More Than Money. Cole Michael A.

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      Michael A. Cole

      More Than Money

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MORE THAN MONEYA Guide to Sustaining Wealth and Preserving the FamilyMichael A. Cole

      Copyright © 2017 by Michael Cole. All rights reserved.

      Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.

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       Library of Congress Cataloging-in-Publication Data is available:

      ISBN 978-1-119-26470-5 (Hardcover)

      ISBN 978-1-119-26473-6 (epdf )

      ISBN 978-1-119-26480-4 (epub)

      Cover Design: Wiley

Dedicated to my son Daniel, whose time with us was cut way too short yet his impact was larger than life itself. Life is about so much more than money, and I would give any amount to have him back

      Preface

      Creating substantial financial resources requires a combination of skill, luck, and timing. Very few people are successful at creating and accumulating wealth that provides more than what is necessary to maintain their standard of living and sustain them throughout their lives. A gifted, fortunate few build levels of wealth that have the potential to last well beyond their lifetime and create impact far beyond their earthly existence.

      For these fortunate few, it is an incredible gift and a substantial burden to enjoy, manage, transfer, and sustain the fortunes they have created or inherited. Several studies document the fact that 70 percent of the time significant wealth evaporates by the third generation. In addition, only 12 percent of family businesses are still in operation by the third generation. How many successful entrepreneurs think of the business they created as their legacy that will survive over time and generations? The fact is only one in nine family businesses survives the test of time and succession.

      If these unique and exceptionally talented individuals and families have been so successful in creating great wealth, then why are so many of them failing at long‐term wealth management and sustainability? Is it poor investment performance, inadequate tax planning, ineffective legal structuring, or substandard advice? Certainly, all these aspects play a part in the preservation of wealth over time. However, extensive research demonstrates that 95 percent of the failures are due to other causes, including poor communication and lack of trust among family members, inadequate preparation of the next generation, and the absence of a shared mission or vision among the family.

      Families that have accumulated great wealth are still families and interact with each other based on emotions, including love, passion, anger, resentment, jealousy, and fear. Yet, given the wealth they have created, they also often display many of the characteristics of operating businesses, such as centralized management, shareholders, and employees. They have family leaders, who are the equivalent of the management team; they have family stakeholders, who are equivalent to shareholders; and they have family members and nonfamily members who work in the business of running and managing the family. These people are the equivalent of employees.

      The challenge that the larger majority of wealthy families face is that they do not take a strategic approach to the business of family wealth management. They tend to be tactical, focusing on the core, traditional wealth management issues such as investment management, tax planning, estate planning, and cash flow management. All of these aspects are critically important, but by themselves they will not provide for successful wealth management and positive wealth impact throughout multiple generations.

      The focus on this book is to provide families the view of their wealth as more than money and to take a strategic approach to managing wealth and the impact that it has on the people and issues that matter to them most. It is not intended as a deep technical guide. Instead, it provides a high‐level overview of strategic processes and basic tools for consideration. It also provides stories of families I have had the pleasure to work with over the last thirty years. Each story is an amalgamation of several families to illustrate the challenges and opportunities that come with managing resources effectively as a family enterprise. From the families I have consulted with throughout my career, I have learned as much as if not more than I have been able to give to them.

      Acknowledgments

      When I was first approached to write a book, I gave it considerable thought and finally came to the conclusion that it was too important an opportunity to pass up and I really did have something meaningful to communicate. However, given that I had never done it before, I had no idea how difficult a process it is to complete. It takes shifting one's mindset out of the day‐to‐day “bits and bytes” of the modern world and focusing so you can deliver your message in a profound and effective way. Although a lot of the actual work is done alone, I could not have taken on or accomplished this endeavor without a lot of help and support.

      I want to start by thanking my writing partner, Gretchen Hirsch. Not only is she an exquisite and creative writer, she has the most positive attitude of anyone I know. During the process of writing the book, she dealt with some significant personal challenges that would have caused most people to quit. Gretchen