The Wesley Group CFSPS Presentation

Many family leaders prepare the money for the family.

An exceptional few prepare the family for the money.

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© 2011. The Wesley Group. All rights reserved.

Mastering the Difficult Job

of Being Rich

It has left me with nothing to hope for, with nothing definite to seek or strive for. Inherited wealth is a real handicap to happiness.”

William K. Vanderbilt, grandson of Cornelius Vanderbilt

“

The Vanderbilts over several generations united two notable talents, those being the acquisition of money and the later the dispensing of it in unparalleled volume, and for frequent and unparalleled self-gratification and, very often, rather forthright stupidity.”

John Kenneth Galbraith

“

It requires a great deal of boldness and a great deal of caution to make a great fortune; and when you have got it, it requires ten times as much wit to keep it.”

Nathan Rothschild

“

It requires a great deal of boldness and a great deal of caution to make a great fortune; and when you have got it, it requires ten times as much wit to keep it.”

Nathan Rothschild

“

• Alphonse James de Rothschild (1827-1905) • Bethsabée de Rothschild (1914-1999) • Charles Rothschild (1877-1923), banker and entomologist • Edmond James de Rothschild (1845-1934) • Elie de Rothschild (born 1917) • Emma Rothschild (born 1948) • Guy de Rothschild (1909-) • Baron Ferdinand de Rothschild (1839-1898) • Hannah Primrose, Countess of Rosebery nee Hannah Rothschild (1851-1890) • Henri James de Rothschild (1872-1946) • Henriette Rothschild (1791-1866) married Sir Moses Montefiore (1784-1885) • James Mayer Rothschild (1792-1868) • Jean-Pierre de Rothschild ("JP") (born 1960) • Josef Rothschild • Kathleen Annie Pannonica Rothschild (Baroness Nica de Koenigswarter) (1913-1990) • Leopold de Rothschild (1845-1917) • Lionel Nathan Rothschild (1808-1879) • Miriam Louisa Rothschild (1908-2005) • Lionel Walter Rothschild, 2nd Baron Rothschild of the United Kingdom (1868-1937) • Nathaniel de Rothschild (1812-1870) • Nathan Mayer Rothschild (1777-1836) • Nathan Mayer Rothschild, 1st Baron Rothschild of the United Kingdom (1840-1915) • Nathaniel Charles Jacob Rothschild, 4th Baron Rothschild of the United Kingdom (born 1936) • Nathaniel Mayer Victor Rothschild, 3rd Baron Rothschild of the United Kingdom (1910-1990) • Philippe de Rothschild (1902-88)

90%98% is gone by the end

of the fourth

is gone by the end of the third

70% of wealth is gone by the end of the second generation

This translates to a “success rate” of only

The Fears

37% Investment risk

26% Systemic economic risk

16% Political and tax risk

7% Family issues

Family Office Exchange

The Reality

60% Communication and trust

25% Inadequately prepared heirs

15% Lack of mission

3% Technical failures

Williams and Preissser (2003)

A WHOLE NEW GAME

Sustainable Wealth

Mile 1: The Stages of Family Development

Mile 2: Understanding Family Wealth

Mile 3: Developing a Family’s Core Competencies

Mile 1: The Stages of Family Development

The Five Stages:

1. Entangled2. Separated3. Gathered4. Flowing5. Generative

entangled

separated

gathered

Flowing

Generative

Mile 1: The Stages of Family Development

Mile 2: Understanding Family Wealth

Mile 3: Developing a Family’s Core Competencies

Families that retain wealth…..

actually perceive their wealth differently.

Types of Family Capital

The Focus: Four Types of Family Capital

HUMAN FINANCIAL

CULTURAL SOCIAL

The Focus: Four Types of Family Capital

Each generation is maximizing its potential.

HUMAN FINANCIAL

CULTURAL SOCIAL

The Focus: Four Types of Family Capital

Assets are protected and wisely used.

HUMAN FINANCIAL

CULTURAL SOCIAL

The Focus: Four Types of Family Capital

The family has a healthy and productive culture.

HUMAN FINANCIAL

CULTURAL SOCIAL

The Focus: Four Types of Family Capital

The family is well-advised and well-connected.

HUMAN FINANCIAL

CULTURAL SOCIAL

The Focus: New Model of Estate Planning

Investment of some financial capital in structures that will foster human, cultural and social capital of the family

Mile 1: The Stages of Family Development

Mile 2: Understanding a Family’s Core Wealth

Mile 3: Developing a Family’s Core Competencies

Core Competencies

1. Alignment & Identity

2. Communication

3. Autonomy and Belonging

4. Performance & accountability

5. Sound financial management

6. Effective structures

7. Robust networks and ecosystems

8. Leadership and governance

9. Education & mentoring

10. Cultural agility & adaptive capacity

Core Competencies

1. Alignment & Identity

2. Communication

Communication

Outcome

Situation

Now

StructuresFunctions

Family TypeRolesCoalitionsPatterns

History

People Patterns

PsychologyEducationExperience

HonestyEngagementCommitment

Family Systems Diagram

Developmental Stage

BelongingIndividuationTrustPower

Stories Scripts

Communication

Outcome

Situation

Now

StructuresFunctions

Family TypeRolesCoalitionsPatterns

People Patterns

PsychologyEducationExperience

HonestyEngagementCommitment

Family Systems Diagram

Developmental Stage

BelongingIndividuationTrustPower

Stories Scripts

Communication

History

Every man takes the limits of his own field of vision for the limits of the world."

Arthur Schopenhauer

“

Outcome

Situation

Now

StructuresFunctions

Family TypeRolesCoalitionsPatterns

People Patterns

PsychologyEducationExperience

HonestyEngagementCommitment

Family Systems Diagram

Developmental Stage

BelongingIndividuationTrustPower

Stories Scripts

Communication

History

Outcome

Situation

Now

StructuresFunctions

Family TypeRolesCoalitionsPatterns

People Patterns

PsychologyEducationExperience

HonestyEngagementCommitment

Family Systems Diagram

Developmental Stage

BelongingIndividuationTrustPower

Stories Scripts

Communication

History

Scripts

Karpman’s Drama Triangle

Rescuer

Persecutor Victim

Rescuer

Persecutor Victim

Rescuer

Persecutor Victim

Outcome

Situation

Now

StructuresFunctions

Family TypeRolesCoalitionsPatterns

People Patterns

PsychologyEducationExperience

HonestyEngagementCommitment

Family Systems Diagram

Developmental Stage

BelongingIndividuationTrustPower

Stories Scripts

Communication

History

Challenge the sense the family is making of itself…

ReframingMoving Boundaries

Shifting FocusDisrupting Cadence

Altering StructureDisturbing Balance

Help the family tell a larger story about itself and thereby create a new identity.

It’s simple in theory….

New Identity

Upshifts Development

Entangled

Separated

Gathering

Flowing

Generative

New Identity

Expanding Possibilities

Waking Up!

Creating the Path

Starting the Journey

Transcendence

Self-Actualization

Knowledge & Understanding

Esteem & Respect

Love & Belonging

Safety & Security

Survival

World View

• Survival

• Safety & Security

• Love & Belonging

• Esteem & Respect

• Understanding

• Self-Actualization

• Transcendence

Philanthropic Values & Motives

• Security, preservation

• Tradition, care, responsibility

• Belonging, identity, tribes

• Power, impact, competence

• Engagement, productivity, leverage

• Growth, synergy, experimentation

• Interdependence , transformation

World View

• Survival

• Safety & Security

• Love & Belonging

• Esteem & Respect

• Understanding

• Self-Actualization

• Transcendence

Family Stages

Entangled, Separating

Separated

Gathered

Flowing

Generative

½ step

In my world philanthropy becomes a lever to do two things….

1. Build Human and

Cultural Capital

In my world philanthropy becomes a lever to do two things….

2. Help families

move from one stage of development to the next.

© 2010. The Wesley Group. All rights reserved.