who first taught me about family and who keeps creating family;
to my professional partner Anne D’Andrea, who after 32 years still keeps me sane and helping and for whose help I am beyond grateful;
and to my partner in life and learning, Jacqueline Merrill, who put her arm through mine.
James E. Hughes
To my mother, Viola, for giving me a vision of what a complete life, well spent, is. Thank you.
Susan E. Mazzenzio
To my family, my friends, and my loving partner—my complete wealth.
Keith Whitaker
What is very easy? To advise another.
What is very hard? To know yourself.
Thales, the first philosopher
Contents
Preface
Introduction An Invitation
A Welcome from James (Jay) Hughes, Esq.
A Welcome from Dr. Susan Massenzio
A Welcome from Dr. Keith Whitaker
The Path Ahead
Part One
Chapter 1: Complete Wealth
Right Understanding
Complete Wealth
The Five Types of Capital
Growing Capital
A Provocative Comparison
Measuring Qualitative Capital
The Family Balance Sheet™
Chapter 2: Family Enterprise
Affinity
Flourishing
The Three-Circle Model
Active Ownership
Transition
Time
Chapter 3: Principles
Part Two
Chapter 4: The Rising Generation
Why Rising?
The Effects of the Black Hole
The Challenge
Meeting the Challenge
Rising in the Middle Passage
Setting Off
Chapter 5: Parents
Giving
Know Thyself
Nothing Too Much
How Much Is Enough? Fair versus Equal?
Communication and Control
Giving as Grandparents
Letting Go
Chapter 6: Spouses
Tough Questions
Fiscal Inequality
Three-Step Process
Spouses and Family Meetings
Blended Families
Chapter 7: Elders
“Old Age Hath Yet Its Honor and Its Toil”
Characteristics
Two Practices
Chapter 8: Trustees and Beneficiaries
Human Consequences
Vocabulary
Activity
Distributions
Conclusion
Chapter 9: Advisers
Questions to Consider
Money
Personnes de Confiance
Counselors, Coaches, and Facilitators
Mentors
A Father’s Wisdom
Chapter 10: Friends
Friends as Wealth
Wealth and Friends
Part Three
Chapter 11: Character
History
What Works
Chapter 12: Work
Meaning
Strengths and Flow
The Human Work
Play
Chapter 13: Talking with Children about Wealth
Development
The Power of the Teachable Moment
Are We Rich?
Curiosity
Allowances
Adolescents
Managing Privacy
Chapter 14: Prenuptial Agreements
Introduction
What Is a Prenuptial Agreement?
How Best to Approach a Prenuptial Agreement
For Parents of the Prospective Spouses
Chapter 15: The Family Executive Summary
Definition
Purpose
Process
Presentation and Next Steps
Chapter 16: Family Meetings
Preparation
Why?
What to Do in a Family Meeting?
Who to Have at a Family Meeting?
When to Hold a Family Meeting?
How to Run an Effective Family Meeting?
Where to Hold the Meeting?
Chapter 17: Family Stories and Rituals
The Stuff of Life
Rituals
Chapter 18: Family Mission Statements
Why a Family Mission Statement Matters
What Is a Family Mission Statement?
How to Create a Family Mission Statement
How to Use a Family Mission Statement
Chapter 19: Family Governance
Humility and Freedom
Constitution, Council, and Assembly
Design
Ratification
Chapter 20: Financial Capital
Return
Two Practices
Chapter 21: Family Philanthropy
The Benefits of Family Philanthropy
Philanthropy for the Family
Getting Started
Magnificence
Conclusion Individual Flourishing
Many Blossoms
The Five Ls
The Four Cs
Three Little Words
Epilogue The Future?
About the Authors
Index
EULA
List of Illustrations
Figure 2.1
Three-Circle Model
Figure 2.2
The Reality for Many Family Enterprises
Figure 2.3
When Ownership Is the Priority
Figure 2.4
Giving Family Its Place
Figure 4.1
The Four Cs
Figure 8.1
Example of a Trustscape
Figure 8.2
The Traditional Trustscape
Figure 8.3
Model for a Humane Trustscape
C.1
The Four Cs
Guide
Cover
Preface
Pages
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Preface
This book culls the essence of our prior books: Family Wealth (1997 and 2004), Family: The Compact Among Generations (2007), Cycle of the Gift (2014), Voice of the Rising Generation (2015), and Family Trusts (2016). It also captures insights that we have shared in dozens of articles, white papers, and blog posts, as well as in presentations to hundreds of audiences. We deeply appreciate all that we have learned from our many reviewers, our respondents, and the participants in these events.
Each chapter of Complete Family Wealth connects to others through themes and concepts; each can also be read on its own. Please feel free to pick and choose among them, based on the topics of greatest importance to you and your family.
In Complete Family Wealth, we have sought to present enduring ideas and practices. These are the insights and the activities that we have seen make a truly positive difference in families’ lives over the long-term.
Following are some of these enduring principles, which are reflected more fully in the chapters that follow:
The goal is not “beating the ‘shirtsleeves to shirtsleeves’ proverb” in the sense of keeping only financial capital in the family. Financial capital is important. But references to “the proverb” have caused many readers to think that we advocate attention to qualitative capital for the sake of financial capital. The opposite is the truth.
Though our subject is “family” wealth, this wealth resides in individual family members. Their relationships are crucial, but the health of relationships and the family depends on the prior health of the individuals who are related.
While “governance” (shared decision-making) is important and sometimes overlooked, too much emphasis on governance ends up imposing “forms” on the family under which it cannot “function.” Sometimes it is easier for advisors to hand a family a draft constitution than to help them to live well together. But the former, if ever adopted, should serve the latter.
Introduction An Invitation
Welcome to the journey. We hope that in reading Complete Family Wealth you will discover new ideas and practices that will enable your family to grow its qualitative and financial capitals long into the future.
Complete Family Wealth marks a stage in the journey of we three coauthors, at times individually, more recently together. As we invite you to join us, we begin with a short description of our paths thus far.
A Welcome from James (Jay) Hughes, Esq.
Welcome back readers of our previous books, and welcome new readers! For those of you pilgrims wearing your scallop shells and round hats and carrying your staffs, walking with us to Santiago to discover how to help your families flourish, please sit down, take off your regalia, and join Keith and Susan and me in the next steps of our common pèlerinages. For those of you just joining please ask those who are already on this journey for their help and their stories of success in overcoming the obstacles their families face to flourishing.
As many readers already know, my journey to help my family deal with the proverb of “shirt sleeves to shirt sleeves in three generations” began when I was four years old. I overheard my mother, Elizabeth Buermann, in an agitated state, explaining to my father, James E. Hughes, her concerns about money and her worries about the proverb. Her worries continued until her death at the age of 95.
Why? Because her father, my grandfather, had gone bankrupt in the Depression. She had come home one day to find a “For Sale” sign on the front lawn of her home in Newark, New Jersey. Her family until then had large financial resources inherited from her grandfather, a German immigrant, an inventor, and a successful industrialist. Not knowing why that sign was there she went into the house and found her mother. Her mother told that her father had gone bankrupt by virtue of depositing his money in his father’s now busted savings and loan. Then her mother shared with her another terrible truth. My grandmother had only a high school education, had been the single cosseted child of devoted parents, and till that day had “help” in the house. She told my mother that, as my grandfather “did not know how to work,” she was going to work the next day. My grandmother worked for 50 years, into her mid 80s, as a receptionist in a hospital to provide for her family. So it is quite understandable that my mother had these fears of the proverb: she had been living it every day since her youth.
My mother’s recital of these realities to my father made me want to help her put those fears aside. It also made me appreciate how emotionally pernicious the effects of the proverb are.
As readers of Family Wealth know, I met the proverb again many years later, in 1974, when I was asked by the sons of an enormously successful businessman in Singapore to come visit their father.
I was naturally curious why I, a still very wet-behind-the-ears private-client attorney, was being invited to travel halfway round the world at substantial cost to the family when there must be excellent legal counsel available in Singapore. When the day of the meeting came, I still had no idea why I had been invited. After entering his office and solving, over tea, all the macroeconomic problems of the world, I was still wondering. Finally, this worldly-wise man said, “Mr. Hughes, you are probably wondering why I invited you here. We Chinese have a proverb, ‘Rice paddy to rice paddy in three generations.’ I don’t want that to happen to my family. Can you help us using the techniques of families in America to solve this problem?” I was happy to discover that I could help him.
In the years since 1974, as I have traveled to meet with families around the world, I have heard the same idea expressed in varying ways. The shirtsleeves proverb turns out to be culturally universal, capturing a great truth about wealth and human behavior.
As a result, the proverb has been the question that has dominated my personal and professional life.
One of the most wonderfully positive parts of my journey has been to be a part of my parents’ creation of a flourishing family from the ashes of both of theirs. Today we are a family, including in my case, wonderful additions from my wife Jackie’s family. We are a flourishing, tightly-knit group of three living generations with a strong bond to the gifts of my parents’ generation. Our tribe meets my test of a flourishing family: every generation has the contact information of their first cousins and, if they called any one of them, their voices would be immediately recognized. Do we face obstacles to continuing this flourishing? Yes we do. Are we facing them head on? Yes we are.
To face the proverb’s challenges, I set out to meet, learn from, and befriend remarkable professionals who share my passion to serve families. These friends and colleagues are too many to name here. Two of them, Susan and Keith, joined me in this effort to produce Complete Family Wealth, and with them I wrote two other books, The Cycle of the Gift (2013) and Voice of the Rising Generation (2014). We came together, over 10 years ago, at a time when I had started to doubt whether I had anything more to say. Our conversations opened new vistas to me of ideas and of hope. I came to see myself in the true elder role: not leading or doing but rather convening those who wish to learn and encouraging those who seek to act.
I am now in my 75th year of life and 50th year of practice. I am deeply humbled to see that, over the past 20 years, our little books have taken on lives of their own. They have done so—and I hope that Complete Family Wealth will do so—because you, the reader, will, I believe, find at least one suggestion here that will prompt you to have the courage to believe that the shirtsleeve proverb can be avoided. I believe it can!
A Welcome from Dr. Susan Massenzio
I was born into a family of second-generation immigrants to America. Resilience, hard work, and community were values that were woven into the fabric of my family as well as the families of many other immigrants.
I was fortunate to have loving grandparents and parents who led their lives with integrity and generosity. I learned at a very young age that money was a means to independence, choice, and the ability to be generous with people whom one loves. I was also gifted with good health, a good mind, and an adaptive attitude. I inherited much qualitative wealth.
My grandfather was very resourceful and made several good real estate investments, which he left equally to his four children. My father started a family business with his brother that had its share of success and hard times. I witnessed firsthand the realities of a family business: the challenge of succession without adequate planning, the conflicts that ensued, and the impact on the business created by spouses who married into the family.
My mother is a remarkable woman—now 101 years old—who decided to take on a second job as the family business was failing, to provide extra money to send me to college. Upon graduation, I worked in a state institution for children with special needs and then I transitioned to teaching special needs children in a public school. It was during my time teaching children with special needs who were living with their families that I saw the impact of having a child with special needs on the family. This experience prompted me to go on to graduate school with a focus on family dynamics.
For several years, I taught undergraduate and graduate courses in organizational psychology with a focus on the application of psychology to organizations and families. For most of my career, I have focused on the application of psychological theories and practices to positively impact leadership development in public and private companies, foundations, and families.
I believe that my professional journey has come full circle. It has gone from personal involvement with family business, to professional work with families with children with special needs, to corporate leadership, and then to families with the special need of wealth, to benefit family members and the communities of which they are a part.
What money I have, I have earned. I know the pride that comes from earning one’s own money and the joy of being able to use it to help others. I have also been fortunate to have enjoyed the peace that comes from the sense of having enough.
In recent years, I have had the good fortune to work with two wonderful professionals: my loving partner, Keith Whitaker, and our dear friend, Jay Hughes. I have also been able to experience the joys and challenges of great corporate leaders and enterprising families with significant wealth. My hope is that I will be able to continue to have a positive impact on the lives of others through my own life experience, education, and commitment to cultivating qualitative wealth.
A Welcome from Dr. Keith Whitaker
My journey into this field began with my 17th birthday. I grew up in a middle-class home. I didn’t think much about money; we didn’t have too much or too little. Then, the afternoon of my birthday, my mother took me aside and said, “I want you to know that your grandfather has been very successful in business, so you can do whatever you like in your life.”
I remember feeling at the time that this was an odd comment. I already believed I could do whatever I liked, with or without money.
However, learning about my grandfather’s financial success did make me feel different than I had before. I felt that more was expected of me. “To whom much is given much shall be required.” When I went off to college—which my grandfather paid for—I made a point of bringing him my transcript each semester, to show what I had achieved. With the gift, I felt a responsibility.
I also felt free—free to pursue a subject that truly interested me, classical philosophy, without focusing on my expected salary. I didn’t have any student loans. I pursued a teaching career without the fear of being destitute.
These are some of the positive elements of the experience of learning about family wealth at an early age. But I found that there are also negatives.
For example, the flip side of freedom is a sort of lightness. This is a sense that no matter what I did, I could make up for bad choices or not deal with the frustrations that most other people face. For example, I loved philosophy but not the many tiresome parts of the job of teaching, and so I left it. Since that time, I do have some regrets, which money can’t eliminate.
The flip side of feeling special is that you can become a mark. People with money often fall in with others who seek them out for their money. I was taken advantage of at times, and it was deeply hurtful.
The flip side of feeling gifted is entanglement. As a recipient, I felt I should give a return to my family by taking on various responsibilities around wealth management, trusteeship, service on the foundation board, and so on. These responsibilities took up a lot of time, taking me away from sorting out my own dreams. While I learned much from this work, it was not my true calling. It took a long time for me truly to become my own person.
When Jay invited me to join him in this journey, I knew that we would make excellent partners. We share the classic understanding of financial capital as a tool to pursue the ultimate qualitative goal: the inquiry into and the practice of living well.
The same is the case with Susan, whom I invited to join me in the journey of work and life almost a decade ago. Little did I know then that I would learn from her that our true resources are our hearts and minds, and that our greatest gift is time, used well.
The Path Ahead
To orient you in this journey, we have organized the book into four main parts:
Part One (
Chapters 1
,
2
, and
3
) lay out the subject matter under discussion, the “what.” They address what we mean by family, wealth, and enterprise.
Part Two (
Chapters 4
through
10
) discuss the host of roles crucial to family enterprise flourishing. The “who” includes the rising generation, parents, grandparents, spouses, elders, trustees, and beneficiaries, advisers, and friends.
Part Three (
Chapters 11
through
21
) move to the “how,” specific practices that families can use to grow their complete family wealth.
We end with a conclusion on individual flourishing that aims to give you best wishes and thoughtful guidance as you continue your own journey and, finally, with an epilogue that seeks to peer a little way into the future.
Again, feel free to read these chapters in order or pick and choose based on your interests. Each one stands on its own.
Rather than a static bibliography in these pages, readers who want to explore the substantial and growing literature on family wealth should visit our website: www.wisecounselresearch.org.
Part One
Chapter 1Complete Wealth
Twenty years ago, when Family Wealth was published, its subtitle was Keeping It in the Family.
Many readers assumed that the “it” referred to financial capital. After all, doesn’t the proverb—“shirtsleeves to shirtsleeves in three generations”—refer to a family’s economic condition?
From this assumption, an entire industry has grown, an industry aimed at helping families correct their family dynamics to preserve and grow their financial capital.
Likewise, many readers, family leaders, and advisers have concluded that the most important thing is to seek to beat the proverb and do what it takes to keep their financial capital in the family.
Right Understanding
But this conclusion is wrong.
The “it” is not money. It is the family’s qualitative wealth—its human, intellectual, social, and spiritual capital—in addition to its quantitative, financial capital.
Beating the proverb is not a matter of simply using various tools and techniques—family meetings, values clarification, communication ground rules, and so on and so forth—to make family members better stewards of their money. Keeping your money in your family is not necessarily a bad thing. But it is not the main thing. It is only one-fifth of the task. And it is the least important fifth, when it comes to happiness.
The goal of Complete Family Wealth is to help you identify, inventory, and grow your true, or complete, wealth as a family. This complete wealth far transcends money. Growing complete wealth also meets the criticisms of those—from Andrew Carnegie to the members of the Occupy Wall Street movement—who denounce inherited financial capital as bad for families and for society. Complete family wealth improves the lives of family members and benefits the communities of which they are a part.
One family leader captured the distinction for us by quoting her grandmother. This wise woman, she said, would often say, “Our family has always been rich, and we’ve sometimes had money.” There is the distinction between qualitative and quantitative capital in a nutshell.
As with any important undertaking, it is crucial to begin with right understanding. To that end, as you read this book and think about wealth, notice when you automatically associate that term with financial capital. That is the association we are seeking to challenge. It is part of being clear about your intention. If you choose to pursue the journey of family wealth, be clear just what kinds of wealth you are trying to keep in the family.
Complete Wealth
We have said that complete family wealth comprises four qualitative types of capital: human, intellectual, social, and spiritual—and the family’s quantitative assets, its financial capital. The goals of the rest of this chapter are to define the five forms of capital, outline ways of growing them, and suggest a method for measuring the growth of qualitative capital.
Rarely do families measure their human, intellectual, social, and spiritual capital. That’s because they often do not even recognize that they own these forms of capital. But can you imagine any enterprise being successful if it didn’t track four of its five forms of capital?
The failure to acknowledge, measure, and grow the human, intellectual, social, and spiritual capital of a family are principal causes for the failure of family flourishing.
As you read you will likely notice overlaps among the four types of qualitative capital. That is because each one captures an aspect of the same thing: the family’s true flourishing.
The Five Types of Capital
Human Capital
The human capital of a family consists of the individuals who make up the family. Their human capital includes their physical and emotional well-being as well as each member’s ability to find meaningful work, establish a positive sense of identity, and pursue his or her own happiness.
Intellectual Capital
The intellectual capital of a family is composed of the knowledge gained through the life experiences of each family member or what each family member knows.
Some signs of intellectual capital include family members’ academic successes, career growth, artistic achievements, their understanding of their individual and family finances, and their ability to teach and learn from each other about what they know.
Social Capital
Social capital refers to family members’ relationships with each other and with their communities.
No family exists without some social capital. Some key indicators of it include the family’s ability to make thoughtful, shared decisions together; to welcome new members into itself; and to give of itself—in time, talent, and treasure—to the larger society of which it is a part.
Spiritual Capital
Spiritual capital is the family’s ability to share and sustain an intention that transcends each member’s individual interests. Sometimes that shared intention is described as a shared dream.
This capital is not necessarily equivalent to a family’s religious beliefs or traditions, though such a tradition may express and nurture spiritual capital.
No family begins the journey of family wealth without some sort of shared intention, that is, without some form of spiritual capital. Spiritual capital also includes humility—the recognition that this journey is fraught with challenges and exceeds the strength of any one of us alone—and gratitude—toward those with whom we share the journey, those who came before, and those who will come after us.
Financial Capital
The financial capital of a family is the property it owns. This property may include cash, public securities, privately held company stock, and interests in private partnerships.
The focus of this book is qualitative capital, not financial capital. But that doesn’t mean that we think that financial capital is unimportant. Financial capital greatly contributes to families’ ability to cultivate their other forms of capital. It makes possible quality health care, education, philanthropy, and the time and opportunities to come together and talk about building and sustaining a shared dream. The opportunity to cultivate these qualitative assets is a great gift, which financial capital makes possible.
Growing Capital
Wealth preservation is a dynamic, not a static, process. To succeed, each generation of the family must adopt a first-generation—a wealth-creating generation—mindset.
Any family whose complete wealth—qualitative and quantitative—is simply maintaining value rather than growing is either in or in danger of entering into a state of decay or entropy. A family, like every investor, must maximize its return on capital if it is to achieve the growth necessary for preservation over a long period of time. What are some of the things a family can do to grow its human, intellectual, social, and spiritual capital?
Human Capital
With respect to its human capital, a family can consider implementing the following practices:
Promote each member’s individual flourishing. (For more on the psychological aspects of individual flourishing, see the Conclusion.) This includes providing the best possible medical care to every family member whose pursuit of happiness is blocked by addiction or physical or mental illness.
Ensure that every family member’s basic requirements for food, shelter, and clothing are met, and for members who experience a life emergency, that those needs are met at a level adequate to allow them to regain the capacity for the pursuit of individual happiness.
Emphasize the importance of work to an individual’s sense of self-worth and assist each family member in finding the work that most enhances that individual’s pursuit of happiness. All such work is of equal value to the growth of the family’s human capital, regardless of its financial reward.
Encourage all family members, especially rising generation members, to develop a strong sense of personal identity separate from the family’s financial success.
Promote the family’s geographic diversification. The world is becoming smaller every day. Families must participate in all corners of the world if they are to meet today’s global challenges.
