Preserving Families and Perpetuating Businesses

Mike0:00Welcome to The Business of Family. I'm your host, Mike Boyd, and this is my look into the world of multi-generational wealth creation, family enterprise, stewardship, family office investing, and the curation of a legacy. On the podcast, I interview members of some of the world's most interesting families to hear how they pass knowledge, resources, values, and wealth to the next generation.

0:31I hope you will enjoy sharing this learning journey with me and would greatly appreciate any feedback or referrals you have to offer. To sign up to my weekly Business of Family newsletter, go to businessoffamily.net forward slash newsletter. Dave Specht is the director of the Global Family Business Institute at the Drucker School of Management. He's the author of The Family Business Whisperer. Prior to joining the Drucker School, Dave helped lead a family dynamics team at one of the largest private banks in the United States, where he trained over two and a half thousand advisors. Dave is married and he and his wife have six children. His personal mission is to preserve families and perpetuate businesses.

1:19Dave, it is so nice to have you with us on the show this week. Thank you so much for joining us.

Dave1:24Yeah, thanks for inviting me, Mike.

Mike1:26So I can't wait to get into your backstory here. It seems like you have been involved in this space in a number of different ways with both the book that you've written and who you've worked with. I don't want to tell your story for you. Can you give us a snapshot of how you first got exposed to this sort of multi-generational family environment and where you've ended up today, please?

Dave1:50Sure. So I was doing my master's degree in finance and tax planning and really was just fighting my way through and was not loving it. And I needed one elective class to finish. And the elective class that I chose was family business management. And the light bulb went on that there were all these non-financial issues that were keeping families from making good decisions. And so I had all these technical tools in my toolbox that weren't particularly interesting to me, actually. And so when I figured out that I could blend the non-financial issues that they face, it really became interesting. And at the same time, I was kind of close to two families that had family businesses that were living out very different

2:39stories. One was a family-owned construction company, third generation. And it was kind of, you know, the family I wanted to be like, Mike. So they worked together, their kids had great work ethic. They even vacationed together, liked each other so much.

Mike2:53Oh, I like to hear those stories. They're often the exception, aren't they? Not the norm.

Dave2:57Yeah, I think they might be. And then the other story is there's a specialty auto company and second generation. Grandpa had a heart attack and suddenly passed away. and the attorney calls them together and basically tells the family what dad's wishes were. And ultimately he left half the business to his wife and he had two kids in the business and he left the other half of the business to his daughter and didn't leave anything to his son with no explanation, Mike. So the son basically came up with his own story of why dad did that.

3:31And it ended up destroying their company and really ruining their relationships. And so all of this was kind of happening at the same time as when I was finishing this graduate degree and found this family business class. And so I thought, you know what, if I can help preserve a family and perpetuate a business and actually make a career out of it, that will be perpetually interesting too, because every family is like a unique puzzle. So that's kind of how it began for me.

Mike3:57And so what happened next after you finished your graduate degree? Did you go out and intentionally find work in this space or did it find you?

Dave4:03So I worked for a few years in a broker dealer, you know, putting plans together. And so I was one step removed from the families themselves. And then finally, I just really wanted to do client work and joined a wealth management firm, started building their family business component to their wealth management practice. And then I didn't want to be just connected to a wealth accumulator, I guess. And so I left and went on my own and just did family business consulting. And at the same time, I joined the University of Nebraska and developed their family business curriculum and their family business program.

4:44And so I had my own consulting business. And then five years ago, Wells Fargo Private Bank approached me about developing a family dynamics program for them. So we started that and grew the team. And just recently I left to join the Drucker School to be the director of the Global Family Business Institute, where we're hopefully going to become the meeting place for influential business-owning families from around the world. So that's where I'm at today.

Mike5:15It's a fantastic mission. And there's lots I want to explore there. Tell me what it was like working with Wells Fargo in a private banking environment. I'm sure you were exposed to lots of interesting families and family dynamics, but also wealth dynamics. But also it's a large, large bank. Could you get in and influence things the way you wanted to?

Dave5:37Yeah. Actually, I love the word that you used, influence, because that was the only reason I joined the bank was because I had a really thriving consulting practice outside of the bank before, but it was making a difference one family at a time, which is great. but I wanted to see if I could kind of make a bigger ripple effect in the, make a bigger dent in the universe. And so I figured if I joined the private bank and was a part of training their advisors and also working with the largest, you know, the largest families in the bank, then maybe I could, you know, make a bigger dent.

6:13Ended up training the top 2,500 financial advisors at Wells Fargo private bank. and was able to work with a number of very interesting families that are $100 million plus relationships with the bank. And so, yeah, all kinds of interesting stories, all kinds of interesting challenges in trying to keep a business in a family and also keep the relationships strong along the way.

Mike6:38I'd love to explore some of those interesting stories if there are any anonymous ones that you can share with us. I'm curious how a bank like Wells Fargo is able to support clients when, as you mentioned earlier, every family is unique in their circumstances and dynamics. So how do you help people at scale or do you not? Is it all tailored consulting type work to try and keep these families glued together?

Dave7:03Mike, if you and I could figure out how to help people at scale, we would be very, very successful. No, this work cannot really be scaled in that way. I think there are tools that can be built to help advisors to be able to infer where a family's challenges are, to be able to quickly identify those things and then be able to help them more efficiently.

7:30But in terms of scaling the advice, scaling the process, really it's still about individual work. It's about individual interviews. It's about putting family meetings together. It's about holding people accountable to things that they say they want to do. And so, no, you're probably disappointed in that answer, Mike, but there's no magic. It's just work. But we did develop a number of things that were helpful, and we'll probably talk about this later, but I'm very passionate about questions.

8:02And I feel like, you know, the path to helping families is not in having the right answers for them, but it's about having the right questions for them. And so in the training that I did for advisors, we spent a lot of time and focus on, you know, the development of questions and, you know, the anatomy of a good question.

Mike8:22I'd love to follow that now, if you don't mind. Tell me more about questions and how do you ultimately design questions that are appropriate for families in these types of circumstances? Is it something that you discover through trial and error or is it grounded in research? How does it come together?

Dave8:40It's work, Mike. Developing questions is work. And I would work with these advisors and they have, you know, pre-calls where they're, you know, coordinating everything. And what I learned was that they were really focusing on what they were going to present, what they were going to show, what the strategy was, you know, how they were going to transition between one person talking and the other. And there was very little about the development of what question are we going to ask that's going to get this person into story mode that's going to tell, allow us to learn from them what they really care about. And so there's a little backstory to this.

9:16I call these inspired questions. When I was an undergraduate, we had our first child, and we're living in a basement apartment. And I promise we'll get back to the heart of this story.

Mike9:28No, no, I love this. Please. Follow the tension.

Dave9:29So I have a little girl, and I'm holding her in my arms. And I'm 22 years old, a young father, and I'm looking into her face. And all I know is that, Mike, I don't have the answers this little girl's going to need for her life. and I was just petrified. And so I took this to one of my professors, and he was my religion professor, and he gave me some advice. And it was, Dave, don't focus on and worry about having the right answers. Make sure you have all the right questions. And what he meant for me was, you know, when she's three, what are you going to ask her so she'll talk to you when she's five?

10:09How are you going to show interest so she'll tell you about her day? When she's 18, Mike, What questions are you going to ask her so she'll allow you to be a part of her life? And so that led me on a journey of creating questions for my personal life with my kids. And then fast forward now into grad school and after grad school, I had all these techniques that I wanted to show and use with families.

10:36And I kind of had to re-remember this teaching that no one cares about my answers. and that I needed to do work on questions. And so I started looking at what were some effective questions that would get people into story mode. And there's really kind of a basic framework for it. First, no yes, no questions. So we need to get away from the yes, no questions.

11:00Ask open-ended questions that lead people to story. The second one is don't ask questions that you already know the answer to. And then third, ask questions that don't have a right or a wrong answer. And so if you think of that basic framework, what that is is it keeps you curious. And for me, I feel like clients know if you're genuinely curious about their life or you're genuinely trying to get to a transaction with them.

11:28And this is what we tried to work on our advisors to learn how to do is to be more genuinely curious and to be able to do the work to get to questions that would allow these families to open up and to tell them what was really important to them. Because there wasn't a lack of technical expertise on any of the teams that we worked on, but sometimes there was a lack of genuine curiosity and care for the family relationships and what these structures might do to those family relationships.

11:58I don't know if that makes sense.

Mike12:00Oh, it does. There's some great insights there. One thing I wanted to pick up on was you said asking great questions to lead people to storytell, if I heard that correctly. I'm curious, was the storytelling for the benefit of the advisor in order to then be able to put together a more robust plan, a more specific plan to their needs?

12:20Or was it designed to get families sharing and storytelling amongst them and working on the dynamics live? Was it a facilitated discussion or was this often one-on-one in order for the advisor to extract what they needed to know to build the plan?

Dave12:38So there's a little of both. But the main thing, Mike, is we wanted the client to hear themselves express what was most important and express it typically in front of their spouse. And if we were in a family meeting setting to express that in front of their children as well. But it gave us an opportunity to then kind of pare it back saying, did we hear you correctly? This is really important to you. And then ultimately, it allows us to keep the client's issues and the client's desires at the middle of the table. And it doesn't allow the advisor's self-interest to get in the way of being in service of that family. And so that's kind of the approach we took.

Mike13:21Yeah, it's really interesting. I'm curious, your background prior to studying this and then ultimately sort of being exposed to the industry, did you come from what you would consider a generational family yourself? Or was that part of your own family dynamics? Could you bring personal experience to the table? Or was this something that you sort of observed from the outside and said, I can see how I can add value here. This is interesting. I want to help.

Dave13:48Yeah, so I didn't come from a family business. I came up observing a couple of families, but I did notice some wealth dynamics in my own family. And we came from a working class family, but I remember asking my dad one time, he was a salesman and he sold building maintenance supplies and he was just, he hustled and he was a grinder.

14:10And I knew he made a lot of money for the company that he worked for and he was very good at. And I asked him one time, I said, Dad, why do you make all that money for them? Why don't you just start a business of your own? And Mike, it had never occurred to him. His mother worked in the fields and was a laborer.

14:32And he came up with a laborer mindset. And a successful day for him was working hard, putting in an honest day, and then taking care of your family. So it hadn't even occurred to him, Mike. and so that you know that kind of dynamic or that perspective on how we feel about ourselves what we can be what we can't be the stories we tell ourselves and then the stories we perpetuate across generations that was really interesting to me and um so again we didn't we didn't come from wealth but there was there were there were dynamics that i was learning from from observing my parents. And so, yeah.

Mike15:08Absolutely. And you have six children today. How has that sort of influenced how you've thought about raising your own family and influencing the future generation or the next gen within your own family? Are some of those dynamics coming through and you're intentionally shifting them or are you sort of keeping those same dynamics all the way through?

Dave15:35Well, it's a good question. It's easier to talk about these things than do them correctly in your own family. In our family, we do look at the generational values of hard work and honest labor, but we want to make some shifts in mindset to being able to have an ownership mentality and being able to not put a ceiling on ourselves.

16:00If we have some ambitious pursuit we want to take, I want them to chase it. And that came from, you know, from me in high school, I played basketball and I had this dream of being a college basketball player. And I'm a kind of a slow white kid, Mike, and that wasn't necessarily the direct path. But I ended up walking on and playing college basketball at Brigham Young University, Hawaii.

16:28And, you know, I didn't play a lot, but that experience, you know, has really shaped me because a walk-on is someone that doesn't have a scholarship. And ultimately, no one cares if you're there or not. The only reason you're there is because you really want to be there and it's your dream. You want to run down. And so I've had countless opportunities to, you know, share those stories with my kids and I want them to have ambitious pursuits. And it's something that I worry about with, you know, the families of wealth that we work with is what is your ambitious pursuit? What is it that wakes you up in the morning and that you want to chase?

17:07One of the challenges, I think, Mike, for us and our kids is that the natural tendency for a parent is want to make their children's life a little better than it was for us and maybe make it easier. And ultimately, if we do that too much, we don't transition our values to them. You know, if our value is hard work and grit and creativity and they don't want for anything, then ultimately we're not really passing our values. We may pass our valuables, but we're not going to pass our values to them. So it's really tough, you know, as a parent to just temper some of those things. And I'm sure your listeners, you know, grapple with that all

17:51the time.

Mike17:51Absolutely. And I understand that one of the key topics that you're passionate about is raising a thriving, rising generation. And it's certainly something that we've explored on the on the podcast before, because I think it's such a challenge for wealthy families. I've even, you know, I've shared my own story that, that, you know, I grew up middle-class, made some wealth in my twenties. And then as I started raising my own children, they were growing up with abundance relative to what I grew up with. And, and how do you do that?

18:24How do you do that in a healthy way and still maintain great values and, and life lessons? And So I'd love to get your perspective on that, particularly for families raising children amid wealth. How do they do it most appropriately, given that sometimes it's even harder to raise children amid wealth?

Dave18:43Yeah. Well, I'll begin with a pretty simple model for myself that I use, and I call it my three Gs. Gratitude, goals, and grit. And so I take a pretty intentional approach to those three Gs in my life. So gratitude. My mom really modeled this for us as young kids. we knew that every night at the dinner table, she was going to ask us for new and goods.

19:10So she was asking us for something that knew that we learned that day. And she was asking for something good that happened to us that day. And what I didn't know, Mike, was that she was programming our little brains to look for things and to be grateful because she was going to ask us. And now growing up, I thought it was annoying at times when she asked for our new and goods, but it helped me to consciously look for the new things I was learning and the good things that were happening to me. So gratitude was really important. And, you know, we try to do that in several different ways. We do our own new and goods at the dinner table. Sometimes we're doing

19:49gratitude exercises. We've used gratitude journals. And ultimately, if we can stay grateful, entitlement can't sneak in. I like to say that gratitude and entitlement are incompatible roommates. And if I'm ever feeling entitled, I need to personally ramp up my gratitude. And if I see my kids becoming a little entitled, I know that we need to really scale up the gratitude. So that's the first one is gratitude. The second one is goals. And this goes back to what we were talking about earlier. And it's just an ambitious pursuit. You need to have a target.

20:28You need to be chasing something. Maybe it's sports. Maybe it's an instrument. Maybe it's learning how to do something new. Honestly, I don't care what my kid's ambitious pursuit is. I want it to be something healthy, obviously, but I want to support them in chasing down a dream, Mike. And if they have goals and they have ambitious pursuits, then they'll be able to translates those lessons learned as they grow older and, you know, have to take care of a family of their own. So gratitude goals. And then the third one is grit. And with this, grit is really about resilience. And this is probably the toughest one when, you know, I like to ask, you know, how do you say no when yes is always an option? You're walking through the store

21:18and your kid wants something and you just want them to be quiet and stop asking? And how do you say no when yes is always an option? And how do you not bail your kids out when they have trouble? You know, a quick story. My son Reichert, he was 12 and he had goals to get straight A's.

21:44And it was towards the end of the semester and we checked his grades. and there was a big assignment that was missing. And he said, he told his mom and I that he had turned it in. And so in that moment, Mike, we had a choice. We could make a phone call or we could encourage him to make a phone call and fight for himself.

22:02And ultimately, I'm so glad that we did not make that phone call. We practiced with him on how to approach his teacher. And ultimately he learned how to stand up for himself and how to take care of his own problem. And it takes longer, Mike. it takes longer to do it that way, but gratitude, goals, and grit. So it's pretty simple, but that's what we're working on.

Mike22:22The three Gs, I think that's a fantastic model. We talked about teaching kids to independently strive, which I think is the same philosophy as what you're talking about. And it's so, so important and always easier to take the easy route. So no, I appreciate you sharing that. And I'd love to also explore with you at what point in this journey you chose to write your book. Was this when you were consulting and positioning yourself in the market as someone that could help these families? Your book is called The Family Business Whisperer for those that didn't catch it earlier. Who was it most targeted at and where did it pop up in your journey?

Dave23:04Yeah, so it happened before I joined Wells Fargo. It happened when I was in private practice. And I was having that same issue of, am I making a big enough impact? I have few clients that I'm doing lots of work for and the work that I'm doing is so meaningful and I have so much passion for it. But how do I share this without taking away from the client work that I'm doing? And so I figured, you know what, I'm going to try to put a simple book together and share it with the world and then go speak about it. And two audiences, one advisors, because I wanted advisors to create better experiences than they currently are or were.

23:50And the second is just families that would not hire me and maybe that were not of significant means, but they had similar challenges. And maybe the book could help them kind of as a self-help get them started. And so that was the purpose behind the Family Business Whisperer.

Mike24:11And would you say it's for only those families that are in family businesses or also sort of enterprising business families in general?

Dave24:20You know, there's a little, I'm just thinking through the chapters here, but there's a little of both. I mean, I think the principles of an operating business and the principles of whether you're a real estate holding family or whether you have a family office, so many of those principles are the same, you know, shared ownership, shared decisions. There's quite a bit in there about that. So whether it's an operating company or you have, you know, holdings as more than one person, you know, and there's dynamics, there's something in there for both of those audiences for sure.

Mike24:52I'd love to get your take on the concept of ownership versus stewardship and sort of the blurry lines in between for generational families. Do you encourage families to share ownership and potentially divide it? Or do you try and encourage families to come together and steward a common asset for the benefit of the next generation? Or some other solution? I'd love to hear from your experience.

Dave25:20One of the bigger challenges that families of wealth have is creating a generation with a a rising generation with ownership mentality because, Mike, we're wearing multiple hats all the time. So we're wearing a father hat, we're wearing a husband hat, we're wearing an owner hat. And ultimately, we forget sometimes what hat we're wearing when we make certain decisions. And one of the big challenges I feel like is that we don't train the next generation to become owners because we don't want them to fail while we're watching. And so, you know, I'm a big believer in becoming co-investors with our kids. And that starts for us as small as buying a new pair of basketball shoes. You know, if you want the basketball shoes,

26:10let's figure out a way that you can earn the money and we'll co-invest, we'll go in half. and what happens is it quickly becomes apparent what they really want and what they really don't because if they're willing to delay gratification at all then they'll have it but some of the things they say they want go away and some of the things that they end up buying get taken care of really well and so I think we need to take every opportunity to develop ownership mentality with our kids. As far as shared ownership goes, it's the hardest thing you can ask anyone to do.

26:46And whether it's two kids in high school sharing use of a vehicle or a family that owns hotels together, it's challenging. People take care of assets differently. Some want to grow and others want to enjoy cashflow, more cashflow. And so, you know, you look at, you know, what's behind, you know, the strategy and the purpose for owning things together. We just recently did a conference at the, at the Drucker school, and we talked about shared ownership of a family cabin and just the unique challenge of, of shared use, of dealing with maintenance costs, of dealing with decisions, you know, when, when do you get to change the, change out the carpet and who gets to decide what color. And I mean, it's crazy. Some of the things that can become

27:42points of disruption in family relationships. And so, you know, I, I like to start really small with, you know, shared decisions and rather than going into shared ownership right away. And for, you know, for kids, Mike, I think that families can set it up where, you know, they make decisions together on small things. It could be, you know, at Christmas time, the family allocates a certain dollar amount and let the kids, you know, bring their ideas of where they want to give that money to, let them decide together, let them do the due diligence, let them carry out that gift, and then have conversations about, you know, the impact.

28:23So again, I think starting small in little micro ways through experiences gives us an opportunity to not only teach, but also observe if shared ownership is going to be a blessing in their life or a burden. And ultimately that's, again, my philosophy or my personal mission is the preservation of family relationships and the perpetuation of businesses in that order.

28:48So I don't want to put my kids' relationships in jeopardy just so that I can feel proud that you know, something that I bought or something that I owned continues. And so, I continually have to think about and check our egos a little bit on why we're doing what we're doing.

Mike29:07And certainly, most of the family wealth that we see lost is due to a breakdown in relationships, not, you know, poor investment planning or otherwise. So, I think you've definitely got the right order of events there in terms of your mission. I'm curious, Dave, if you have any great examples for us of families that have done this particularly well, generational families that might have a sophisticated structure of shared ownership or governance or shared decision-making who maybe don't do it the same as everyone else, but for whatever reason works for them.

29:40I always love to hear a story like that.

Dave29:40Yeah, I have a couple. I don't know if they're sophisticated, but I actually think simple is probably are the best structures that people understand and can actually execute on. There's one family I was working with that had two, you know, vacation homes. One was significantly more expensive than the other. Two kids in the family that didn't particularly get along and it was difficult for them to make decisions together.

30:09The parents were dead set on inheritance being equal because they didn't want to have them think that they loved one of them more than the other. And ultimately what happened was I asked some tough questions to all of them. What are your real intentions behind forcing them into shared ownership? What is your greatest hope with forcing them into shared ownership? And I let them verbalize that. Anyways, what happened was they ended up deciding to not have them co-own, but they ended up giving one property to one child and the other to the other child.

30:43and even though they had different values assigned to those properties, they didn't have to decide together when to do maintenance or they didn't have to make some of those decisions together and financially and they just decided how they were going to share a week, a year with the other sibling. And so for that family, shared ownership in multiple properties was not going to bless the lives of their kids. And so they heard their kids and they went an alternate route and it's worked well for them.

Mike31:18I like that. And so is it fair to assume that each child got the property that they were more interested in, more passionate about anyway?

Dave31:24They did. Yeah. It ended up working out that one spent more time at one property than the other. They both enjoyed both properties, but yeah, they let them really take ownership of the property that they were closest to and the one that they had kind of the greatest affinity for. So it worked out great.

Mike31:43We've spoken to a couple of families on this podcast before about this concept of fair does not mean equal. And I think that's another great example of it. We see it a lot with families with education funds where two different siblings might have children that benefit from the education fund within the family. but what happens if they have different numbers of children you know does one get the benefit of of funding for three children and one only gets it for two and and in often cases the answer is yes they do get that it's the the benefit is education the benefit is not the financial equivalent of the education so fair is not equal I think is a an interesting but difficult concept for

32:28families to grasp particularly for the first time around

Dave32:28yeah and Mike I think it goes back to entitlement and gratitude. So if we start with the expectation, and this is the expectation we've given to our kids is that they will not receive anything from us, but love and education, we hope that they're experience-rich kids that can be independent. They know how to work. They know how to look at someone in the eye and converse with them. And ultimately, we hope that the experiences that we give them along the way will lead to their independence because a lot of this, a lot of the wealth transfer, what happens is it leads to dependence.

33:10And that's not what we want. That's not what we intend. But sometimes creating ease in the path actually handicaps our kids from being able to square their shoulders and make tough choices and also own their mistakes. But also it robs them sometimes of chasing what's important to them. I've met so many that are managing their parents' business because they felt like they needed to.

33:40They felt like they had to, and they were going to let their parents down. And so, it's pretty hard for them to bring all their energy and passion to something that is not their idea. I mean, I'm a big believer that generational transitions happen in businesses when there is a similar interest, you know, when there's a similar interest in an industry.

34:05And where there's a shared interest, you know, there's shared possibility. And yeah, it's tough. And sometimes, you know, kids will want to go away and spread their wings. And I encourage it to go work outside the family business. And oftentimes they'll return once they're married and have kids and decide, you know what, that lifestyle my parents created in that little town or whatever. I didn't think it was cool when I was 21, but I think I want that for my kids. And I've seen it over and over again.

Mike34:36Yeah. And that's a great example. I'm curious with all the work that you did with families, whether it was with Wells Fargo or otherwise teaching family dynamics, did you introduce this concept of human and intellectual and spiritual capital as opposed to just purely financial? Is this part of the conversation that you were having with families to ensure that they were passing down different forms of wealth and not just solely focused on the dollars?

Dave35:05Absolutely. And Jay Hughes is now talking about wealth as well-being. and he's the one that really pushed the different forms of capital. And so, yeah, I've thought about that a lot and have incorporated that into the work with the families. What does it mean to be wealthy? Asking them and then introducing that there are these different dimensions to it because if you ask someone about their wealth, it's uncomfortable and it's weird and it's rude.

35:40And so we need to find new ways to approach what it means to be wealthy. And I like to tell families that you either define what it means to be wealthy, or you will be defined by your wealth by someone else. And, you know, parents really need to do that hard work for themselves so that they're clear on what it means to be wealthy.

36:03And one of the questions I like is, what does it mean to be a boy? so that's a that's a question i like to i like to lead with in family meetings have them write down their answer you know and then share so i think just focusing on the wealth the financial wealth is a is a real mistake you know looking at the intellectual capital the you know the human capital and actually making investments of time and resources to develop those different capitals is something families need to do. And we're under-investing, Mike. I mean, we are under-investing in those. If you ask someone, what is your budget this year for experience creation in one of those

36:48capitals? Most don't have a budget for it. But if you ask them, what's your budget for paying your wealth manager or what's your budget for looking after your real estate? Everyone knows there's real cost to managing those assets. But if we can get people to think about actually budgeting time and resources to develop those other pieces of capital, I think that in and of itself will go a long ways to changing and improving how families are in relationship with their financial wealth.

Mike37:21There's some excellent points there. And my experience too is that I hear from a lot of people that listen to this or read my newsletter and things like that. And they often start with, how do we get started? This just seems like such an undertaking to approach family governance for the first time. But in actual fact, when you talk to families who've done it, most will tell you that it was very, very messy to begin with. They've polished it over time, but the first time they held a family meeting, they bumbled through it or used a bit of a template or some idea from someone else. But the most important part of it was that they got together and started trying to

37:57answer some of those questions together. They created time and space. And when you talk about budgeting for those other forms of capital, I also think just the practice of saying, we're going to sit down for this two-hour period and talk about what's most important to our family and what we're doing and how we're going about stewarding our assets or our interests or our rising generation. I think that's half the battle is just showing up.

Dave38:22Absolutely. Yeah, in our family, Monday nights are sacred. And so we carve out Monday nights and we call it family night. And the kids know and the people in the community know that we're not going to schedule things on Monday night. And it's because we're allocating that time to do an activity together. It may be something connected to our faith, but it may be service or it may be playing games together.

38:47But we've decided to make that investment Monday nights and to make that time valuable and untouchable. And, you know, it's done a lot for us to show ourselves and to show our kids that, look, you're important enough for us to carve out this time. No matter what else is going on in our lives, this is going to happen.

Mike39:08That's really powerful. I love that example. I want to change tack now, Dave, and explore a topic that I know we share a common interest in, this topic of mothers of influence, or sometimes a matriarch, or exploring the better half of families. When we talk about family businesses or family enterprises or the founding generation, we're often talking about a patriarch or a founder that it all started from.

39:38But oftentimes we underappreciate the support roles that others play. So I'd love to get your perspective on this and your theory around mothers of influence, please.

Dave39:49Sure. Yeah, at the Drucker School, we're actually getting ready to launch a project called the Better Half Project, where we're partnering with YPO to interview partners and spouses to get their insights around identity, around expectations, expectations of self, expectations they feel others have of them because of who they are and who they're connected to. and also just some of the unique parenting situations that come up with the problems that success creates, I'll just call them, the unique challenges that success creates.

40:26And so there's a number of reasons why I'm passionate about this group, Women of Influence or Mothers of Influence. One is because I think about the influence that my mom had in me in shaping how I felt about myself, what I believed I could accomplish. and ultimately, you know, they're the story keepers. So when you think about family business, oftentimes, I mean, in first generation, what's very typical and you'll hear the story over and over again is maybe the husband is kind of leading, but the wife is making sure people get paid. The financial person, they're the accountant and they may sometimes be in the background. And not always, but they are the story keepers of the family business. And so,

41:19you know, when I think about the importance of this group, these mothers in particular, they're the ones that tell the story about the family business. And ultimately, if they resent the family business for how much time someone's away, then that's the story that their kids hear. And if they tell the story about how much good the family business is able to allow the family to do and the opportunities it gives them, that colors how the children feel about the family business.

41:48And so, you know, how they feel about money, I'll just tell you, Mike, I mean, I hope that I have some influence on my kids, but I can guarantee you, my wife is the bigger influence on, you know, how they feel about money, how they treat their things, because she's more invested time-wise than I am. She just has more hours with them.

42:07And so I want to do my part to honor that group and to shine a light on just how influential they are. And I'll also add, this is one of the biggest mistakes advisors make is somehow discounting the spouse or not involving the spouse early. They are the ones that are going to nudge the process forward. If you want to put a succession plan in place, get both spouses involved and make sure that that mother who loves those kids is going to be involved in pushing it to the finish line because there's no better advocate for putting these plans in place than these mothers that are fully invested in their kids.

42:51And I know every family's different and every business is different. Sometimes it is the woman that's leading and the husband is taking more of a secondary role with the business and taking care of the kids. But, you know, I just I'd see this over and over again.

Mike43:06Absolutely. And I appreciate you actually discussing a topic that I think is often neglected. One thing you mentioned early on in that response there was this concept of identity as a spouse or as a mother of influence. And I'd love for you to sort of unpack that a bit further, because I think sometimes when we talk about, you know, extreme wealth in generational families, sometimes the positioning of those families and your identity as a part of it, particularly if you marry into a family, is quite challenging.

43:38What are your thoughts around it?

Dave43:40Yeah, identity is difficult. A lot of women make large sacrifices, my wife being one, to be able to have children. And so she steps away from the workforce. She steps away from external validation for how amazing she is and takes on a thankless job. Thankless most days, Mike. And so what we see is a lot of transitions.

44:06So once maybe, I mean, it just depends on the philosophy of the parents, but once the children are a little older, the wife may transition back. She may transition back right away, but there are so many of these transition points. And I don't think those transitions are understood or studied enough. But back to identity, you were talking about marrying into a family business.

44:31oftentimes there's a level of kind of ours and yours. And also with regard to family meetings, I mean, every family has a different philosophy on who gets to be at the meeting and who gets to know the details of what the family plan is for assets and wealth and who does not. And that's dangerous because ultimately you're in a relationship with your spouse or with your partner. And that level of secrecy can drive a wedge in that relationship. And so as I'm working with families, I'm asking them the tough questions. What are your intended consequences of not including the spouse in the conversation? In this event where we were working with this family that had the shared ownership issue with the family cabin, their philosophy is every person

45:27has a voice, but the blood heirs have the vote, which I thought was nice because they could just keep them out altogether and not allow them to have a voice, not allow them to understand. But ultimately, they wanted the bloodline to control the asset, but they also want to invite the voice and the influence of the spouse because ultimately, they're going to either accept it or cause problems with it if they're not involved. And I feel the same way about putting plans together for inheritance for your kids. You're either going to do something and include their voice, include some of their intentions, and it's going to be done for them, or you're going to not

46:10include them and it's going to be something that you're doing to them. And there's a very different feeling to something being done for me or with me and something being done to me. And too many people are putting together plans that feel like something that's being done to them, even though it's usually, you know, amazingly generous and everything else. But yeah, it's tricky.

Mike46:36It comes back to your point about asking great questions, inspired questions. I think you said it's involving people in the process and starting a discussion around that I'm sure is hugely helpful.

Dave46:47Yeah. And part of the problem is that a lot of families begin with the technical expertise. So they begin by putting a plan together with their tax, with their accountant. They begin by putting a plan together with their attorney. And so they begin with these strategies that are really technical and focused on saving taxes and saving transfer taxes and things like that. And then as an afterthought, we start having family meetings and start figuring out, oh, this is how this is going to impact our family. And so I try to turn that process on its head as quickly as I can with families and encourage them to lead with what is your greatest hope for your family in relationship to this asset? Again, let them tell the story. And if

47:39their story is, you know, that they use it together, their story is whatever the story is, then you can layer on the technical expertise and accomplish exactly what they're trying to do. But if you lead with the technical, you almost always end up undoing a strategy or being stuck in a strategy that doesn't really serve the family relationships.

Mike47:58The same answer might apply to what I'm about to ask, but I'm curious if somebody is new to wealth and approaches you or some other advisor, and they're trying to get what I like to call from zero to one, you know, they don't have a generational plan in place. They don't have a family constitution. They've never had a family meeting, but they're the first generation to make real substantial wealth. Maybe it's in a family business or maybe it's already liquid because they've sold an asset. Where do they start in approaching this conversation? And, you know, because I imagine a lot of people also rush into the technical advice, as you've just described. But if we're setting out to be successful for

48:43at least the next generation and hopefully beyond, where do you suggest a entrepreneur or an investor or someone that's new to wealth actually begins this process?

Dave48:50I think they need to begin with someone that is going to ask them hard questions. They need to begin with someone that's going to ask them, you know, what is your greatest hope for the success that you've created? And on the other side, what is your greatest fear with the success that you've created? And then you need to let them talk and let them go for a while. You know, what is your greatest hope for your children? What does success look like? If today's your last day and you're looking back on your children's life, what do you need to have happen for them for you to feel like you've set them up for life, you know, to be able to do what they need to do. So honestly, I mean, you need to find

49:34an advisor that's going to ask great questions and is not going to go to solutions. And Mike, they're hard to find.

Mike49:40Sounds like there's two and a half thousand of them at Wells Fargo private, right?

Dave49:46Well, I taught them. Some were more interested in hearing what I had to say than than others.

Mike49:51But, uh, so I'm curious to circle back to your shift away from that to the Drucker school. It's a relatively recent shift this year, I think. So tell me about the vision and the impact that you want to have at the Drucker school. What's coming up? What do you hope to achieve there? What's the, what's the priorities?

Dave50:08Yeah. The opportunity at the Drucker school was to, again, try to make an even bigger dent in the universe. The Drucker name is fairly global. Peter Drucker's presence in Asia and around the world, the Drucker name still means something around the world. And he's someone that attached principles, timeless principles, to management. And when I think about attaching principles to generational family businesses and generational wealth, I just feel like the story matches well. And there needs to be a place where there needs to be a non-commercial environment to bring families together, to really allow them to be vulnerable with each other and to be able to learn together. And for grad students to come and to really be able to get a management education that is really layered with principles

51:12and that also has some deep expertise if they're planning on going back to their family enterprise. We really want this to be kind of the meeting place for the rising generation of family business leaders. And we want to train them in Drucker principles. We want to train them in the best practices of global family businesses. And we feel like we have a chance to be that place.

Mike51:37It's really exciting. I hope that there's an opportunity to be a part of it somehow. I can't wait to follow along with this whole journey. I think it's fantastic.

Dave51:46You're in.

Mike51:47Thank you. Well, that was easy. Do I get an honorary degree too? Dave, we're almost out of time. And as you may know, I always ask the same final question to my guests, which is a bit of fun. Imagine you're writing a letter to your children. What is one lesson or idea that you don't think many parents would mention, that you consider important to understand?

Dave52:07Yeah. I mean, I think we may rehash it a little bit, but that your worth is not measured in dollars and cents. And I'll just repeat it. Your worth is not measured in dollars and cents. And happiness is found in ambitiously pursuing worthwhile goals. And that has nothing to do with money either. So I want them to remember that their worth has nothing to do with money, my money or the money they create or whatever.

52:39I need them to be in ambitious pursuit of worthwhile, worthy goals. And I want them to be good humans that can relate and interact with all types of people. It's a fear I have as well, Mike, is I feel like when there's some wealth, we start building fences around us to protect us and we start to lose touch with, you know, every everyday folks. And so those are things that those are things that I worry about with with my own kids. And so we're we're working on it.

Mike53:14Fantastic. Dave, this has been really enjoyable. And I love that you've sort of challenged some preconceived ideas that we hear about with wealthy families. And I think given us plenty to think about with your inspired questions. So I really appreciate you making the time. Thanks again for joining us.

Dave53:29Absolutely. Thanks, Mike.

Mike53:32To find more episodes of the Business of Family podcast, go to businessoffamily.net. You can also sign up for my email list at businessoffamily.net forward slash newsletter. After you sign up, you'll receive immediate access to all past issues and then one email per week. You can also follow me on Twitter using at Mike Boyd. If you enjoyed the show, please tell a friend or leave a quick review on iTunes, which will help more people discover the business of family.

54:06Thank you so much for listening.