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Wealth and Children: Being Successful with Both


By Bernard Kliska, Ph.D.

Harry Martin manages the Cargill/MacMillan family's office. Cargill is the world's largest privately-owned family business, according to Forbes. We've excerpted a few comments from a presentation he made last November to the First Annual Private Investors Conference entitled Challenge: Accomplishing Generational Transitions.

  • "The point where power changes hands is the time of greatest family vulnerability.
  • Problems are created when families give enormous emphasis to the creation of wealth, but don't give enough attention to the creation of a sound family able to manage it.
  • Money itself is just a commodity. It is created by human enterprise and then utilized by people for productive or non-productive purposes, for constructive or destructive ends. Money achieves value only through the use made of it. That wholly depends on the human qualities of those who create, perpetuate and utilize it.
  • The bedrock for a smooth transition 30-50 years later starts with the discipline of helping one's children create self worth. This is a daunting task for wealthy families since wealth often operates as an enemy to a child's positive development.
  • Self worth is created by good parenting empowering the child to develop competency. Wealth often works against good parenting. It distracts parents from personal time spent with their children. Wealth should be no excuse for not being there to help with homework or attend a child's soccer game. Wealth also works against the child's chance to develop competency and character. It offers him indulgent escapes from the need to experience hard work along with life's inevitable successes and failures.
  • "Children from wealthy families should be held to the same demanding standards as children from well-parented, middle class families. They should work hard, get good grades, be disciplined, get along in school, and if they don't suffer the consequences. They shouldn't be merely shipped off to a more permissive private school. Since a disciplined work ethic built the wealth why shouldn't this discipline be continued in the children of the wealthy? By depriving their children of it, wealthy parents turn them into disenfranchised adults.
  • One of the most significant factors creating disunity in wealthy families is the feeling of being trapped by one's ownership position. Thus flexibility in providing some liquidity to shareholders, before and during a transition process, is important. This is particularly valuable for family members not directly involved in the family company. As a last resort, family members who absolutely wish to exit should be allowed to do so.
  • The result of a successful generational transition is worth all this effort. You'll know you've succeeded when your children regard their wealth as a responsibility, rather than as a privilege. You'll know you've succeeded when they have the character and competence to manage this responsibility.
 

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