Entrepreneurial Empire
Learn the fundamentals of where you are in business and how to scale with your host Jacqueline. Your business will go through many stages, and every stage will have it's own set of requirements. Let's unravel the journey ahead together and find strategic solutions that will help you conquer it all.
Entrepreneurial Empire
🚀 Navigating Family Wealth: Insights on Succession, and Philanthropy
Ever wondered how to navigate the complex world of preserving family wealth? Discover the answers as guest experts Mitzi, Alan, and Sheila help decode common challenges like lifestyle inflation, tax and succession planning, and the necessity of a family governance system. Uncover the critical rule of never airing your family's dirty laundry in public, and learn to effectively steer through changing economic and political landscapes. Gain insights into mentorship and preparing the next generation, crucial components of managing family wealth.
The conversation doesn't end there. In our second segment, we delve into the secret sauce - passing on financial wisdom and values to the next generation. Be inspired by a family who included a preventive clause in their will to avert sibling disputes and learn why it's vital to instill a spiritual value system over a purely financial one. Discover the meaning of stewardship in understanding money and the role of philanthropy in a family's legacy and wealth preservation strategy. Get practical tips on how to pass on financial wisdom, be it through newsletters or giving clubs, and craft a lasting family legacy. This episode is a treasure trove of knowledge for anyone seeking to preserve and pass on their family wealth successfully.
Welcome to the Entrepreneurial Empire Podcast. This is the place where you can find business and career strategies, techniques and real-life success journeys of individuals who have built businesses to the million-dollar revenue mark and beyond. I'm Jaclyn Hernandez, life Coach and Business Development Consultant. I have worked with startups, fortune 100 companies, network marketing, direct sales organizations, churches, nonprofits and government agencies all to become the authority experts in their industry, lead with people and scale their revenue. Let's get started. Okay, so my next question is challenges and pitfalls. So what are some common challenges or pitfalls that maybe didn't happen in your family, but, being connected with other families, that you've seen them face when trying to preserve wealth over time? She asked you first.
Speaker 2:So, again, I could probably say one of the biggest pitfalls I can summarize it in two words, and that would be lifestyle inflation, and with that I mean it's increased wealth leads to increased spending. We've all seen it. We've all seen it. But here's the underlining message we all need to take away and wealth is to be nurtured and grown, just not merely consumed. And I think this is what Mitzi had just said so beautifully, and I think some of the ways to look at that and to really navigate the challenges and the pitfalls is and I'll kind of put this ball back in Alan's court, which I think he's seen as well is you really need to have a clear idea of taxation and really strategies for efficient managing of taxation and tax efficiency in your giving and in your business.
Speaker 2:This is often overlooked. One of the other pitfalls that I have seen families rarely have a succession plan. I mean literally a document that's built in. If A dies, b will take over, and I've seen it in philanthropy as well. One of the key things that we'll talk about later is when I look at donating to foundations and supporting philanthropy, do they have a strategic plan, which is basically a family charter, family governments in essence and do they have a succession plan? Nine times out of 10, they don't.
Speaker 2:And this is where people that I have known in philanthropy have been 20, 30 years especially celebrities that have very prominent foundations literally clutch their pearls, pull their tie. They don't feel they can let go because they never train their replacement. They don't feel that another person can do what they do so well. So I think that's part of it. So mentorship, preparation for the next generation something that Alan just said previously dialogue and consensus building.
Speaker 2:He said he wouldn't touch that family with a 10 foot pole until they all came into the same room and 23 years later, successfully, he's still representing them and helping them. So dialogue and consensus building is huge. And then you really have to look at and I think COVID brought this out, the Ukraine War brought this out rapidly navigating the changing economics and landscape, and I think you do that by diversified portfolios. But also look at one element which would be having not only the diversification in your portfolio but really looking at compound growth. Those two words are huge, compound growth. That's where I would say it's how you kind of navigate the challenges and the pitfalls that I have seen in my own company and in my own family business as well.
Speaker 1:Thank you so much, sheila Mitzi. How about you? How do you see these common challenges or pitfalls, that family space when they're trying to preserve their wealth over time?
Speaker 3:Okay, to get academic for a moment, I'm going to quote Dennis Jaffe again. He says the statistic I'm about to share it's not certain, it's a little bit squishy, but it's surely ballpark he feels that one family in a thousand makes it a hundred years. And why do they? Why do they not make it? And the biggest reason seems to be family quarrels. It's rarely that they made bad investment decisions or it's the greatest vulnerability a family has is family quarrels. And so I want to circle back to what Sheila said at the very beginning, that having a system of family governance where you have a way of coming to decisions which are understood and kind of rules that are expected circle like having a constitution, almost I think that's. That's how about that's prime. But then I'm going to throw in the second one, which is and again I'm quoting from a number of people who've studied this that I thought that's still mentioned If, when you have a family quarrel every family has quarrels, but if you take it public, that's very likely to be a bridge too far it's seriously difficult, if not verging on impossible, to have the family be high, functioning and together if you've had a quarrel that's broken out in the newspapers or where you've had adversarial lawyers fighting each other.
Speaker 3:And so in both of the two families that I'm associated with, we grew up from childhood with the idea that harboring is okay. Do it, get it out there, don't hold it back, but never, under any possible circumstance, wash your dirty linen in public. And the way that it was expressed in the Henderson's is where united families, far as the world goes, we don't wash our dirty linen in public, and the produce expressed as the covenant again that within the family, whatever it takes to do to be heard and hopefully it doesn't mean screaming and shouting, it doesn't, but if it did, that would be okay. What's important is you don't take the quarrel public. And if you quarrel with within the family and yeah, that's just, I think, 100% inevitable but if you quarrel within the family, you still have to really pretty good chats of putting it back together, and so my recommendation to everybody is to teach the kids from childhood we don't wash our dirty linen in public.
Speaker 1:Yes, Did you guys hear that audience? Please put a thumbs up if you heard that and you're taking it in. Yes, thank you so much. We do not wash our dirty laundry in public. Thank you, Okay, Alan. How about you? What common challenges and pitfalls that family face when trying to preserve wealth over time?
Speaker 4:I'm going to just pick up where Mitzi left off about airing dirty laundry in public. I was involved with a family and they you know this is years ago. I'll name the family because they were in the National Enquirer with their stories as Bing Crosby's estate and under it wasn't Bing's fault, but you know, his first wife, dixie, died at a relatively early age from cancer and left three children in that you know behind. And then Bing later married to Catherine and Crosby and then they had three more children and as the kids grew up, I think Bing was well-meaning with everything of keeping the kids together, but Catherine wanted to have her own family, her own children, taken care of and there was no prenuptial agreement through this process. So it's something to consider that when you have children from blended marriages that a prenuptial agreement is provided for, or, if the surviving spouse decides to marry afterwards, that the person who passes on clearly defines how he wants his spouse to be taken care of. And in Bing's case he was one of the first to set up what we call the AB trust the above ground and the below ground. The above ground is what's left to the surviving spouse and the below ground is what he controls inside of the bypass trust and also his half of the estate.
Speaker 4:You know what eventually happened there is, you know, is the first the kids.
Speaker 4:They were always trying to, you know, battle things out in public with the National Inquirer, and one day I found myself picking up a phone call from them and it was kind of interesting called the family members and they said don't talk to them now.
Speaker 4:And I said I don't plan to keep it private, keep it within the family, but it's most important that this is all done while everyone is still alive, and so to prevent this. And then the other thing that will often happen is, on this, there's a generation that creates the wealth and then they pass to the next generation and there's also a lot of tussling back and forth of who's really in control in the second generation. And that's where, again, the family governance becomes extremely important, especially if they're a very, very large business, because you find that, in frustration of trying to grab control, they'll often leak things out to the media, which does nothing to help the family. And I think some ground rules do need to be put in place about what people are able to do and what they're not able to do, and some repercussions should they go ahead and leak like that.
Speaker 1:Thank you so much, ellen. Okay, so we got Maria Duncan said spot on, joyce says right to the heart of the matter, and we got Fatten that says I already practiced that, love this. Okay, so teaching the next generation. Let's just really quickly talk on that Two ways that your family has done to pass on financial wisdom and values to that next generation. And I feel like that goes right along the lines with what Ellen was talking about right now who's going to be in charge or who's who, and the next generation. So what are two ways that your family has been able to provide that financial wisdom and values to the next generation?
Speaker 2:Absolutely the two ways that were passed on, and I'm Gen four that I can tell you. My father took me to business meetings and hand on experience. I was brought to business meetings when I was four years old and went with my father. I was not allowed to speak. My father taught me how to learn to listen Huge, because say people listen to reply, not to respond or understand and that was a huge wake up call for me. And I would listen to the people discuss strategies, how did they plan, how did they take turns, their body language. But what did this teach me? My father taught me how to negotiate. Women are not taught how to negotiate in business.
Speaker 2:This is a huge piece of our financial literacy that's missing. And my father, at the end of the meeting, would say so, sheila, who was the person that did not get angry at the meeting? And I said well, it was X or it was Y. He says then that's the person you always consult because they have the level head in the answer. Wow, very simple, but it's hands on experience. My parents were very, very good about including me, so one hands on experience go with the family, learn from them, be taken out. And so my dad taught me the business part, but my mother also taught me the philanthropy part. She was an RN, a registered nurse.
Speaker 2:It was important because growing up I grew up in Salinas, on the Central Coast there were a lot of farming families and not a lot of wealth. We were very simple people but many people had large families. To Alan's point, families had nine kids. Grandparents came for families of 13, my own included. It was wisdom, it was knowledge, and so she would take me and I would learn Her bedside manner, how to calm those that were scared, frightened, the medicine that she'd dispensed. She was almost like the town doctor, but it was her love of giving, it was her love of humanity that inspired my love of giving and my love of humanity. And the second piece would be storytelling. Storytelling is huge in the family and mine has a legacy and many would also know that if any of you have spoken to me or talked to me offline, there is quite a history of storytelling and that's what goes back. You will all be faced with moments of uncertainty and a doubt in your business and having that storytelling and that wisdom to fall back on is huge. And I'll end with a point where, in 1942, during World War II, a lot of people were unaware that the Japanese-American were the farm workers in the strawberry fields. When World War II hit, they were interned. People lost their workforce overnight and Driscoll's made a promise that when this all ended we would homestead, we would open their homes and come back.
Speaker 2:My father was a World War II. He was a Pearl Harbor survivor, so he was there when the Japanese bombed. My dad was one of the few that bought out by the skin of his teeth and there was a lot of resentment and anger. That was not going to bode well in our family. And again, going back to decision-making, my grandfather made my father go off and said you have no place with your anger in this family and you need to bring harmony and restore economic security to our family. Go off and pray and meditate and come back. He says two questions One can you forgive? This is first and foremost because if you cannot forgive, you cannot lead. And second, he said you need to learn the difference between reacting and responding. So what are you doing, david? Are you reacting or are you responding? Get that difference clear. And he says and I'll leave you with this the difference between anger and danger is the letter D Wow, wow.
Speaker 1:Wow. Wendy Gamio says thank you so much for sharing impactful. Thank you. Ghanash says his father also took him on many business meetings when he was a teenager. Thank you so much for sharing that, Sheila, Of course, Alan, how about you? Two ways that your family has done to pass on financial wisdom and values to the next generation.
Speaker 4:First of all, thank you everybody. They, they added a, a clause into the wills. Okay, okay, here we go. Okay, so one of the things that it is important within the family is to make sure the kids get along and and there's. I can't think of no better way to make sure that there's never a quarrel over the what the parents intended to do by putting a Clause within there, should any of the children take an action against one of the other in a financial dispute, legal matter, that that person will reward, rewarded one dollar from the estate and that's it. And Then usually it prevents arguments, at least in public right, and I think beyond that it is I love. I love what Sheila brought out about learning forgiveness.
Speaker 4:And also, you know, I've talked to other planners who have talked about how do you get that second generation to instill a value system of Money within the transition wealth from one generation to the next.
Speaker 4:And I say well, you don't instill a value system of money, you instill a value system of Something having to do it in spiritual in nature. You know Tony Robbins, I recently spent a week with him and he he brought up point that business is spiritual and we are all spiritual beings going through a human experience and and, as such, the more that we understand our purpose and our mantra of. You know, it's about giving back, it's about lifting others, it's about building those around us, the more value that comes back to us and enriching our own life. And I can't emphasize enough that the parents, as they meet with the children, that they work to instill a value that it's not about the money, it's about the stewardship, it's about the purpose, it's about making sure that what you're doing you have a passion for, and so that this legacy will continue to build into the next generation.
Speaker 1:Thank you so much, alan, for sharing that. Okay, I've got some comments over here. Alicia Johnson says Sheila, oh, oh, we're here, sheila, what you just shared is so powerful I feel tears of major truth hitting. Wow, I definitely felt the goosebumps too. Addison says you must be able to forgive, to lead. That so very powerful. And Chuck, leading by example Is the best way to teach. Well done, please give them a round of applause. Okay, thank you so much, mitzi, that that question is also for you. So let's uh, we want to hear about For you two ways that your family and how they were able to pass on financial wisdom and values to their next generation.
Speaker 3:Okay, the first is get them while they're young. But I do, and I discuss this endlessly because His, his grandchildren were like fourth generation. They're geographically dispersed from California to Maine. And how do you, how do you instill wisdom in the distance? And what we came up with was Newsletters. But within the newsletters there would be one specifically Aimed at the grandchildren, say, age Maybe four to twelve. And these newsletters, I would write them, I would tell stories from family members. I'll give you one example of one newsletter.
Speaker 3:Mommy do, which is the, the matriarch she used to. For Thanksgiving, she would make her famous buttermilk biscuits and she would make them. Yeah, she'd whip up the batter, put it on a baking sheet that was covered with aluminum foil. After she'd cooked them should remove the, the biscuits, brush off the crumbs, wash the aluminum foil, soap and water, dry it and recycle it. And the reason why the newsletter would explain is that we are a frugal family, we recycle things, we don't waste God's bounty. And that's half of the newsletter. The other half is Accompanying each newsletter. I wouldn't have a treasure box inside of which would be an activity, and then, in the case of the aluminum foil, there would be In a plastic baggie, in a ziplock bag the ingredients for the buttermilk biscuits, but there would also be aluminum foil. The kids would make the biscuits On the aluminum foil over a baking sheet, and they would.
Speaker 3:Every activity in these newsletters Is designed to last like an hour during which the kid discusses with their grown-up Uh, what the value that we're talking about is. So the ideas. They experience it and they read about it. And then when they get together they all talk about it. How are the biscuits? Uh? The other thing which I can tell quite shortly is For the 12 kids who are, I'm not sure the exact age range. Maybe we're talking eight to 18. We have a giving club and the giving club is each kid has an amount that can go for philanthropy. So once a year they get to make a donation. They get to spend the whole year studying where it's going to go and does it fit in with the family values that we have? Is it in accordance with what we as a family believe? And then they get to explain to their kid peers why they chose this and in some cases, like three or four kids will get together and put their donations together, and it's a fabulous way of having kids thinking philanthropically from a very young age.
Speaker 1:Wow, ok, audience, did you guys take that all in? Starting your kids philanthropic work begins at a very, very young age. You talk about teaching them how to put a savings aside, but this is a whole new portal. You're teaching them to put money aside for philanthropic work. So I want to see you guys on social media LinkedIn. Let's see those stories about what we're doing with our children and how we're opening that avenue of philanthropic ways for them right now, today, in their early ages. Ok, and speaking of philanthropic work, we're going to talk about the legacy. So your philanthropic endeavors have left a profound impact on society. How do you see philanthropy as an integral part of your family's legacy and wealth preservation strategy? So I'll go ahead and send it over to your way, sheila.
Speaker 2:So one of the things that we did as a family and each generation was given a mandate by my great-grandfather, jeremiah, and the mandate consisted of three words we were to inform, inspire and innovate. And that had to be not only in our philanthropic giving but in our business sense as well. So when you take those three mandates, those three principles, and say each day in business and in philanthropy, how am I informing the public, how am I innovating, what am I creating that's new and how can I inspire others to do the same? Now you've got a very good framework. So with that Mitzi had earlier said, it's the joy of giving part of the legacy.
Speaker 2:One of the things that my family has done is my great-grandfather built the company on two words create joy. It wasn't create conglomerates, it wasn't create monologues, it wasn't create billions, simply create joy. He had it very early on that in order to preserve our legacy and in order to preserve our philanthropy, you have to put other people's happiness before yourself, and he focused on that. Only the freshest, finest berries, that every day, if you put a bowl of berries, it brings a smile to your face, it brings joy to your family, it's nutritious, it's good. So simple, and it's how he did it.
Speaker 2:But we built our entire business around those two words and every day we look to inspire, to inform and to innovate and really serve the higher purpose, that spiritual overlay. It was never anything that we ever strayed from and I think, in order to preserve that, it's really looking on higher-purpose innovation, which is what I look at to do and to create and building the team around me, but, moreover, it's really having that sense of we rise by lifting others. But I'll end with something that I learned from Kevin Spacey, that his mentor, jack Lemon, taught him and mentorship is huge in families. He said when you get to the top, send the elevator back down.
Speaker 1:Yes, did you guys hear that? Say that one more time, sheila, please.
Speaker 2:When you get to the top, send the elevator back down. That's your philanthropy legacy and really a renewed sense of business Share what you know, inspire those around you, inform and innovate. My great-grandfather was right that's how you send the elevator back down. That's how you continue the wealth, the philanthropy and, hopefully, the legacy.
Speaker 1:Wow, ok, if that didn't give everybody here goosebumps, I don't know what will Send the elevator back down. Hold the door open for those behind you. Thank you so much, alan. Philanthropic endeavors how have they left a profound impact on society, and how do you see philanthropy as an integral part of your family's legacy and wealth preservation?
Speaker 4:I had an interesting part of my life where, when I got married to my wife, I said we put out a mantra about what our purpose and our mission would be, and we went to the end of life. We said well, we take nothing to the grave, so it has to be more than just making money, because that all stays behind, and we decided that we would put a purpose within the family and within those that we know within our surrounding communities. And so, as we started out on our mission in life, we came to a point in life where I was having four children that would be going to college at the same time. It was going to be a real financial burden, and as I began to put them in the second child I was putting her in school for professional orientation. I stood up on campus and the voice of God came to me and it said you know, alan, you told me your life would never be about money, so I want you to do something for somebody else. There are kids in this world that have greater needs than yours. You've been taken care of. And I looked up at the heavens and I said like what? And it stayed quiet. So I told my wife about this experience and she said well, that's your experience, not mine. And so she says well, whatever you decide to do, I'll support you.
Speaker 4:Well, I decided that, with an act of faith, I would go back and I said, well, if this is God and I had faith that it was I said what is money to him? And I went back and I emptied my bank accounts and wrote out a home equity check and I completely took everything all in and put the money into a. I called up the university and said I want you to give this money to the kids that would never really have a chance to go to college because of their situation broken homes, economically disadvantaged but they will have a greater need. And the philanthropy office was grateful. But they said we don't know what to do with this. And so they called up the president of the school and the university president said no, that's funny, I'm going to go down and meet Alan. And I said I don't know who he was. He came into my office and down in Fremont, california, he said why did you do this? And I told him about my experience. He says I've been having a similar feeling and I said well, then you take the money and you apply it as a seed for whatever program you think will work.
Speaker 4:What I had to do with my own children, though, is I went back to my kids and I said I don't have any money for your school anymore, and so everyone had been paid for their own education, with tuition, housing and food, and they all became very successful in learning how to support themselves. You know, teaching your kids a value system and having them learn through life about their own resilience that is not about taking somebody else's money that's handed to them, but it's creating your own pathway in life and your own passion. Following the gifts that God has given you and developing those and relating them to the communities around you will give you a much higher purpose in life, and I think that the parents will do well to make sure that their kids are taught a value system that will carry on within their own posterity's life that can benefit the lives of many I love that you know and I really want to.
Speaker 1:Okay, we got some. Chuck Roberts says ideal, tough love. Ghanash says what an inspiring story, alan, and great words of wisdom. Thank you so much for Wendiga Mule. Yes, definitely, thank you for sharing Alan from Fat and Buzzy. This is great information, great stories. Again, I love.
Speaker 1:What Sheila always said from the very beginning is what you're hearing here today in this discussion cannot be Googled, right. You know, on social media today we see a lot of people flaunting, well, but we don't see a lot of people giving and being philanthropic, right, and that's what this topic is about today is teaching those values to your children, teaching those values to your family, no matter what state your family is in right now. As Mitzi says, as Sheila, alan, they say, as long as it's not in the newspaper, it can still come back together and you can reconcile those differences. But not only that. Start instilling and establishing, anchoring and chartering those cultures that you want to be developed within your family, where you want the ship to go and how it's being steered and also what is going to be left to manage and handle that. That's it for this week's episode, until next time. Bye for now.