What’s your family legacy?

[5 min read]

Change of pace today.

We can debate the value of cryptos, SPACs, loss-making IPOs and advice like ‘shares for the long term’ and ‘it’s time in NOT timing the market’.

However, there’s one thing we can all find common ground on. The best investment you can ever make is in your family.

With Easter almost upon us, family is on my mind. An opportunity to be with the people who are the centre of my universe.

Over the course of my personal and professional life, I’ve been fortunate to have met people from very diverse backgrounds.

Seriously wealthy to the not so wealthy. Privileged upbringings to life on struggle street.

Loving families. Dysfunctional families. There are emotional responses of gratitude, resignation, regret and resentment.

Everyone has a story to tell. Within each story there are lessons to be learned…what to do and just as importantly, what NOT to do.

The one thing I know for certain is this…family culture is caught not taught. Or, to put it another way, actions speak far louder than words. Children observe what parents do…not so much what they say.

Today I’d like to share a story with you from a meeting I had a few years ago with a very successful businessman.

In his words, ‘I have been given the privilege and responsibility of managing the family business.’

This business empire has been four generations in the making.

Generational wealth is no accident…it takes commitment, discipline, respect, humility, education and above all, trust.

For without trust, nothing moves forward.

Knowing the high regard the community had for this man and his family, I was curious to find out what the drivers were behind their professional and private success.

My question to him was ‘What are the key principles your father instilled in you and that you are teaching your children?’

These are the four key principles upon which a valuable family legacy has been built.

Tell the story

‘You have to tell the story. When you know the history behind the sacrifices that were made to put you in a position of privilege, it makes you more respectful and thankful. Never take anything for granted.’

He recalled his father telling him about how his great-grandfather started with a small farming lot. Worked long hours and saved for years to buy another lot and then another.

From those humble beginnings each successive generation has — and these were his words — ‘been careful stewards of the family capital’. Today, the family is involved in large scale agricultural and beef production, mining and property development.

The way he told the story you could sense a deep level of respect and gratitude for the foundation laid by his father and the two generations prior.

He said ‘Story telling is a lost art. Decades ago — before TV — people gathered around the radio and used their imagination. Today, people are dumbed down by all sorts of technology. They’ve lost the power to think for themselves. Telling stories reignites the imagination and stimulates the thought process.’

We all have a story…tell it, warts and all. Be proud of what you and if applicable, your ancestors have achieved.

The sacrifices made. The risks taken. The disappointments. The setbacks overcome. The failures. The successes. Wisdom gained.

Bringing your story to life — with characters, places and events your family knows — can create a lasting impression…one that could continue to be told with great admiration by the next generation.

The responsibility of education, working and spending

When you have more money than you could possibly spend in five lifetimes, the challenge is staying motivated.

What’s the point of studying? Why do I need to work? What does it matter if I buy this or that, there’s plenty more where that came from?

‘Sense of purpose’ he said, ‘is crucial to long-term generational wealth.’

All it takes is one generation to break the chain and it undermines decades, even centuries, of effort, planning and sacrifice.

The education can be formal (tertiary qualifications) and informal…learning on the job, access to a family mentor, exposure to creative thinkers.

Keep the younger generation interested in learning. Look for new ways to develop their skills and self-confidence.

He told the story of sending one of his sons to Florida to spend six months with a property developer. He said it was a great opportunity to gain inside knowledge on a larger scale retirement village development…‘my son came back bursting with ideas.’

The work ethic must be established early. From doing chores to helping out in the family business or getting a part-time job. They need to know the value of a dollar and to respect that value.

Having money doesn’t mean you have to spend that money. Think carefully about the ‘need and want’ of a transaction. Do you need it, or do you want it?

If it’s a ‘want’, why do you want it and can you afford it?

Instilling a ‘a well-considered thought filter’ between the wallet and the purchase can help keep the focus on the importance of living within their means.

Teach the next generation to be leaders

One day they will be handed responsibility of the family enterprises or an inheritance…we have to prepare them for that eventuality.

Surgeons train for years before being deemed capable to operate solo. Fighter pilots spend countless hours in simulators prior to being handed the controls of a plane worth tens of millions of dollars.

‘The same goes for our business’ he said. The next generation needs to be taught how to be leaders. This process takes years. Start early.

The family culture has to be encouraging and forgiving. Mistakes will be made. Accept these as part of the learning process.

We’re now seeing the mental health effects on James Packer from the relentless pressure (and at times, ridicule) he received from his father. Never underestimate the impact (positive and negative) the nurturing process can have on young and impressionable minds.

The businessman’s children have various roles within the family business. Some are on the board and others involved in committees. Over the years, the family has ‘cross-pollinated’ with other family businesses. Interning the younger generation with each other’s businesses. Giving them exposure to different management and leadership styles.

He stressed that as part of their leadership role, the family is actively engaged in the community. Giving back is an expression of gratitude and it keeps you grounded. You gain an appreciation of what life is like outside your world of privilege.

Knowing what the average family deals with on a daily basis builds understanding, and all good leaders must possess empathy.

Access quality advice

‘My grandfather learnt a valuable lesson when he engaged a “cheap” solicitor to do some conveyancing work. Apparently, he nearly lost the title to a block of land.’

Never again did he look to cut corners when it came to advice.

‘You pay for what you get son’, these were the words that rang in his father’s ears and passed onto the fourth and now fifth generations.

Wealth requires structures. Companies. Trusts. Wills.

When it comes to long-term wealth creation and protection…tax planning, asset protection and estate planning are necessary evils.

Engage well qualified and highly recommended advisors to provide you with the advice to create and maintain the structures necessary to legally minimise tax, successfully protect your assets and ensure a smooth transition of your estate.

The same principle applies to their business interests. When specialist advice or service is needed, they engage suitably qualified professionals.

He said ‘short cuts’ can turn into ‘deep incisions’ into your wealth. Avoid them.

Paying for quality advice is money well invested.

Conclusion

These were his final comments to me…

‘Values are the most important legacy you can leave your family. Good values will outlive you. The values of my great-grandfather — work ethic, frugality, respect for family — are with us today,’ he said.

‘I realise that I cannot force my family to stay together or to continue with the business after I’m gone. That’s their choice. What I can do is give them the values and wisdom to assist them in making well considered choices.’

From my family to yours, have a happy, safe and loving Easter.

Regards,

Vern Gowdie,
Editor, The Rum Rebellion

Vern is also the Editor of The Gowdie Letter and The Gowdie Advisory — investment services designed to help everyday Australians avoid the financial pitfalls of a volatile economy and make informed decisions to grow their wealth for generations to come.