My core values, passed down from my family, protected me from foolish expenditures, and I had already undertaken work entirely independent of my family, earning a living as a chartered accountant like my father and grandfather before me. (Location 50)
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That means a family’s total assets are far greater than its financial assets alone. In this sense, you really are much richer than you think. (Location 64)
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The failure rate today for succession and wealth-transition plans is an astounding 70 percent. (Location 68)
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The Family Bank is a dynamic approach to multigenerational wealth transitions that can be implemented at any stage in a family’s life cycle. (Location 73)
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However, they are equally concerned about the potential negative impact on these economies if the pattern continues and 70 percent of the succession plans for these family businesses fail. (Location 143)
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According to their definition, a succession plan is considered to have failed if the next generation involuntarily loses control of the transitioned assets. (Location 155)
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60% Breakdown in communication and trust within the family unit 25% Unprepared heirs 12% Lack of mission 3% Failures of professionals (Location 165)
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If I am in a conversation with someone who I do not trust, then I will not believe what he or she is saying. The message sender may think they have delivered a clear message but, in my mind, I have disregarded it. (Location 173)
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For instance, when my family lost control of our media operations, the national press certainly paid rapt attention when private family matters were inadvertently not kept private. (Location 181)
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Earning a voice is a key element of the Family Bank; to have a say, each family member must earn a voice in the Family Bank, or be genuinely working towards earning it. (Location 197)
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A few of the qualifications a family might require for earning a voice include disagreeing without emotion during family discussions, behaving with respect towards other family members, working towards financial independence, and putting the needs of the family first. (Location 200)
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Effective communication in a family does not simply happen. It requires practice and a genuine commitment to the process. (Location 202)
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Most people think immediately of children when they hear the word heirs, but guess what? An heir can be anyone we decide is a member of our Family Bank. (Location 210)
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It is impossible to overstate the power of a shared vision. When people’s dreams and objectives align, the seemingly impossible becomes possible. (Location 245)
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By developing a shared vision using the Family Bank approach, a family diminishes the likelihood for conflict. (Location 253)
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Through earlier Family Bank discussions, they will have learned a very important concept: that fair does not necessarily mean equal. (Location 257)
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This is where the Family Bank comes in, a concept that turns the traditional approach to succession and wealth-transition planning upside down. (Location 273)
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As opposed to family members working together for the first time to overturn an estate’s legal structure, such as a trust, families following the Family Bank approach are working together long before estate issues arise. (Location 274)
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Once the family’s assets have been assessed and prepared and the family has found a way to organize itself to reach its objectives, by establishing a governance structure, then, if agreed to by the Family Bank members, (Location 278)
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traditionally advised structures could be entered into. (Location 280)
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I had witnessed successful families following its core concepts over generations, though no name was formally given as to how they operated. (Location 283)
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The Family Bank approach makes far more sense than the generally accepted, professionally advised solutions that fail the majority of the time. (Location 288)
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the Family Bank is designed to be the custodian of all aspects of the family’s wealth—not just the financial assets, but also its human and intellectual assets. (Location 291)
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The continuity of the Family Bank depends on each generation creating its own wealth while simultaneously serving as stewards of any inherited Family Bank assets. (Location 297)
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First of all, as initiators of this approach in the family, they are blazing a new trail. (Location 304)
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These are individuals whose powerful dreams have inspired them to overcome significant odds to achieve full-blown financial success. (Location 306)
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In other words, when they first set out on their missions, they were blessed with a plentitude of human and intellectual capital but suffered from a scarcity of financial capital. (Location 308)
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The successful transition of a family’s wealth from first generation to second generation will require the first generation to cede some control. (Location 311)
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However, sharing control, rather than ownership, with the next generation at this stage is a pragmatic and proactive way to prepare the younger generation both for their future roles and responsibilities as Family Bank members and for successful independent lives. (Location 313)
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An important part of the first generation’s role is offering genuine respect and admiration to other Family Bank members, especially as their competencies and skills increase. (Location 318)
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The Family Bank approach reminds families seeking to sustain multigenerational transitions of wealth that the primary purpose of financial capital is as a tool to be used to nurture and strengthen each family member’s human and intellectual capital, and thereby increase the assets of the family as a whole. (Location 326)
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What a family member’s job pays is no indication of the true value of that individual’s work or (Location 340)
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worth to the family, to their Family Bank, or to society at large. (Location 341)
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These are the values that are lived out by parents in front of their children. (Location 343)
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A family’s intellectual capital can be defined as the sum total of everything each family member knows. (Location 345)
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A life spent trapped in the dreams of one’s parents can be a nightmare. By contrast, a life spent pursuing one’s personal dreams allows an individual to create a future of their own making. (Location 349)
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The financial assets of the Family Bank are the economic tools that will eventually be transitioned to the next generation of Family Bank members and the generations that follow. (Location 353)
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The gold standard is for each generation, as stewards, to leave the Family Bank, including the financial assets, even stronger than the one vouchsafed to them. (Location 358)
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As stewards of the financial assets of the Family Bank, each generation is working for the human and intellectual benefit of future generations. (Location 359)
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When a family sees its purpose as being to nurture and support each individual to find their individual calling, the family’s human and intellectual capital increases. (Location 361)
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There is nothing to stop a Family Bank member from pursuing a passion to rebuild collector cars, for example, as long as that passion is supported by the financial capital that member earned individually. (Location 365)
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Part of the Family Bank process is engaging younger generations in financial conversations in an age-appropriate way. (Location 368)
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However, since developing the human and intellectual capital of our young children—our most valuable family assets—is our priority, we recognized the critical importance of role modeling key values such as a strong work ethic, loyalty to our clients, passion for our work, and a commitment to self-sufficiency. (Location 375)
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In succession planning lingo, the second generation is referred to as the “sibling partnership.” (Location 388)
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Using the Family Bank approach, however, siblings learn how to compromise and work together. (Location 391)
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The Family Bank approach provides an excellent way to work around this potentially divisive issue. (Location 400)
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Because Family Bank members agree on the family’s long-term vision and the purpose of the Family Bank, decisions that may not be strictly equal among family members will still be seen as fair. (Location 402)
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The famous Rothschild family, who at one time possessed the largest private fortune in the world, has successfully transitioned wealth over multiple generations, in part due to the use of a Family Bank concept. (Location 419)
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This resulted in the amalgamation of the family’s intellectual capital and the strengthening of their human capital. (Location 425)
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The first was that the family members were to work together, and the second was to be reasonable in their profit expectations. (Location 427)
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This family puts individual achievement and family unity first. (Location 432)
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So important is the gathering to their Family Bank that it has been noted that family members who fail to attend are locked out of their Family Bank. (Location 433)
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Shared family values are a key foundational piece of the Family Bank approach. (Location 441)
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When the members of a family articulate their values, they find themselves answering questions like: (Location 444)
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you will come to realize that your value system is unique to your family as it describes how your family sees itself. (Location 448)
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In my experience, most families are comfortable discussing the issue of values, yet it is also a subject that can be easily overlooked. (Location 450)
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However, today’s Family Bank leaders must stay abreast of (and often counteract) the various influences on younger family members, both in a general sense and when the younger people might be targeted. (Location 456)
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As a Family Bank leader, you will not only influence the values of the younger family members, but also help those members to appreciate why shared family values are so important. (Location 458)
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“Children have never been good at listening to their elders, but they have never failed to imitate them.” (Location 463)
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While every family’s values are as unique as the family itself, there are several values shared by many families who have successfully transitioned all their forms of wealth over multiple generations. (Location 473)
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Respect for the Luck Factor (Location 475)
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Luck comes in many forms, including good timing, being in the right place at the right time, and spotting an opportunity that might otherwise have been missed. (Location 479)
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An inheritance is different from a lottery win only in that it was expected. (Location 482)
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The word “heirloom” has a much different resonance. However an heirloom comes into a family’s hands, it is something to be taken care of and protected—and in the case of the Family Bank, to be stewarded so that future generations may share in the benefits. (Location 486)
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Going forward, Family Bank members should be encouraged to take reasoned financial risks with their own financial assets as well. (Location 489)
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Once all family members understand that money does not grow on trees, they will appreciate that the financial assets of the Family Bank should be managed with a long-term view and in a more conservative and prudent manner. (Location 490)
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I like to use the term in connection with the Family Bank: family members must see themselves as stewards of their family’s wealth to ensure the Family Bank’s sustainability. (Location 496)
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Family Bank leaders must make it a priority to develop members who are independent, self-fulfilled individuals, who are emotionally and physically healthy and well prepared for the future. (Location 499)
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Like a traditional bank, the Family Bank may lend money to family members, but that money must be repaid. (Location 503)
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In preparing our sons for the concept of stewardship, it was important to draw their attention to the distinction between control and ownership. (Location 505)
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Encouraging each family member to earn their own way in the world must be a top priority for Family Bank leaders. (Location 514)
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Mental health professionals tell us that we all need two things to be self-fulfilled: love and work. (Location 516)
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For younger members of the Family Bank, work is the first step in cutting the umbilical cord. (Location 518)
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By becoming self-sufficient through work, Family Bank members will develop the physical, emotional, intellectual, and financial capacity to lead lives entirely independent of the Family Bank. (Location 523)
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Precious opportunities are lost to inform growing children about the pitfalls and possibilities in managing one’s financial affairs, and to discuss other examples of individuals and families who handle their money especially well or badly. (Location 530)
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Families following the Family Bank approach appreciate the fact that the family working together as a unit is more powerful than any one person can be working independently. (Location 536)
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The Family Bank model allows each family member to feel they are part of something bigger and more important than themselves. (Location 545)
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Optimism is a personal philosophy of mine, and I encourage families to approach their shared vision statement in that way. (Location 552)
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Since a family’s shared vision statement captures how the family wants to approach all of the Family Bank’s assets—human, intellectual and financial, now and into the future—this (Location 563)
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Working together to create a vision that everyone agrees to and wants to strive for strengthens communication in the same way. (Location 567)
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The Family Bank approach treats the family like any high-achieving business. (Location 578)
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Many professional advisors, however, unaware that communication breakdown leads so often to the failure of succession (Location 585)
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In a common scenario, individual family members often learn about their family’s corporate and trust structure only at the time they file their first personal income tax returns. (Location 587)
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A young family member struggling to meet his monthly rent for shared accommodation, for example, may understandably feel resentment or anger towards older family members if he is unprepared for this new information regarding the flow and extent of financial capital. (Location 593)
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By following the Family Bank approach and clearly articulating a shared vision statement based on your family’s shared values, you will not fall prey to the poor advice of a professional with a product to sell. (Location 601)
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For instance, a shared vision statement, based on the family’s shared values, may recognize the importance of a robust democratic political system, including a healthy tax system to provide infrastructure, education, healthcare, and other social safety nets. (Location 605)
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The Family Bank approach provides many opportunities for all members to practise their communication skills in a friendly, non-critical environment. (Location 664)
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The strength of the shared family vision statement that will set the destiny for your Family Bank will be exponentially more powerful when, through ongoing communication built on trust within the family, (Location 680)
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The question Family Bank leaders need to ask is this: do our Family Bank members have what it will take to get the job done for years to come? If not, what do we need to do to get there? It can be a humbling experience to see ourselves for who we are, rather than who we pretend we are, but it is an essential part of the Family Bank process. (Location 686)
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Reaching one’s individual potential requires character traits such as commitment, hard work, high standards, and expertise. (Location 709)
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Every Family Bank member, young or old, must keep up with the financial realities of the twenty-first century. (Location 722)
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Part of assessing your family honestly is examining members’ attitudes about lifestyle and work. (Location 801)
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A legacy lifestyle, as I define it, is one in which an individual enjoys a quality of life based on a certain level of affluence earned by another individual. (Location 808)
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Holding regular ongoing conversations with all family members about the purpose of the Family Bank can prevent some of these legacy lifestyle children from facing a rude awakening when they realize in early adulthood that the effort, talent, abilities, or correlated earnings required to sustain such a lifestyle are no longer within their reach. (Location 813)
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True happiness is realized through the ability to lead a free life, not only physically but also emotionally and financially. (Location 824)
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When the Family Bank approach is used, these kinds of issues are less likely to arise. As part of the process, everyone agrees to the purpose of the Family Bank and the deployment of its assets. (Location 834)
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If the goal of the Family Bank is for every member to lead a free and independent life, finding paid work will be a priority. (Location 835)
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Articulating the family’s shared values and vision requires robust conversations among people who are willing and able to work together. (Location 841)
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Over time, the Family Bank leaders will be continually assessing the family’s ability to work together effectively and can suggest adjustments as necessary. (Location 845)
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And working together over time allows our sons, who spent their growing-up years competing with each other, as all siblings do, to learn to work together in an adult sibling partnership with a shared purpose. (Location 848)
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Forcing a relationship is never a good idea, and it is counterproductive to the Family Bank’s shared desire to work together for a brighter future for the family. (Location 851)
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Someone unwilling to do what it takes to earn a voice in the Family Bank can still be welcome at a family dinner. (Location 855)
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This is normal; people that age are often focused on finishing their education, finding a job, and becoming financially self-sufficient. (Location 870)
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Individuals pursuing lives independent of their families, including in financial terms, are actually developing strong human and intellectual assets for the Family Bank, even if they currently are not able to be directly involved. (Location 874)
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deepened. I know today that while the numbers are very important, and must be wisely heeded, it is by considering the entire forest—the family’s human, intellectual, and financial assets—that you will make the best decisions regarding the stewarding of the trees. (Location 887)
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Encouraging Family Bank members to participate in financial discussions allows them to take pride in the stewardship of the family’s assets and prepares them for future responsibilities. (Location 898)
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In my family, the sale of a significant family business triggered liquid financial assets for our Family Bank, so our initial stewardship decisions ran more to passive investments: financial markets, real estate, and collectibles. (Location 900)
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I have personal experience with the power of a seemingly unattainable dream. (Location 924)
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Without the passionate dreams of an active and engaged ownership to guide it, a company is like a ship lost at sea, with no clear destination. Management too is left adrift. A family business in such a state is only one competitive economic storm away from ruination. (Location 983)
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