Wealth Clarity Blog

As a business owner myself, there is no shortage of fears and worries that I either want to ignore or don’t know who I can talk about them with. It has morphed over the years, and I definitely feel more comfortable talking about deeper issues and concerns, but it has taken me a long time to get to this point.   

In retrospect, it was many times pride, fear of failure, and other times just the lack of someone (other than my wife) to talk to.  After a few years of dumping on my wife, and some counseling, we concluded it wasn’t good for our relationship.  Close friends may not be a good alternative either, because many times they just don’t have the experience or perspective to offer much value or guidance.  Key employees are also generally not good choices due to confidentiality and the potential for your raw thoughts to be shared with other third parties. 

But make no mistake, friend or no friends, these fears and worries are real and go home with the business owner every night, whether or not you consciously think about them.

The funny thing is, business owners are generally an optimistic bunch, and we really would much prefer to just focus 150% on running and growing our business and not waste energy on things out of our control.  However, this mentality only creates a false sense of security that can easily unwind into unintended consequences; namely, we aren’t really prepared for the uncertain future that awaits all of us. 

So, here are three fears you may want pay much closer attention to: 

1. Feeling isolated at the top—no one to talk to or be real with.  Advisory boards can be great, but are not always the best venue for processing your inner concerns, hopes, and dreams.  Unsure about whom to trust and with what information?  Concerned that if you trust someone with confidential information about the business it could get leaked? The need for a true confidant to listen to your joys and disappointments without an agenda and to hold you accountable is invaluable.
2. What if something bad happens?—get sick, die, divorce.  Who is asking you the hard questions without sugar coating it?  Is there a contingency plan to address these unfortunate potential events so your wife, family, and key employees aren’t left with a big mess to clean up?  Does someone know you and your situation well enough to help guide your choices that will impact your life and business?
3. Burnout caused by an out-of-balance life.  Who are you without the business?  Is there an overarching plan or legacy for all this hard work and time?  Consider a broader view of your wealth that includes intellectual, financial, social, family, and spiritual capital. Many times the business and financial capital is well developed and other areas of life are immature.   

I have lots of experience with these fears and many others and have carried them around for years.  It was about 3 years ago that I finally realized the importance of facing them head on.  The benefits have come in the form of lower stress, greater life satisfaction, and a clearer purpose and meaning for my life. 

If you have questions about my journey in this area, please drop me a note and let’s grab coffee.  I’d be happy to share my story.

Guest Blog provided by Richard Beaton & Linda Wagener of Marigold Associates.

Over the past several weeks, we discussed the value of using deliberate training strategies such as allowances and budget management to teach children financial skills. In this segment we’re going to tackle the problem of how to form our children’s attitudes toward money and work. These are rarely shaped simply by education. They are rooted in the basic practices and habits of family life.

You may have heard the phrase “shirtsleeves to shirtsleeves in three generations.” It refers to the fact that often a person’s attitudes toward money and work can be traced to where they are in the family wealth cycle. Those in the first generation of affluence learned how to earn and manage money because they had to. There were no family funds to buy them everything that they needed, wanted, or thought they wanted. They had to work to pay for any extras and even in some cases, the necessities, like clothes. If they wanted a college education, they had to take out loans and work part time. By the third generation, the work ethic has often declined to the point where the accumulated wealth of the family is depleted by a generation who has learned to be consumers rather than creators of wealth.  But it doesn’t have to play out this way.

We interviewed a member of a fourth-generation family of wealth who illustrated this pattern clearly. His side of the family had continued to live productive lives. Their wealth had increased in every generation. Another branch of the family, the “country-club cousins,” had burned through their inheritance. Their kids would be back to shirt-sleeves. The difference? He pointed out the window to an 8-year old neighbor kid, mowing the lawn across the street. “See that kid? His family is worth millions. But they live modestly, and expect their kids to work as soon and as hard as they are able. See that other kid next door? He’s 16 and has never held a job. His family doesn’t have the wealth of the other, but probably never will.”

In our work with entrepreneurs and families, we have heard variations on this story over and over again. The families whose children grow up to be hard-working productive contributors are expected to work and be responsible, just like everyone else. They live comfortably but modestly. They also recognize that their wealth is a responsibility, not a privilege. It is to be used for good, not for pleasure.

Five Things You Can Do to Teach Your Children to Handle Wealth Wisely

1. Let them learn the joy of working hard and the reward that follows. It may be tempting to think that schoolwork is enough to accomplish this, but schoolwork has sadly become more about performance achievement. In contrast, work contributes to the well-being of others and is a piece of a larger enterprise.
2. Never use money as a reward for achievement such as grades. Such practices teach kids that money is the only reward that matters, and they distract them from the intrinsic pleasure of doing well.
3. Live modestly. This is often very difficult for those who want to enjoy their wealth. One entrepreneur we interviewed came from significant poverty and loved the lavish lifestyle he was now able to afford. The children of his first marriage had blown through every cent he had given them. He didn’t want the same thing to happen to the kids of his second marriage, yet he couldn’t give up the ostentatious lifestyle. Eventually he had nothing left to pass on.
4. Be wise with your inheritance strategy.Let your kids know from an early age that they will be expected to work and live responsibly. Make a commitment to yourself that you won’t give large sums of money to adults who have not demonstrated the capacity to use finances wisely. 
5. Don’t use your wealth to protect your kids from the harsh realities of life. Admittedly, this is difficult for any parent, but your children need to be exposed to those in need in order to build their sense of empathy and gratitude. You can build their hope by demonstrating how your wealth can make a difference in the world. Involve them early in giving back through hands-on service in their community. There are many excellent organizations that provide opportunities for young people to develop their skills. Social Venture Partners (Seattle) is one good example.

There is little in life as satisfying as seeing your children flourish in their lives; delighting in their life’s purpose. Whether they end up with modest or robust incomes, they will need to know how to work hard and manage their finances. As parents you can make a significant difference through financial education and creating a family environment that forms their character and values.

A big “thank you” to Richard Beaton and Linda Wagener of Marigold Associates for guest blogging.  Feel free to contact them directly if you have questions or need more information.  As a reminder, we are hosting a luncheon on February 15th to hear more about the subject of Kids & Money from these two experts.  If you have an interest in learning about the event, please contact jessica@highlandprivate.com.

I am excited to have Richard Beaton and Linda Wagener, founders of Marigold Associates, provide a series of guest posts related to the topic of kids and money.  As a heads up, we are hosting a lunch seminar on Wednesday, February 15th, that will give you an opportunity to hear even more of their deep wisdom and experience in this area.  If you are interested in attending, please contact jessica@highlandprivate.com.

Will your children be positively or negatively affected by the financial wealth you share with them?

In thirty years of working with families and children, we have never heard one family member express concern about the impact of wealth on their kids. Wealth is always assumed to be a good thing.  But the reality is that there are plenty of reasons to be concerned.

The value of wealth lies in its power to expand opportunities and resources that can strengthen families and provide a good life for children. There are extraordinary young people coming from families of means who are thriving and contributing positively to society. There are also extraordinary young people coming from families of means who are floundering amidst the wealth, overwhelmed by abundance and opportunity.

Affluence increases certain risks. There are far too many examples of young people whose lives have been distorted by wealth. The negative impact of wealth can result in a broad range of life problems, which include:

• Lifelong financial dependency.
• Loss of hard won family wealth due to mismanagement or unhealthy lifestyles.
• Destructive values about money such as equating money with self worth or believing that happiness depends upon having all the latest trends.
• Over use of credit, ending in unmanageable debt.
• Family conflict and resentments about money and inheritances.
• Loss of incentive to live a life of substance and meaning.

Gift that it is, wealth apparently has the power to build or destroy. What makes the difference?

We have been studying multigenerational families of wealth for many years, and here’s what we’ve found.  Some of the families we have observed have practices that consistently result in generations of children who become creatively engaged in life. They contribute to their families and communities through productive lives. Other families have struggled. Their children are voracious consumers of wealth who have failed to build their lives around a meaningful purpose. In the worst cases, there have been drug and alcohol problems, eating disorders, family alienation and estrangement.

We observed that the successful families have deliberately prepared their children for wealth. Beginning at a young age, they have provided financial education and training, formed their children to have strong values including a work ethic and integrated certain practices into their family life.

This is the first of a series on how to prepare children for living with wealth. We will tackle each of these topics – education, formation and practice – in the blogs that follow. In the meantime, here is something you and your family can do in preparation:

1. Discuss with your spouse what you’ve done to prepare your children for wealth.  What concrete steps have you taken?  Where are you succeeding? Where could you improve?
2. Talk with your children about their views about wealth.  What do they think money is for?

As I was thinking of last month’s post about leaving a legacy I thought but what if all I had was today?

If you knew you only had today to live, how would you spend your time?  What things would you choose to do?

My guess is that you would make sure to spend time with people you love and you might even go do something super fun, or see something that really mattered to you.  As I contemplated it myself, I think the day would be marked as much by the things that I wouldn’t do as by the things I would choose to do. 

For example, I wouldn’t get frustrated or angry with someone but instead would laugh often; I wouldn’t worry about rushing from place to place but instead would focus on staying present in each moment; I wouldn’t focus on mundane tasks and busyness in favor of meaningful conversations and relationship; I wouldn’t worry so much and waste time on fear-based thinking but instead explore life.

The reality is that we really don’t have any control over how much time we have on this planet.  The funny thing is that planning for the future is critical to what we do at Highland, and it’s very important, but it can give a false sense of control.  Living fully present in each moment and focused on today is all we really have for sure.

Try this simple exercise: Before you do the next thing in your day, ask yourself, what if today was my last?  How would you choose to live it?  My suspicion is that you might need to make some adjustments or different choices about how you’re going to spend your time.

This doesn’t mean that you don’t go to work (nice try), but instead use it as a way to evaluate if you are doing the things that bring meaning and value to your life, even at work.

We all have things we have to do but maybe don’t want to, but the key is to minimize these types of items and instead of stubbornly doing all of them regardless, use this screening mechanism to evaluate what needs to change today.

What would you do if today is all there is?

About a month ago, the Wizard of Westwood, John Wooden died after a storied life of triumph.  He was arguably one of the greatest coaches and leaders of all time, indelibly influencing the game of basketball forever with his focus on basic skills, team greatness, and individual commitment.

After his death, I watched hours of ESPN programming about his life, his philosophy, his relationships, and his legacy.  I was amazed by how many people he influenced during his life, even long after he stopped coaching, and I presume for many years to come.

Over the past decade I have read several books about John and his life.  I have even used some of the elements of his Pyramid of Success approach in my own business team development and vision.  I shared some of that in a previous post on our internal strategic planning.

As a part of my own personal visioning process, I asked myself the question:  At my funeral, what do I want people to say about me?  Obviously, this really unabashedly pokes at the issue of legacy and the true meaning of my life. 

I had never done this before and decided to take a stab at it. So, one afternoon I got out my notebook and pen and started a list. 

It was interesting that it took me a while to get past the small items and performance based things like work success, awards, etc. and get to the essence of who I am and what I want to be remembered for (good father, husband, deep friendships, loyalty, compassion are a few of mine).  I plan to spend more time refining the list and processing what I wrote down over the next few months as I continue on this journey.

Some of the items are quite personal and in a recent conversation with a friend who was asking me about my list, I found myself getting very uncomfortable.  This tells me I also have some work to do on being more authentic with who I am—and who I want to become. 

What do you want your life to be about?  If you don’t know, it might be time to think about it and start moving towards it.  This exercise might come in handy, “My Life Story.”  It’s a five step exercise that helps represent expression of the “choices” you are making about your life.

If you want to know more about my experience going through this process, please feel free to reach out and I would be happy to share more of my story.

The word “wealth” gets used often and can get confused with the word “rich”.  They are not interchangeable but can be used like they are synonymous.

The point or outcome of proper “wealth” management is so you can lead a “rich” life.  Wealth connotes money, investments, assets, property, and rights of ownership.  (See my previous post on what wealth management means.)

Riches represent things like: significance, family, passions, friendships, happiness, impact, joy, compassion, and legacy.  We all want a “rich” life, don’t we?  You might say these are the softer issues associated with wealth, but in my opinion they are what matter most in my life and they aren’t impacted by how much money you have.

Here are a few things you might consider that can increase the riches in your life:

• Take the time to visualize the “rich” life you desire.  Write it down because your definition and picture is unique and different than mine. 
• Integrate your wealth management strategies into your life so that it can yield riches. That is the reason why your core values and personal vision are critical elements of a wealth strategy.  I will be talking more about how to do this in future posts.
• Inventory the results of your wealth management in light of the life you desire.  If changes need to be made in your strategy now is the time to make them.
• Evaluate the amount of time you are spending on things that don’t create riches in your life.  Commit to making one key change in this area this month. Really.  This month.

We only have only one life to live and so living it to the fullest, each day, is the only way I know how to live richly.  As I said in a recent video blog, I am evaluating my use of email and how it can control and rob me of precious time.  Join our discussion on Facebook on what areas of your life need adjustment.

In a recent post titled Moving from Success to Significance, I wrote about some of the key considerations when shifting your life from a journey of success to a journey of significance.  Making this shift requires action, but unfortunately, many wealth creators get stuck along the way.

The major barrier to a life of significance is Complexity.

Two Challenges of Complexity

First, wealth—especially increasing wealth—will naturally create a heightened level of complication in your life.  You tend to worry more, have less time for the things you truly love, and desire more control and simplification.  But, at the same time, you aren’t sure what options you have that will allow change to occur.  

Secondly, when you’re in the middle of wealth complexity you don’t know what you’re missing: you can’t see it. 

The base that will allow you to fully experience significance is Wealth Clarity.

In many ways, wealth clarity is the bridge that crosses the chasm from complexity to simplicity.  It frees you to think and to enjoy life in a more meaningful way.  It builds confidence because you can manage your financial life more easily and respond to changing assumptions and life circumstances in stride.

The sad truth is that 90-95% of wealth creators live a life of wealth complexity. 

In my next post I will focus on the consequences—impacts and costs—of not having clarity and what you can do about it.

With two kids already off to college and one safely stashed with friends, my wife and I were invited to northern Idaho for a Labor Day weekend getaway.

Our friends' Idaho getaway provides not only a great weekend escape, but a place to cultivate family memories and values.

Aside from the six-hour car ride from Seattle, we were excited to be guests at this beautiful home on the south shore of Priest Lake, one of three pristine mountainous lakes in Idaho’s panhandle.

For our host family, this home and property provide a year-round gathering place for three generations of family and their friends.

Depending on the season, there’s abundant hiking, snowmobiling, water skiing, family dinners on the patio, stories around the fire pit, lots of laughter and games—all happening at this lakeside retreat.

Your family may already have a place like this so you may fully understand the power and benefits of creating this type of family experience.

The location or aesthetic features aren’t the key.  In fact, in the case of our Idaho friends, the little red cabin next door is the true humble beginning of their family story.

The important question is this:  Does your family have that one special place?

Why is this important?

In short, it is a tangible way for your family legacy to take shape and develop.

No matter where the ”place” is, it becomes the conduit to share family history, honor older generations, build new family memories, reinforce family values and beliefs, and provide a consistent place over time where family and close friends can gather.

There is no doubt that special places like this one in Idaho require vision, even, …courage to create.  But they can pay rich dividends to your family for generations to come.