family wealth

Important Conversations for Family Gatherings

How you can help your family unlock its ‘soul capital’

Key Takeaways:

  • A legacy conversation is a frank discussion in which the older and younger generations share their views about what really matters to them.

  • Show and tell is a good technique for getting families to reveal their values in action.

  • Combining “soul capital” with financial capital will help families clarify their core values.


Now is the time of year when many extended families get together for some R&R at a family vacation home. While the bonding and elaborate meals can be great, living in close quarters, even for just a few days, can strain relationships among even the closest of families.


Throughout the course of our work with successful families empathy has been central to our practice. Empathy is about “feeling with” another person.

“Walk a mile in my shoes” is the old adage and listening—is one of the most important ways to do that. We spend so much time texting, tweeting and multi-tasking today, that listening has become almost a lost art. But, when someone listens to you, I mean REALLY listens, there is nothing like it. The rapt attention someone pays to you is a blessing and a gift. To be heard, seen and validated is a true gift.

All family members need empathy. Renowned psychologist Carl Rogers called this “unconditional positive regard.” It is the deepest form of acceptance.

When a family needs to address legacy issues, it’s important to be honest with each other about what really matters. For a family to do this there needs to be empathy.

When I was a kid in school, my favorite activity was show and tell. To bring some special personal object in to share with my classmates was a sheer joy. I also loved hearing about my classmates’ objects and the stories that filled my imagination. Each time, I learned something new, unique and often intimate about my classmates. And of course, when it was my turn, I beamed.

Talking about what really matters


What is a legacy conversation? It is a conversation in which the older and younger generations sit together and talk about what really matters. What really matters is each other; the family relationships and the way the family relates to each other and loves each other.

Money and other family assets are important because they sustain the family into the future. These things can be seen as giving stability or causing instability, depending upon how the family is doing with itself. If the family is good, wealth is good. If the family is not good, wealth can make it worse. So the show-and-tell notion related to legacy conversations has to do with honestly sitting together and talking about who we are, how we are and what we have. The family elders tell the stories about how they got here. They inform the “middlers” and the “youngers” what worked for them and what didn’t.

These conversations become sacred conversations because they contain wisdom. I use the phrase “soul capital.” Wisdom is different from knowledge. Knowledge is information and wisdom is deep and painstakingly won insight.

Wisdom is unique and particular to each family since every family dynamic is different. So when these kinds of conversations are held, they become sacred, as spiritual capital represents something bigger than the self and family—something that guides and protects us.

Legacy conversations are “show and tell” events as well. When grandfather and grandmother are sharing at a family gathering, the stories they tell are often gems from their past. Show and tell is a ritual that reveals a family’s values in action. As this sharing continues, the family begins to show and tell together. Over time, this simple sharing turns into what I believe to be sacred conversations. In these conversations lies true wealth.

Successful families that initiate and maintain conversations about legacy, values and related issues discover deep treasure. Why is it that most families don’t hold conversations like this? In a word: intimacy. When we become intimate with each other, we reveal. Vulnerability is uncomfortable.

Discomfort creates anxiety or pain. The paradox is that when a family is courageous enough to delve into these kinds of conversations, the discomfort passes over time, and what a family and its individual members find is unity. With family unity, anything is possible.

The soul capital of a family


Legacy conversations are sacred because they contain stories from the elders, middlers and newers that carry the “soul” capital of a family. Soul capital married with financial capital clarifies and empowers families to live their core values truly. Sacred conversations lead to true family flourishing.

I use the phrase “sacred conversations” because of the depth that lives in the inner world of family. At the core is love. Love is sacred; it is divine. In essence what lies in waiting for prosperous families is a different kind of wealth—soul capital.

Conclusion


When a family engages in family meetings to address legacy questions, it is good to begin with show and tell. Simple storytelling captures the essence of what brought a family to have a legacy to pass on.

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

How Children Successfully Join Family Businesses

7 key considerations

Key Takeaways:

  • Have a family business constitution in place before your children join your business.

  • Make sure you allow your child to make and learn from their mistakes.

  • Have your child successfully work outside your business before letting them start work at your company.

  • Have someone besides you supervise and manage your children when they work for your business.

You have worked very hard to build a successful business. The dream has been to have children join you and continue the legacy that the founder started.

But, before you get excited, stop and think.  For many entrepreneurs, having children join their business is a true joy.  For others their children are an albatross. They wonder why they ever thought it was a good idea to have their children work in their business, much less take it over.

If you are thinking about having children join your business, here are some important considerations:

1. Make sure the next generation is competent.

You don’t want to be in a position in which you have to tell your own child that they can’t stay with the business.  Too often parents let their children join the business only to discover that their children add zero value to the enterprise—and sometimes even subtract value.

A business is not a place where you provide social welfare for a child.  Next Gen must be able to add to the value that the business provides to its clients and customers.

2. Make sure the next owners (your children) have experienced life outside of your business.

The best way to ensure that your child is competent is to make sure they’ve worked successfully outside of your company.  You don’t want to have your child join your company as their first “real” job.

One of the most important rules you can adopt in your business is to require your child to earn at least one promotion while working outside the family company.  This way, someone else can handle their early career training and make an objective decision about how competent the child is.

3. Have a real job for your child.

After your child has proven him or herself outside your business, you’re in a better position to have them join your company. But, suppose you don’t have a job that fits their skills and experience?

This is not the time for you to make up a job for them.  Make sure your child holds on to the outside job until you truly have a job that fits their skill set.

When it’s time to bring a child into your business, make sure they’re not joining  at a level higher than the job they had outside your company. You never want to have to tell a child that they aren’t unwelcome in the family business after an unsuccessful debut.

4. Think about your compensation policy for your children well in advance.

Too often I see children overpaid or underpaid. Either way it’s a big mistake. Make sure you have a firm salary policy in place. If you do, it’s important that you pay children comparably to what non-family members earn for similar jobs.

If your children are overpaid, then non-family employees will find out and they’ll resent it.  If your child is underpaid, he or she will find out and resent you for it. You’ll have some uncomfortable family dinners as well.

5. Never have your children report directly to you.

Part of supervising an employee is correcting his or her behavior and work. This is not something you want to do with your child.  Let’s face it; you have a history with your child around discipline and it’s often not a very positive one.

Even though you have policies that work well for non-family members, it’s rare that those policies work for family members when they’re coming from a parent.  When a non-family member supervises your children, you’ll likely avoid hard feelings that result from having to reprimand a child for their workplace behavior or performance.

6. Remember, Next Gen will run your business differently than you did.

I’m hoping that you successfully integrate your child into the business. Now it’s time for you to transfer real responsibility to your child. Just know that your child is going to approach problems and opportunities differently than you do.  This means their approach to solving these issues will also be different, and in many cases, better than how you would do it.

You’re going to want to look at the results your child’s methods produce.  You need to let your child make mistakes and you need to be there to help them learn from those mistakes. 

Think about how you learned on the job.  I bet you made plenty of mistakes along the way.

7. Successful transitions come with a process.

I like to see family businesses develop what I call a “family constitution” for joining the family enterprise.  Your family constitution doesn’t have to be complicated.  In fact, it can be as simple as the bullet point list below:

  • Have your child achieve a certain level of education.

  • Have children work outside the family business for at least two years.

  • Make sure your child has earned at least one promotion from a non-family business before joining yours.

  • Don’t start your child in the family business at a level higher than they had at their last non-family business.

  • Pay your child at the same scale that you would pay a non-family member for a comparable job.

  • Have your child’s direct supervisor be someone who is not in your family, especially you.

  • Have a system in place for accepting and learning from your child’s mistakes.

  • Let your child do things their way once they have proven themselves-- unless their idea will truly put your business at high risk.

Conclusion

I’m hoping that you’ve successfully brought your child into your business.  Years will have passed and you know that it’s time for you to let go and have your child take over. This will be a challenging time for you.  You’re going to need to learn how to let go.  You’re going to need to find a compelling next chapter in your life.  You’re going to have to let your child be his or her own person.

Successfully transitioning your child can be an incredibly satisfying experience.  Have a system and stick with it.  You’ll be glad you did.

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Diversified Asset Management, Inc. – 2019 2nd Quarter Newsletter

This quarter’s newsletter is filled with lots of great information. Here is a list of topics included in this newsletter.

Soaring Stocks Raises Importance Of Diversifying

The concept of diversification is vital to investors: Don't put all your eggs in one basket so they won't all get smashed if you trip and fall. It's better to spread your wealth over a broad financial spectrum of investments, but avoiding pitfalls isn't as intuitive as it may seem. Diversification neither assures a profit nor guarantees against loss in a declining market. This is especially important to remember when stocks are soaring and portfolios can get overloaded with stocks and human nature is to get greedy and overly optimistic about a continuation of the current trend.

 

If Family Is Wealth, Then Planning Is Immortality

Planning makes you immortal. It ensures the next generation will be just fine. This is something you may not learn or even understand until your 60s or 70s. If you're lucky, you come to hold a baby with dreams for the best things that could happen in the future.

In that moment, when you are feeling so blessed and generous, plan to make the next generation better. Think about how you can imbue the values you hold dear in them.

 

Your Alma Mater Or Your Family?

The new tax law doubles what you can leave loved ones' tax free when you die and that's really bad for your alma mater. Tax breaks for donations to your alma mater may no longer make the grade with you. Here's why:

Estate Tax Exemption Rises. The Tax Cuts And Jobs Act (TCJA) doubles a married couple's estate's tax-exemption to $22 million. Alums now want to maximize their exemptions by leaving $22 million to their children, nieces, nephews and other loved ones before even thinking about a donation to favorite old schools.

 

What Are The 3 R’s Of Roth IRAs?

It's not reading, 'riting, and 'rithmatic, but when it comes to Roth IRAs, it pays to know the three R's: Roth conversions, rechacterizations, and reconversions. Understanding the rules for all of these could save you thousands of tax dollars.

Unlike with traditional IRAs, for which some of your contributions could be tax-deductible, money that goes into to a Roth IRA never is. However, after five years, the money coming out of a Roth is tax free. To qualify for that benefit, withdrawals must be made after age 59Y, because of death or disability, or to buy a first home (up to a lifetime limit of $10,000).

 

Seven Steps To Get Ready For Your Retirement

Are you among the millions of Baby Boomers counting down the days to retirement? Before you move into the next stage of life, it's important to get all of your financial ducks in line. To prepare yourself, consider these seven practical suggestions.

Rebuild the budget. You've probably been living on a monthly budget that takes into account your usual expenditures and income. But that's about to change in a big way. For example, once you stop working, your expenses for a business wardrobe and commuting will also end, but so will the regular paychecks you've been living on.

Come up with a new plan. Identify what you expect to have coming in and going out. Remember that you won't be able to rely on 401(k) deferrals to reduce your taxable income after retirement, but you should still keep saving.

 

Paying Off A Mortgage And The New Tax Code

Among the most prized tax deductions to get trimmed by the Tax Cut And Jobs Act was the monthly mortgage interest. Should you pay off your mortgage, if your mortgage interest deduction is gone? The answer more often now is "Yes," providing you can afford to retire the debt. If you can't afford that now, aim to do it as soon you can.

Due to a large increase in the standard deduction, fewer taxpayers qualify for the mortgage interest deduction. The standard deduction under the new tax law almost doubled to $12,000 for single filers and $24,000 for married couples. Only people with deductions of more than those amounts can itemize and deduct their mortgage interest.

To read the newsletter click on the link below:

Diversified Asset Management, Inc. – 2019 2nd Quarter Newsletter

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

The Value of Multigenerational Family Meetings

If you’ve amassed sizable wealth, or are on the right path and getting there, it may be time to consider how to pass on some of that money to children and grandchildren—without creating big problems that could harm their futures and destroy family harmony.

The fact is, family wealth—how it’s managed, transferred and used—can generate major drama among family members. As wealth grows, so does the potential for that money to foment conflicts and bad financial decisions that can reduce a family’s financial position and even ruin intra-family relationships forever.

The good news: We can look to the strategies used by today’s ultra-wealthy families to avoid or mitigate such negative outcomes—and find ways to adopt similar strategies in our own families.

One of the most effective tools harnessed by the ultra-affluent is the family meeting—which is used to educate heirs and potential heirs about sound financial decision-making, to identify shared family financial values and to maintain (and grow) family wealth in a unified manner.

Click here to read more:

The Value of Multigenerational Family Meetings

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Eye On Money September/October 2018

We invite you to check out the new issue of Eye On Money! Inside are articles on:               

Financial tips for your 50s and 60s that can help you build wealth and prepare for a financially secure retirement.

529 plans. They are not just for college anymore! Don’t miss this article if you plan to use money from a 529 plan to pay for grades K-12 tuition.

Roth IRAs. With lower income tax rates in place, this may be an ideal time to convert to a Roth IRA.

Asset location. Dividing your assets between your taxable investment accounts and retirement accounts in a tax-smart manner may boost your after-tax returns.

Also in this issue, you can check out how to prepare financially for a health crisis, learn what to consider when choosing a donor-advised fund sponsor, and review five things you should know about the new federal estate tax exemption. Plus, you can take an armchair tour of Arches National Park, learn where to find the darkest skies and best star-gazing, and see how much you really know about South America.       

Please let us know if you have questions about anything in Eye On Money.

­Eye On Money September/October 2018

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.