What really matters at the intersection of family and wealth?
Every now and then you get a moment of clarity. Sometimes it’s clarity on something small, sometimes something big. Then there are moments where a lot of pieces come together all at once. This post is about one of those moments.
It was about a year ago when the pastor of my church asked a somewhat rhetorical question – “What’s the purpose of apple trees?” It wasn’t a major focus of the sermon – it was almost a “throw-in.” Regardless, as you might expect (maybe you are even answering the question yourself right now) he heard the answer he expected – “to make apples.” But his answer was different. He suggested that the purpose of apple trees is to make apple trees.
As I let this question roll around for a few days, I realized this was a great metaphor for why estate plans fail, why parenting in affluence falls short, and so on. Too much focus on bright, shiny apples – and not nearly enough attention to raising strong, productive apple trees. Let me give you some examples:
1. Estate planning attorneys focus on maximizing what gets to heirs.
I’ve worked with over 1,000 individuals and families over the years. I don’t think I’ve met a single person whose primary goal is to maximize the wealth of their children, or the somewhat parallel goal of minimizing taxes. If passing wealth to kids or grandkids would lead to a “trustafarian” lifestyle, they’d abandon those objectives in a heartbeat.
2. Financial planners focus on maximizing returns.
Most of my clients are well off – although not all of them feel that way. And, of course, financial advisors are tasked with maximizing value for their clients. But the bottom line isn’t the whole story. An individual’s, couple’s or family’s wealth exists in a context, a family system.
3. Insurance advisors focus on maximizing liquidity and inheritance.
Life insurance certainly is a useful tool – as long as it’s used to accomplish the right goal. But many insurance advisors assume their clients want to maximize the amount passing to the next generation as well. Sometimes that’s the right approach, sometimes not.
What’s interesting to me when looking at the above list (and it’s just a partial sampling of the issues of being off-focus) is that the problem arises even when (or perhaps because) each advisor is doing their job. Think about what you have hired your advisors to do, and whether they match up in whole in part with what’s above. That tells me we need a paradigm shift.
This blog is driven towards that paradigm shift – assuming you’re more interested in apple trees than apples. We’ll explore how to help you achieve your true, underlying goals when it comes to the stewardship of your family’s personal, social, and financial capital. It’ll take effort. It’ll take focus. Frankly, I suspect you need to be at the center of making it happen. But together, I’m confident we can get there.
Let me know if you agree, and what challenges you think are most critical for your family to overcome. I look forward to helping each other make a difference for generations to come!
Thanks for stopping by.