Anticipating the Storm: Preparedness, the Danger of Complacency, and Generational Wealth

Whether inherited over generations or newly created through the success of a small business grown large, the management of high wealth – if handled poorly – can be the catalyst for a crisis of stunning proportion that reverberates from one generation to the next. It can be the collapse of the entire family foundation. It can be the storm of the century.
anticipating the storm

As a father, husband, brother and son, and as someone who lives in a region prone to violent storms and flooding,  I think about my family’s readiness for disaster every start of hurricane season.

For any of us with families, our first goal is to keep our family members safe from harm. We study CPR ‘just in case’; we understand inherited or diagnosed medical issues and become knowledgeable patient advocates.

We fix our roofs, check our plumbing, make sure our power sources are safe and able to handle the load. We have backup power if able.

We check to assure our foundation is solid.

We anticipate risk; we drill for fire, blizzards, floods, tornadoes, earthquakes and hurricanes. We practice how to quickly gather supplies, important documents, irreplaceable possessions. We take shelter, shelter-in-place, and if need be, we run, hide or fight. We educate family members on the dangers that may exist in a crisis or emergency and we train on response and test for comprehension. 

We study evacuation routes, gathering points in case we become separated, and we teach those we love how to identify trusted authorities and ask for assistance.

We take special care to consider those who may be unable to care for themselves; those very young, infirm or elderly. We act responsibly. We document and educate. We help the next generation understand how to keep themselves safe, and how to pass this knowledge on.

We plan. We are not complacent.

Why then, do so few of us plan to assure the success of our financial legacies?

Why do we not create these same types of structured family plans and responses for the passing of significant generational wealth?

Whether inherited over generations or newly created through the success of a small business grown large, the management of high wealth – if handled poorly – can be the catalyst for a crisis of stunning proportion that reverberates from one generation to the next. It can be the collapse of the entire family foundation. It can be the storm of the century.

Neglecting to create the foundation of a family governance structure that provides education, a clear mission, and clear communication is as dangerous as ignoring weather reports of an incoming hurricane; our loved ones won’t know they’re in trouble until it’s too late.

The success of generational wealth growth cannot be defined solely on the basis of today’s portfolio returns. Rather, success should be mapped against a Family Constitution and Investment Philosophy based upon what the family wants to accomplish and do with their wealth and collateral wealth. Success should be measured against how the family achieves goals and educates subsequent generations to be stewards of the wealth.

Families that breed a culture of wealth education and management, that value the generational gift of wealth, define core values and document them. Next, they understand that high wealth requires sophisticated advice – remember, “we teach those we love how to identify trusted authorities and ask for assistance.

Additionally important, is how the family is motivated to stay true to the family’s overarching investment philosophy. Having a clear structure and an investment plan allows that philosophy – the vision – to expand and change with the vision of next generations, without risking collapse. Structure does not equal rigidity.

The lessons we can apply equally to disaster preparedness and wealth preparedness alike?

  • Be advocates for future generations
  • Assure a solid foundation
  • Anticipate risk
  • Identify true experts and ask for assistance
  • Consider the needs of those who require special care
  • Document
  • Educate
  • Plan, practice, test, repeat
  • Do not become complacent

One of the greatest gifts we can give to our families is to provide a framework for maximizing cash flow from existing assets with a blueprint for how to manage the assets far into the future.

Most important, the transfer of family private assets from generation to generation is a gift, not an entitlement.

To learn more about creating a sound Private Asset Management strategy and blueprint for your family, visit us at i3resources.com and ask us how. To learn more about natural disaster preparedness for your family, visit FEMA‘s Family Resource Guide.

About Kevin Heaton

Kevin Heaton is a CFO who understands the cycles of wealth, the dynamics of family change and resultant behaviors. His expertise is in developing and implementing focused tactics to protect and manage private assets through the objective application of information tools, infrastructure support and investment strategies.

Mr. Heaton is the founder and principal of i3, LLC, and has grown the organization into a team of professionals who provide clients with access to relevant information to make informed decisions, the infrastructure (team and tools), to actively manage their assets and investment opportunities (directly or through managed funds) to (re)invest their capital.

As an accomplished speaker and presenter, Kevin’s talks give in-depth analyses of his own experiences in family office asset management and makes even the most complex asset strategies clear with concrete action plans.

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(This article by Kevin Heaton is reprinted by permission and originally appeared in the Insurance Research Letter, November 2019 issue.)

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