“You want to be me someday? Then become something that can help me protect this place.” John Dutton, Yellowstone

Morning and happy Monday!

What a gorgeous fall weekend here in Ontario, I trust the weekend treated everyone well!

Last night was a big night – The Dutton Family made their season 4 debut in show Yellowstone…Rip and Kevin Costner’s John Dutton are back in action.

An already iconic series, I find the underlying themes through the series fascinating, particularly as it relates to intergenerational wealth transition.

When we discuss with our clients what they want to achieve with their wealth, an interesting challenge often arises. When our clients describe goals, the picture is often fairly clear: more travel, more time with the children, the freedom to choose their own schedule. However, after quantifying these goals into a wealth plan, successful families often find they have more money than they need, and begin to understand the impact their wealth can have on the generations to follow. As we contemplate what our goals are outside of our own, the planning needs to become much more intentional and requires much broader planning.

For us all, much like the Dutton’s, money can be a difficult topic for many families to discuss. While these basic estate questions help start the conversation, too often we find that this discussion unearths more questions than answers.

Will the children understand all of the hard work that went into creating the wealth? How do we ensure the children are motivated to build their own happiness? Can the family work together to manage the wealth, or will it create anxiety and strife?

Communication breakdown: the primary reason for poor wealth succession

The Williams Group—a family wealth transfer research organization in the United States— has spent over 20 years interviewing families after wealth has been transitioned to the next generation. Their findings show that 95% of wealth transitions within families fail for three reasons:

• 60% of failed transfers are the result of “an internal breakdown of trust and communication”. This is a disturbing statistic as it implies that the very act of transitioning wealth can cause issues among family members.
• 25% of transitions break down due to a “failure to prepare heirs”. While a number of issues go into preparing children to take over the family wealth, this is fundamentally a communication problem.
• 10% of transfers are unsuccessful as a result of “a lack of an agreed-upon mission for the family wealth”. At the heart of creating a common mission is also communication.

The very act of not effectively speaking about wealth—and especially the purpose of wealth—creates the seeds for failure. Unfortunately, this can lead to not just the destruction of wealth, but to the potential failure of healthy family relationships.

Four ideas for foundational family meetings

If excellent communication is the foundation for ensuring the health of a family’s wealth and relationships, what can we do to plant the seeds of success? Below are four ideas that families can implement to start conversations around building money management knowledge for an effective wealth transition.

These recommendations are just an example of the work we do with our clients, and their families. As we create roadmaps for you and your specific journey for your family, we ensure you will develop a healthier dynamic and eventually a more successful wealth growth and transition.

I have listed key points below, topics that we work through with our clients and their families. Being mindful of your reading time on a Monday morning, I will wait to expand on each point in my Monday morning musing next week.

1. Goal setting with the entire family
2. Instilling values
3. Investment principles
4. A bigger purpose—Family Mission Statement

Working through our disciplined process, it’s always apparent that the foundation for effective family relationships is communication. Complex family issues can arise when family wealth is added into the mix.

However, for families prepared to practice open communication and implement effective family governance, the hard work of the family’s wealth creators not only can be preserved but also can enable the pursuit of happiness and success for future generations.

As we wait for more Yellowstone episodes next Sunday, it will be fun to expand on the four points above for you next week. Until then, it’s important to remember that wealth planning is a continuous and evolving process. In planning for your future and the future of the generations to follow you, be sure to make time and take time to enjoy the moments.

“Work, family life, it’s so demanding. A little fresh air, a little ‘me’ time.” Beth, from Yellowstone

Be well & enjoy the moments

Derek