I like a good aphorism – a clever phrase or limerick that teaches me wisdom, nearly eternal, without needing to read all those books.
The best of these maxims arise globally, across centuries and cultures, ever applicable. Treat others the way you want to be treated. So simple, clear as crystal, there’s no getting one over it. Now, if only I can carry it out.
Right now I’m considering an expression that runs: one generation earns the wealth; the next squanders it in ease; the third goes begging. That one spans the globe, it seems.
You’ll find it everywhere – Europe, the US, Japan, India – China’s written version is 3,000 years old. You’d think it would sink in and we’d do something about it. After all, it’s easy these days – and likely was in days gone by – but Bloomberg research suggests that only one-third of billionaires globally have an up-to-date succession plan. I’d feign surprise, but I doubt you’d be fooled.
And so, even the super-wealthy are dodging the drill. A key problem, even for them, is the task’s complexity. Wealth managers and advisors of all stripes like to break estate planning down into three or five tasks. We make it sound simple, a box-checking exercise, manageable on legal pad or clipboard. In real life, it’s more than difficult, impossible without expert assistance, and when extended family is involved, trouble soon starts a-brewing.
Let’s illustrate with three steps. Three, after all, is a pleasant number – triangular, with a holistic ring. A wealthy fellow or lady knows they’ll be passing away one day – not soon; no, they haven’t skied all five continents yet – but everyone knows it’s smart to plan early. First on the agenda is investment management. This means setting goals, picking strategies, keeping sleepless eyes on markets and performance, switching assets as needed (not too much!), watching political moves, technological change – everything. It almost sounds like a career.
Detail-ridden though it is, this part is easy to grasp. Plan and execute, move ever toward the goal. A few meetings and you’re ready to go, assuming nothing drastic takes place, like war, pandemic or economic collapse. True financial professionals know how to manage all these risks and perhaps even profit, though discussions of that sort will be confidential and private.
The next step is trickier. It introduces affairs intimately close to task one, and lo, they are many. Consider: taxes, insurance and trusts. Education, business issues and long-term healthcare. A will, an estate plan, a retirement plan – keep them updated as life travels on, or else. Kids arrive, unions are forged, sometimes they end. Taxes dip, then they rise, now the foundation shifts – there go your planning assumptions. Endless monitoring, analysis and adjustment – that’s the drill.
Advice isn’t free, but you’ll need all you can get, and then you must put it into effect – all while assuring everyone’s up to snuff and paying proper attention. They’re only human, and right busy specimens, too.
Finally, task three: now raise your head and look around. Who else needs attention? Before we get to family, let’s talk charity. Giving to others is nothing new, but with excessive wealth a fashionable mote in the public’s eye, it’s much more under the lens. Via interviews and statements super-wealthy celebrities declare: the heirs will get something, but causes effectively trump family. In other words, expect a bull market for trusts and foundations.
This approach needs explaining, particularly to children. A long while back, I recall a bigwig saying he’d leave each child $10 million: enough to do anything, not enough to do nothing, he said. I’d be jumping joyous with that bag of loot, but his kids were mad, it seems, and more special talks with father were on the agenda, he said. I try not to lose sleep with worry for their welfare.
Families are full of prickly pears: seldom competent enough to manage complex assets or affairs, yet each one full of ideas. Nevertheless, they must be included in the estate-planning process. Kids, siblings, spouses and more: all must join the crew, learn the ropes, toe the line, and all the other Kennebunkport jargon favored by the fellow referenced above – it’s a lovely town, how could there be heartache? Experience shows this is normal, and that applied, patient effort is the key to success, as our old nautical billionaire has told.
So, as we see, it’s all so very complicated. Busy executives and entrepreneurs have full plates and packed inboxes. Even though they know, they let things slide, don’t schedule the meetings and hope the kids will just grow up, darn it. Before they know it, it’s getting late – though, hopefully, not too late to give us a call without assisted care.
Curious matters can make planning harder. In some Asian cultures, death is taboo. It’s tough for professionals, unable to broach the unmentionable, and wealthy scions can’t speak to their spouses. We value all cultures and hate to be obvious, but this isn’t conducive to planning.
Traditionally, family stability, prosperity and unity are the pillars of Eastern civilization, particularly among the ethnic Chinese. There’s an ethos of hard work, true enough, but also of privacy, even secrecy. It’s intended to protect the family from outsiders, but it can stifle communication inside the family, even between husband and wife. You’ll hear so many tales in South Asia of the greatest rich families, outwardly placid and strong, but riven by conflict, with hardly a word ever spoken precisely when it’s most needed.
I encountered a bit of this in Singapore. At the Catholic Church on Zion Road, I quickly noticed that nearly every Sunday sermon was about working less and spending more time with family. Yes, the children need money to fulfill their dreams, the priest would intone, but they need mom and dad even more. Their presence, smarts, love and plain good humor are more important, he’d say. It sounded good sense and people would nod, but the priests know their parishioners, so the sermon went on week after week. Ancient tradition has long talons; it hangs on.
I don’t live in Singapore any more, but I have a guy there. He’s a financial planner and writer, so I asked him about it. Amazingly, he confirmed what I’d been reading: the pandemic is keeping people home and they’re actually starting to talk.
Mortality is there for everyone to see, so there’s no avoiding the discussion. People are enjoying time with the spouse, kids and relatives – why not do this more? There’s a lot of wealth in Singapore, as you may know, and people are considering their options. Around the globe, many families are looking one other in the eye, liking who they see, and wondering: when the day comes, who will look out for them? Calling all professionals with the skills – now is a good time reach out and touch them, too.