Generational Wealth
Why 90% of Families Fail to Establish a Lasting Legacy
A Dialogue Between Two Family Wealth Experts About How To Establish Your Multi-Generational Family Legacy
By Nicholas Charles and Antoaneta Proctor
Those of you that know me well will know that my clients are almost exclusively ‘purpose driven business leaders and entrepreneurs’ who want to grow inspiring businesses that make a difference to others. This is a book review with a difference as I was coaching both the authors separately when they came together to write the book. Hence, I am able to share my own perspectives about some of the background of the 2 authors and their journey that would ordinarily be impossible to do for most book reviews.
Whether or not you have written your own book already or tried to, it is really interesting to observe someone else going on the journey of writing a book.
Interestingly, a fellow business coach who I have known for many years helped Nicholas and Antoaneta to get the book published and help to get it ranked as number one for its category on Amazon, so a big shout out to the legendary Andrew Priestley (please let me know if you want Andrew’s contact details)!
For me witnessing the early beginnings of this book started when I first started coaching Nicholas to expand his vision for Family Prosperity into an actual business service (www.familyprosperity.com) The concept of Family Prosperity addresses a well-researched, damning statistic, which is that…
“90 percent of families lose their wealth within 3 generations!”
About 3 years ago Nicholas and I met Antoaneta at a Family Prosperity presentation that I had helped Nicholas to create. Antoaneta attended the talk and immediately related to this statement as THE problem that family governance is aimed at solving.
After the presentation she spent time speaking with us and we all just clicked! Antoaneta is a partner in a City law firm, Wedlake Bell, and she knew first hand from her extensive specialised legal work with wealthy families that no matter how well all the legal aspects were done (from tax advice, to trust structures and wills), the vast majority of families were still doomed to lose their wealth within 3 generations unless effective family governance was put in place and that it was ‘the human element of family wealth’ that was the main reason that so many families lost their wealth over 3 generations.
Likewise, despite providing excellent tax advice, Nicholas had discovered that some of his family clients were still losing all their wealth. Having spoken with hundreds of other professional advisors such as lawyers, financial advisors and fiduciary providers, Nicholas had realised that this was a common problem. Families that failed to deal with the human element of family wealth were usually doomed to fail to retain the financial capital for multiple generations.
Nicholas’ biggest insight about the generational loss of family wealth came from his own family history which perfectly demonstrated the cycle of ‘shirtsleeves to shirtsleeves in 3 generations’! Nicholas’ great grandfather had been a multi-millionaire in Cyprus, yet by the time his father was 8 years old the family had lost all of their wealth. Nicholas’ dad emigrated as a young man to the U.K. in the 1960s to re-start the 3 generational process of wealth building from scratch. Nicholas realised that this now effectively made him ‘second generation wealth’ and his kids ‘third generation wealth’. Statistically, the second generation are actually a massive 70 percent likely to ‘blow the family wealth’! With this realisation, Nicholas was inspired to help his own family and other families to understand and solve this widespread problem that can affect any family with any amount of wealth.
In the meantime, since 2011 Antoaneta has been providing legal advice to wealthy families across the world, gaining incredible first hand experiences of what works and what does not work in terms of families prospering for multiple generations. Family constitutions are a critical element of multi-generational family prosperity and whilst I am no expert and probably slightly biased, Antoaneta’s experience and knowledge of family constitutions would appear to be without equal!
Prior to meeting Antoaneta, I had helped Nicholas to flush out what were the causes of these damning statistics which culminated in his first book ‘The 4 Fundamentals of Family Prosperity’. You can see the Book of The Month Review that I did for this book in December 2018 here.
One of the many big insights from this book on generational wealth is that ‘real family wealth’ consists of more than just ‘financial capital’. Real wealth also consists of human, intellectual, social and spiritual capital. Nicholas and Antoaneta stress that any family who wishes to retain its financial capital for multiple generations must focus on passing ALL the wealth to the next generation and not just the financial capital.
As explained in both books, in order of significance, the biggest 5 reasons that 90 percent of families lose most of their wealth within 3 generations are:
1- Lack of an inspiring purposeful family vision, that includes, but is a vision bigger than the family itself and focused on how the family as a whole can serve others beyond their family.
2- Lack of effective communication
3- Lack of education and preparing the heirs to receive the wealth (appreciation of wealth).
4- Advisors and professional advisors who are not aligned with the family’s visions and not effectively communicating with each other.
5- Lack of ‘Sustainable Philanthropy’ which links to the sustainability of the ‘Inspiring, Purposeful Family Vision’.
Nicholas describes ‘The 4 Fundamentals of Family Prosperity’ as ‘the starter’ and this book ‘Generational Wealth’ as the main course.
Amazingly the foreword of the book has been written by Alexander Hoare of C. Hoare & Co who are the oldest family banking dynasty in the world. Not only older, but differently structured with different core values to other well-known banking family dynasties like the Rothschilds.
Here is something that may surprise you about this book, it wasn’t so much planned in advance, as it evolved organically!
It started when Nicholas realised that to solve this wealth conundrum and become an expert in this field, he would need to find and learn from people with proven immense wisdom in the field of family wealth. Nicholas needed very little encouragement to seek out Alexander Hoare of the oldest private family bank in the entire world ‘C. Hoare & Co’. I recall when Nicholas first got in touch with Alexander Hoare who was delighted to talk about such a subject as his family had retained wealth for over 300 years! Nicholas was not surprised to learn that after Alexander Hoare chose to step down as CEO of C.Hoare & Co. Bank, he had spent even more time immersed in the philanthropic causes the support of which, has for generations been an essential part of the bank’s key objectives. The philanthropic activities of C.Hoare & Co. simply reiterates the vital connection between sustainable wealth and the greater purpose that comes with sustainable philanthropy that is essential for family wealth to be retained for multiple generations!
Nicholas has always had a hunger for more knowledge about the subject of generational wealth. He contacted Antoaneta to arrange an interview with her to ask her a series of questions and tap into her experience and expertise around the problems her family clients were facing. The interview was initially scheduled for 45 minutes but ended up taking just under 2 hours – such was the flow between both individuals who share a common passion to help family clients retain their wealth. I recall an inspiring teacher I had at school Mr Kearny, who was big on encouraging collaboration, once said ‘If you put 2 complimentary experts together, you get a genius’!
Both Nicholas and Antoaneta realised that their different expert perspectives of the same issue were unearthing a lot of gold nuggets that would benefit anyone interested in long term family prosperity. At the time Nicholas told me that he was blown away by Antoaneta’s understanding and insights of the practical issues around family wealth and governance; which issues can be addressed with great traditional professional advice and planning and which issues are ‘human factors’ and need a different approach.
When Nicholas listened back to the recording of their call, he realised that they had the basis for a profoundly insightful book about creating purposeful family prosperity across generations. Always struggling to find the time to write the book, Nicholas found himself stuck in Dubai for 10 days with Covid. Rather than complain he used the time to write a first draft of the book, to which Antoaneta provided her contribution to create this incredible book. Whilst it contains some very useful facts, it also has plenty of stories to keep the reader actively involved. Nicholas and Antoaneta were keen not to produce a boring textbook on the subject but something that was interesting to read. Every chapter also ends with a series of thought provoking questions that the reader needs to ask themselves.
Whilst it contains some very useful facts it also has plenty of stories to keep the reader actively involved. Nicholas and Antoaneta were keen not to produce a boring textbook on the subject but something that was interesting to read. Every chapter also ends with a series of thought provoking questions that the reader needs to ask themselves.
As the book was nearing completion, Nicholas asked me about who to get involved to write the introduction, I said to him ‘Why not ask Alexander Hoare?’. Nicholas asked him and he readily agreed using transcripts of their original conversation about the Hoare family’s multi-generational family prosperity as the basis for the introduction.
Because the book is based on real dialogue it is particularly easy and enjoyable to read and does not get over-technical.
Some of the most interesting subjects covered in the book include:
- What do we mean by ‘wealth’?
- Are we really talking? If not, why not?
- What is a family constitution?
- Emotions and wealth
- Letting go
- Family retreats or families retreat
- Sustainable philanthropy and relationships
- Why giving back works for wealthy families
- The role of advisors
- Getting the whole picture
- Tax advice is NOT the key driver
- Prevention or else cure
- Focus on the whole family
Ultimately this book provides massive insights about what a family needs to do if it wants to be one of the 10 percent of families (like the Hoare family) to create family prosperity for multiple generations, the major reasons that 90 percent of wealthy families fail to leave a legacy for multiple generations and what to do about it is found in this book.
Ultimately this book provides massive insights about what a family needs to do if it wants to be one of the 10 percent of families (like the Hoare family) to create family prosperity for multiple generations, the major reasons that 90 percent of wealthy families fail to leave a legacy for multiple generations and what to do about it. The answers to these and other relevant questions on the topic of family governance are found in this book.
Excellent. I’m keen to read it.