Successful business families can provide their children a sense of well-being and privilege, but in doing so are they sheltering them from adversity, or denying the next generation a golden opportunity to be challenged?
In the January 2012 edition of Family Business Magazine, Relative Solutions principal Fran Lotery details critical questions that emerge as family enterprises anticipate a future generational transition, including:
• What does the next generation need to be prepared for?
• How big is this challenge, and how will it be met?
• What is the priority? Is it to develop the human capital of the family or future leaders, or a combination of both?
Fran Lotery answers a reader’s question in the Advisors’ FORUM of Worth magazine, January/February 2008 issue.
Not too long ago the greatest concern of wealthy parents’ was that their wealth would act as a negative force for their children, leading them to feel entitled and preventing them from productive work and livelihood. Since the financial crisis, many of these families are experiencing a change in the availability and even the loss of their assets and thus a change in current and future wealth. This inflection point has created an opportunity for them to examine how they want to raise their children vis à vis wealth. For some families, the financial meltdown requires they also take a hard look at their present lifestyle and make certain changes too. What happens when you continue to live and feel affluent, when in fact your net worth may have been reduced by a quarter, half or more? Is the potential negative force of wealth still great when the expectation may still be present and the full asset availability is not? What is the difference when the assets for which a young person felt entitled no longer exist in the same fashion?
Preserving wealth and relationships.
Losing a member of the family to death need not spell endless turmoil for a family business, says Fredda Herz Brown, but rather a way for a family to clarify its raison d’etre.
Families who develop ways to manage the tension between the emotional and the economic can create great opportunities for all members.
Fredda Herz Brown writes about the role of family goverence on sustainability in the family enterprise.
“Emotional Intelligence” has been highlighted as a requirement for CEO’s. Family firms must redefine the term to encompass additional competencies.
Family Business Succession Handbook
Fredda Herz Brown and Fran Lotery