Preparation is a Great Inheritance Tool

I have been part of conversation focused on what the best thing to inherit is. Some think it is cash. Some think it is real estate. Some think it is a portfolio of assets to be reinvested. I suggest it is being prepared, being prepared to become stewards of an incoming inheritance.

 

Studies show that for 90% of families where wealth makes it to the 3rd generation, it is gone by the end of this generation. This is not due to a fault of this generation. They are merely responding to a lack of preparation and instead doing what is naturally the course, spend, squander or squabble over the inheritance.

 

Each generation has a unique view and interpretation of its partnership with money and the family. The first generation carries the vision, the passion and focus to build a new company. This generation tends to sacrifice their personal life for the business. They must do so in order to build a successful enterprise.

 

The second generation has a different perspective. They have grown up with explicit or implicit expectations placed upon them to build on the family fortune that often conflict with their own personal objectives. Understandably this can create great friction. Couple this with squabbling that happens between siblings over the purpose of the wealth and there lays a sure recipe for even bigger problems. Studies confirm that 70 % of families lose their wealth by the end of the second generation.

 

For those families, whose wealth makes it to the grandchildren, there is a new perspective. The third generation is farther removed from the creation of the wealth. They are accustomed to being wealthy. From their point of view, having wealth is a birthright. They have never seen or been exposed to the struggle or the reason of making money. They are free to dream and create. They have never had nor needed the tools to build a productive life. They are only familiar with spending money.

In three generations, a family’s past and all its treasures will be lost and forgotten. Memories will fade as new generations spend their precious time scrambling to build a-new.

 

But when a family prepares its present and future for its inheritance, it can grow its bounty. A family who conscientiously grows and develops its assets, is called a legacy family. This is a family where the money as well as the family culture develops and is transferred from one generation to the next with purpose and intention. This type of family uses appropriate systems, tools and activities to stay connected through generations maintaining shared purpose, understanding, and trust. This family becomes a prepared family transferring its wealth with confidence it will grow in the family for generations.

 

Let me know your experiences on preparing inheritances for long term family connection. I would love to hear from you.

It’s Time to Alter the Traditional Financial Security Model

People are living longer lives. More years are being spent post work. And the current model of financial security funded by 401ks and social security is cracking.  Three out of five boomers, according to a recent report from Transamerica Center for Retirement Studies, are forced to retire due to “layoffs, organizational changes, health concerns and family responsibilities.” Only one in six can retire early, with a secure financial net to carry them through their golden years.  The 2008 “Great Recession” hit the boomers hard as many found their retirement savings severely reduced, were laid off, or could not find increasing salaries above inflation adjustments to fund their lifestyles.

 

Boomers are not alone.  The Generation Xers, born between the mid-1960s and the early 1980s, are concerned about their financial security. According to the Transamerica 17th annual Retirement Survey, only 12% of Xers are confident they will be able to retire comfortably, 30% have taken a loan or an early withdrawal from their retirement accounts an 86% are concerned that social security will not be there for them when they retire. Their median retirement savings is: $69,000.

 

It is time for a change to the financial model we have in place.

 

I think it is odd that people can work and then find themselves without enough money in their sunset years, after they provided great benefit to companies they worked for. I find it egregious that companies skating on the thin line of ethical standards, can jeopardize the financial security of their employees, while the founders or CEOs raid the company to line their own pockets. I think it is not right that so many retirees do not have a secure financial base at a time of life when they are more prone to disease, increasing costs, and shrinking opportunities. Dementia and Cancer are potentially major financial requirements that can reduce a couple’s assets to almost nothing. I think it is terrible that very capable workers are unable to find jobs due to efficiencies of businesses and now find themselves falling further and further behind financially. These stresses do not help people live productive lives.  

 

It is time for a change.

 

Some countries are looking at alternatives. Canada and Finland and Switzerland, for instance, are looking at a base universal income. Switzerland is talking about a guaranteed income of 30,000 Swiss francs for its citizens. Here in the U.S., Alaska has been paying its residents a dividend since the 1980s. This dividend is based on the oil revenue it produces.

 

What are you experiencing in your community as it examines its own economic security? Let me know. I would love to hear what you experience.

We Are Not the Only Ones Who Feel Injustice

The Capuchin Monkey, a small and baby faced primate has some curious behaviors and habits. No, Michael Jackson’s Bubbles was not a Capuchin Monkey, but Justin Bieber’s Mally is.

It is very intelligent with skills ranging from hustling as a street performer to providing assistance to quadriplegics. It is trained to serve much like an assistance dog is trained to do. It can perform everyday tasks like opening bottles and microwaving food. But that is not why I wanted to introduce you to the Capuchin Monkey. REALLY!!!

This monkey, which likes to live in big colonies and wander wide areas, was chosen for a study: Determine how it responded to rewards. This particular study was conducted about ten years ago, at Emory University, by renown primatologist and professor Frans de Waal. He called this research, which involved studying the behaviors of two Capuchin Monkeys under a specific setting, The “Fairness Study.”  

He assigned the same tasks to these two monkeys. Whoever was finished first was awarded a cucumber. The winning monkey took its prize willingly but not with any extra glee. And that made sense because the Capuchin Monkey considers the cucumber to be an acceptable reward but not as rewarding as receiving a grape.  

The dynamics between the two monkeys was copacetic as long as the winning monkey received the cucumber and the other monkey received nothing. But the dynamics between the two monkeys changed when Dr. de Waal gave grapes to the monkey who came in second at the same task. When the” winning monkey” saw the other one receiving grapes for doing the EXACT same task but slower, the “winner“ had a fit. It rattled its cage, it pounded the table in protest, it was not going to let such an “unfairness” go unnoticed.

The monkeys clearly understood the distinction between the two prizes, and the “winning monkey” thought it had been given a lesser reward for finishing its tasks first.

How do you deal when you are provoked by injustice? Do you rant and rattle like the “winner monkey?”  Do you confront the provider of the reward for their “inequity?” Do you not care as all rewards are good rewards? Do you ask to see the “rules” before you play “the game?” Injustice is ever present. Do you deal with it on an emotional level or on a principled level?

And we thought we were the only ones who felt injustice. I thought you would want to know what I found.

Buried Emotions around Money were Revealed When…

Because I often host money workshops, I do not have the experience that my workshop attendees (mostly intergenerational members of families) have. It was a delight to be able to participate in a workshop hosted by a therapist.

 

In this money workshop, we all pretended to be a family. Although none of us were related, it did not take long for emotional dynamics to come into play between us.  

 

The first direction was to take the bills out of our wallets and give these bills to the host. Immediately questions of trust were unearthed. Would the money be returned? Should I hold back any bills? Who cares, it’s just money, right? were just some of the dynamics that came up.

 

Next, the host asked for a volunteer to count the money the host was holding. That brought comments like: “How can we trust the counter?” “Are they going to keep the money?” “Can I count the money too to be sure they counted it correctly?”

 

Next, the host asked for a volunteer to divide the pile of money into seven uneven piles (matching the number of participants.) The host then picked up a pile, gave it to the first person, picked up the next, gave it to the second person and continued to distribute the piles like this until all the piles were distributed.  As you can imagine, this created quite a stream of comments as some felt short changed while others felt like they got a good deal from the initial amount they had given the host. One person felt like a weight had been taken off his shoulders as the pile he got was more than what he had borrowed from another player to give to the host (he did not have any bills in his wallet.) One person left the game frustrated that this was “going nowhere. You’re just moving money here and some of it was my money that I no longer have.”

 

The host then told us to put any money that we had above the smallest amount a player had in their hand, in a pile on the floor. Each participant now had the same amount of money in their possession. Tension turned to relief and awkward laughter.

 

The host asked everyone to talk about their favorite charities which we did, one at a time. The host then had us talk about what should be done with the money in the pile on the floor. Should it be returned to the participants or should it be given to one of the charities mentioned by us? We had seven minutes to reach consensus. We did not reach consensus. The host then had everyone pick a number from a hat. He called out a number and the person holding that number was identified. The host then told us we had another five minutes to reach a consensus about what to do with that money or it would go to the person holding the number he called. Still no consensus so the host gave the money in the middle of the floor to the person whose number he had announced.

 

Two people were okay with the outcome; two people were outraged that their money had been “taken from them”; one person asked what the person who was awarded the money was going to do with their new money? The person with the money said they would either give it to the charity they had defended or they would return it to each participant so they could be made whole. But the group had to come to a consensus on which choice to make. The decision was to give it to the organization that the person holding the money had talked about.

 

We then debriefed on the exercise, paying close attention to the emotions we exhibited and the feelings we had during the various sections of the money exercise. I found myself noting reactive behaviors triggered by feelings I had as a child around money.

 

Money exercises are a wonderful way to experience beliefs and emotions around money. You can identify patterns of behaviors that are unproductive and introduce new patterns of behaviors that encourage productive habits and behaviors around your money. Often, we hide and bury these feelings but they can come up in the oddest places.  

 

If you would like to explore a money exercise with your family or group, let me know. I would be delighted to develop a money workshop for you.

Sometimes, Money is Hard to Talk About. But…

When money can be talked about without the added emotions of hidden blame or unrelenting shame, money conversations can become like other productive conversations: meaningful and connective.  When money conversations become supportive rather than decisive, money conversations can be engaging and powerful. Instead of blaming others for their behaviors or shaming ourselves for behaviors and habits we are exhibiting, we become supportive of another’s and our own objectives with money. We become engaged in conversations as we understand others and our own motives and intentions with their and our own money. We can then put in play powerful actions to attain our common objectives. What makes this transformation from feeling divided to feeling unified around money?

When we understand each other’s views and stories about money, we become more engaged with their struggles and triumphs with money. When we take money “out of the closet” of isolation, blame, or shame, and bring it into our shared lives, as partners and as a family, money becomes a productive tool.

What restrains you from talking about money? Is it lack of confidence on your ability to make consistently good decisions about money? Is it an inability to engage your partner in conversations you think are important with your money?   Is it an inability to know how to approach planning your financial goals? Is it an inability find time to spend on financial matters and if you had the time, not knowing how to frame a conversation on financial matters? Is it a fear that conversations about money will lead to tension or disinterest from your partner? These can be dealt with productively and effectively.

The first question you can ask someone you share finances with is:  What is important about money to you? And let them response without interruption from you. You can learn a lot by asking this one question.

When you find out what is important about money to yourself and to those with whom you share financial interests, money will transform from being hard to talk about to being a welcomed subject of conversation in your house.

Let me know what keeps you isolated with your money or, how you have created a bridge from isolation around your money to it being a productive tool in your and your family’s life.

 

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Connections Matter

December wanes as another calendar year closes.

In the spirit of appreciation at this year’s end, I want to share with you my gratitude of having you in my circle.

Thank you so very much for the acknowledgement you have given me this year.

I appreciate the emails I have received and the questions that opened into conversations on the consequences of making meaningful choices.

I love the stories you have shared about your observations and challenges on legacy, life, and money matters.

I am grateful for the introductions to your clients and the impact I have had the chance to have on their lives.

Most of all, I am grateful for your partnership as we do all we can in providing our clients with the direction, tools and encouragement to do the best thing for their families.

One word encompasses the qualities  I appreciate in you:

Committed

Observant

Notable

Nurturing

Exemplary

Clear

Thankful

Insightful

Open hearted

Noteworthy

Thank you for the CONNECTION we have.

May 2017 bring great success in the significance we cultivate.

Happy

2017

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Prepare Your Family for Money It Will be Inheriting

It is estimated that 20,000 families will each transfer over $20,000,000 to the next generation next year. They will continue doing so, it is forecasted, for the next twenty-nine years. Although this may sound fortuitous, research tells us that 70% of these families will find their wealth gone by the end of the second generation and by the end of the third generation 90% of these families will find their wealth squandered or spent. Unless they take steps to keep the wealth, families will find themselves falling into this statistic.

Money that has been amassed, will be gone, for most families, by the time their grandchildren are thinking about what they can pass to their heirs.  The great estate and trust planning coupled with the precise tax and investment positioning, although essential, is not enough. There is an element that most families do not put in place to ensure that their money passes to next generations intact. And that missing element is the preparation of the family for the receipt of the money.

Heirs need a blueprint and a roadmap to know how to sustain the wealth through the generations. They need to master skills of leadership, and family cohesion to successfully steward their new responsibilities associated with the money. Only when families have and master the roadmap to success, will they be able to grow cohesively as a family for many generations.

 

Let me know how your family is attending to preparing the family for its roles as financial beneficiaries. What kind of conversations are you having? How do family members feel about this forthcoming transfer? How is the family talking about the transfer of financial stewardship?

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Connect with Loved Ones over the Holidays by Trying This

It’s time for the family gatherings again. You know the ones I am referring to: where people cluster in their usual groups, talking about the weather, travel hiccups, politics; where people cluster around the food taking bites in short and informational filled conversations; where someone introduces a topic they know will fuel the flames of emotional reaction. Yes…those dynamics.

 

This year you can come to a family celebration prepared to add a dollop of meaningful connection. Bring a series of questions with which you can connect more personally with those you engage in conversation.

 

Start by asking someone to share something significant that has positively impacted them this year. Listen as they share that event or experience with you. Then follow up by asking them either: how this significant impact they experienced benefited them or ask them how this significant impact made them feel.  And again, just listen. When you do, you will find that they will share with you a value of theirs that is important to the core of who they are. This will connect you to them in a very personal way that small talk cannot.

 

I find that asking questions like these, at the end of the year, to be a wonderful icebreaker and connector with friends and family.

 

Let me know how the outcome of having this conversation at your family gathering. I would love to hear your comments.

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Being “The Greatest” Lets You Shine

Remember the phrase: “I am the greatest!”? It was a statement proclaimed repeatedly, in different ways, by the great boxer Muhammed Ali to reporters and to his opponent. He believed it and he became it. Which came first, his belief or his statement? I do not know. I do understand it was one of the tools he used to become the icon he became.

 

You may not be a boxer who needs to pump yourself up before the fight, however, you are someone who I would like to consider the phrase “I am the greatest!” for a moment and say it to yourself, for you are the greatest. You are unique and the greatest in something you do, how you do it or in who you are. The question is: How are you the greatest?

 

To find out the answer to this question, ask yourself: “What are the values you hold dearest to your heart?” and then list your top three. These are the values that identify your greatness. So, take the time to identify and define them. Then, use them to guide your decisions, your actions and your movements.

 

You are the greatest. Now, let that part of you shine.

The First Step to Living a Significant, Relevant, and Connected Retirement

The 2016 professional tennis season is winding down. The final Masters 1000 tournament is underway and will determine the final two singles players and final doubles team who will gain admission in the prestigious world tour final tournament in London later this month.  Sampras, Agassi, Becker, Lendl and McEnroe may be familiar names of a few retired players who have won this tournament more than once. But I want to draw our attention to Agassi, who won this year end tournament once, and what he had to say about retiring, because for some, the thought of retiring is daunting.

Preparing for retirement filled Andre Agassi with dread. As he said: “It’s like preparing for death. Nobody knows what it’s going to feel like and nobody knows when it is going to happen and when it does, it’s your time.”  Agassi was not ready to retire.

I hear a similar thought of dread from those I talk to nearing retirement. They do not want to satisfy someone else’s “to do” list, they do not want to become recluse travelers. They do not want to be the default baby sitters for their grandchildren. They want to be engaged with their children and grandchildren. They want to travel and pick up dormant hobbies. They do not want to a life directed by someone else. They want to live relevant, significant and connected lives. But how?

Leaving a business you built or a career you designed can be a tough proposition.  How can you transition out of your company to a new chapter of life where you can keep the feelings that matter to you-significance, relevance, and meaningful connection alive?

The first step to take is to look at the footprint you want to make that you will then leave behind. Find the outline of that footprint by reconnecting with what is most important to you, your values, and finding a way to express yourself through them. Take the time to look at the meaning of your values to you and build a personal mission statement that reflects these profound meanings you have for them.

Remember, retirer merely means to draw again. So, now, draw that outline of a footprint you want to have and to leave behind as your legacy.

Agassi focused on the outline of his footprint, his values, and then created the footprint he is now developing and building. You can too.

For more tools, click here: http://www.focusandsustain.com/life-focus to see what would be wise for you to focus on so you can live a rich and meaningful retirement.

Tell me what you have observed as you engage with those reluctant to or avoiding retiring.  I would love to read your comment.  \

 

Reflecting