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What your kids need to know about the family fortune (part two)
Authored by: Evana Lithgow, of Working Minds
Talking to your children about your wealth and preparing them for a place in the family’s business or fortune can be enjoyable. But it can also be daunting if the topic is new to you and them or if relationships are distant. The key is that your approach is aligned to you and your family context – what has worked for someone else may not work for you. It’s also important to include your partner in your thinking from the start and agree on how to approach the topic together.
Over the years I’ve seen families employ some great ways to engage with the next generation, from creating traditions and rites of passage to making books of wisdom. Once you’ve decided to start the conversation, there are more ways of talking about wealth than there are flavours of ice cream but I find a few simple principles work well.
What is the best age to start?
One of the most common questions I’m asked is, at what age should you begin talking to your children about wealth. The short answer is, it’s never too early or too late to start this lifelong conversation. But for many families it’s a tricky topic to start talking about, as covered in my first article, and there are many adult next gen children who have no idea what their family fortune is really worth or what role they are expected to play in the future.
Like any conversation, it needs to start at the beginning, be age appropriate and staggered over time – you would naturally take a different approach talking to young children than adults. But for any age, it’s important to hone in on the key message and think of it as chapters, taking one chapter at a time.
The starting point doesn’t have to be long, deep and heavy. Everyone loves photos, pictures and being taken places to see things. Some families have created photo books to tell their story. It is also important to have your audience and future generations in mind – this instigated one family I worked with to start a time capsule which really engaged the next gen in the family.
Do I tell them everything?
Another common question I am asked is how much information is too much? I’ve seen parents start a wealth conversation with such intensity that their children are left thinking someone is on their deathbed – because their natural fall back is to wonder ‘why else would they tell us now’? It’s important to communicate the reason you’re talking about wealth, and to think about how the conversation will be received.
If there is a dump of information, for the other party it could be like drinking from a firehose. Take it one chapter at a time and think about what information needs to be given at the start, the middle, and the end. Make it a story that they can easily remember because this is family legacy you’re creating. Leave pauses for your children to respond and ask them what they think.
I often work alongside families with high profiles who need to consider what information to share more widely. But regardless of how well known a family may be, I advise all my clients to consider what is public information, and what isn’t. A rule of thumb is to use your family wealth story as the benchmark for what is shared more widely because if your children find out more details about their own family via other sources it could diminish the trust you’ve established.
What could go wrong?
Families know all too well that conversations don’t always go to plan, and I’m often asked what could go wrong. There are serious considerations in sharing your family wealth story and some simple principles that will help things go smoothly.
The types of things that could go wrong are if there is a dump of information, no opportunity for the listeners to respond, or if the listeners are bored to tears because the story is long and dull. Another potential pitfall is to be too vague about details such as net worth, which can give the people you’re talking to the wrong idea.
These steps will help you avoid those pitfalls and set you on the right path to sharing your family’s wealth story.
Tips for sharing your wealth story
- Plan your key points and messages with your partner or spouse.
- Set yourself up for success – approach the conversation when you all have the time and energy (you, your partner and your children).
- Keep the conversation open – rather than saying it’s a secret, let your children know who they can tell or if it’s information that needs to remain family-only.
- Leave pauses to invite questions from your family and check their understanding, don’t make them drink from the firehose.
- Provide context for your story for the next generation to better understand.
- Make it a series of conversations over time.
- Consider how to tell the family wealth story for future generations. This could be a photo book, time capsule, video – the options are endless!
Evana Lithgow is a psychologist with 19 years’ experience. She is the Managing Partner of Working Minds, a boutique practice focused on guiding clients through the people side of succession, transition, change and growth. Having grown up in a successful family business, Evana brings a unique understanding and empathy of her area of expertise. www.workingminds.co.nz
Author: Evana Lithgow.