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Copyright © 2018 by Ilze Alberts. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data
Names: Alberts, Ilze, 1958- author.
Title: Passing the torch : preserving family wealth beyond the third generation / by Ilze Alberts.
Description: Hoboken, New Jersey : John Wiley & Sons, Inc., [2018] | Includes index. |
Identifiers: LCCN 2017059968 (print) | LCCN 2018010658 (ebook) | ISBN 9781119486459 (pdf) | ISBN 9781119486435 (epub) | ISBN 9781119486442 (cloth)
Subjects: LCSH: Finance, Personal. | Families. | Wealth. | Estate planning.
Classification: LCC HG179 (ebook) | LCC HG179 .A399 2018 (print) | DDC 332.024/016—dc23
LC record available at https://lccn.loc.gov/2017059968
Cover Design: Wiley
Cover Image: © BestPix / Shutterstock
Ignite and pass the torch. Unlock the high net worth in every family member for the ultimate prosperity and fulfillment of the family for generations to come.
I dedicate this book to my fellow torch igniter, Roelf Alberts, and our children we are passing the torch to: Charne, Jacques, and Louis‐Franz. May it shine brightly on your path.
by James Hughes
It is my privilege to join Ilze Alberts' journey as she imparts the wisdom of her deeply lived life of commitment to helping families and the individuals who compose them thrive and flourish.
In the book you are about to enter, Ilze offers you the gift of her awareness of what has helped families avoid the entropy that leads to their early dissolution in three or less generations and what those few families do who thrive and flourish beyond three generations.
She will share with you that it is in the great virtues of family harmony, family support of individual dreams toward all family boats rising, and family defining itself as its positive connections of affinity 1 + 1 = 3, that a family discovers and sustains its journey to long‐term flourishing.
She will help you to appreciate that a family consists of four qualitative (spiritual, social, intellectual, and human capital) and one quantitative (financial) capitals. She will encourage your awareness of a frequently missed truth that a family's long‐term success lies in growing the first four and dynamically preserving the fifth as a resource to grow the first four.
She will offer you the wisdom that a family who does not in its second, hopefully its first, generation form the intention, as its highest purpose and ambition, to flourish for many generations to come cannot succeed. To break the shirtsleeves‐to‐shirtsleeves proverb so often true, it must practice that intention through seeking to enhance the journeys of happiness of every family member, toward each having a meaningful life, all toward the whole family flourishing.
Valuably, Ilze brings to the challenge of helping your family flourish a depth of psychological mindedness and awareness of the gifts of positive psychology's developmental practices and assessments that I have not encountered in such abundance elsewhere.
By combining virtue, psychological mindedness, and proven individual family member and whole family developmental practices, Ilze charts the course for your family to flourish for seven generations and beyond.
I have deeply enjoyed my journey with Ilze in her professional life of service to human flourishing, now continued and artfully shared as a gift to all families in Passing the Torch: Preserving Family Wealth Beyond the Third Generation.
I have every confidence that as you and your family now accompany her on her journey to help your family flourish through her gift to you of her wisdom and experience; through her helping you imagine your family preserving its wealth, its human, intellectual, social and spiritual self; through her encouraging and informing your endeavors to enhance the journey of happiness of each of your family members, all toward your goal of your whole family flourishing; and by adopting and living out the philosophy Ilze imparts, that yours will be one of the very few families who truly flourishes.
I look forward to greeting you on our pilgrim's way as we walk together with Ilze to accomplish your high worthy purpose, the thriving of each of your family members and the preserving of your family far beyond three generations.
The purpose of this book is first to create awareness in families that it is the birthright of every family to be a powerful unit for generations to come. Second, I want this book to create the awareness in families that it is the birthright of every family member, as individuals, to have the opportunity to unlock their highest potential for their ultimate fulfillment, meaning, inspiration, and prosperity. Third, bonds of affinity that exist between family members are stronger than blood bonds. It's important to form bonds of affinity if the family is to continue for generations as a powerful family. Fourth, it is my heart's desire to assist families for multiple generations to develop the know‐how, the skills, and the human behavioral understanding to keep the family vision growing until the momentum of the snowball keeps on to such an extent that the impact and influence of that vision will be felt seven generations from now. Fifth, I wish to assist families in becoming inspired to create and maintain a family vision for multiple generations, to empower the family in transforming the proverb from shirtsleeves‐to‐shirtsleeves in three generations.
In Japan, there's an expression, “Rice paddies to rice paddies in three generations.” The Scottish say, “The father buys, the son builds, the grandchild sells, and his son begs.” In China, “Wealth never survives three generations.” Around the world there are many variations on this theme, all used to describe the tendency of the third generation of a family to squander the wealth obtained by the first generation.
According to studies, only 30 percent of family businesses built by one generation are passed on to their children, and only 10 percent of those businesses ever reach a third generation. One reason suggested is that the third generation doesn't possess the same set of values, work ethic, and perspective because of their very different experience growing up.
The first generation struggles hard to rise above their current conditions to achieve a more comfortable life for themselves and their family. They work hard, diligently save their money, and by their later years have something of value to pass on.
Their children, the second generation, grow up as a witness to their parents' struggle and understand the value of hard work. Although they now live a comfortable life, they can remember a childhood filled with frugality and perhaps even poverty. Because of this, they make educational and financial choices that help them build on what their parents created. By retirement, they have, most likely, acquired even greater wealth.
The third generation, however, has no memory of want or struggle. They've only known a life of plenty. When the family wealth is passed onto them, they lack the values and skills necessary to maintain the health of the assets. If universal proverbs and small business statistics are to be believed, the third generation squanders the resources their parents and grandparents worked so hard to achieve. Thus, the three‐generations cycle.
Figure 1 shows the etymology of the word wealth.
FIGURE 1 Etymology of the word wealth
The word wealth in Middle English is welthe, which refers to weal, on the pattern of health. Wealth means well‐being and prosperity. It is the right of every person to be prosperous and live with well‐being and fulfillment.
It's also the right of every person to have the following opportunities:
Changing the predictive outcome that follows the from shirtsleeves‐to‐shirtsleeves in three generations proverb has taken on tremendous value to me. Why am I doing whatever it takes in an attempt to find out how? It's common knowledge that a void drives a value on something; whatever we perceive to be missing, we strive to fill it. This is certainly true for me, and the reason lies in my story.
My father grew up with wealth yet when he died, he was financially dependent on his children. As the daughter of parents who lost all our family wealth (they were the third generation), I wish to raise awareness, facilitate the mindset, the desire, and the appropriate skills for my children and me to transform the from shirtsleeves‐to‐shirtsleeves in three generations proverb to enable our family to create and grow family wealth for multiple generations. In that way, we take action to live extraordinary lives that raise the culture we live in and obtain the best opportunities to grow and expand our family for the ultimate fulfillment, well‐being, and prosperity of every family member for multiple generations. By doing this, we have a greater opportunity to invest in our world society and contribute to the raising of world standards in education and health. Our wealth can unlock more opportunities for education and health worldwide. Family wealth through generations is not exclusively for the benefit of the family, because it's through the acts of service and unlocking of opportunities for society that family wealth transcends the generational family to become the cosmic family.
We do not resent our parents for the actions and choices they made. I am grateful that through their choices I developed a big void regarding generational wealth. That void has given me a life purpose and meaning. I can use their lack of insight and knowledge as a springboard and through study, research, and practice, I can find inspiring ways to transform the cycle for my family and, in the process, empower my children and their children and their children—for multiple generations.
I'm certain that I'm not the only parent who has asked myself the following question: “I'm spending so much time, energy, and money on my children's mental development by sending them for the best education, but what am I doing to educate them about understanding human behavior and being financially wise?” Acquiring knowledge, understanding human behavior, and being financially skilled and wise will be the three most important influences I can have on the next generation's lives. By sharing the gift of knowledge, human behavior skills, and financial skills and wisdom, I share the gift of empowerment in all areas of life.
A family's true wealth consists of:
It's highly likely that you're either the visionary and wealth creator of your family wealth or that you're the next generation and you wish to shift the energy of the shirtsleeves‐to‐shirtsleeves in three generations proverb. You may also be a professional service provider to high‐net‐worth families. This book is written with the intention of providing some answers to the big question: how do we change or transform the cycle of the shirtsleeves‐to‐shirtsleeves proverb? Can we even change it at all? Since energy can't be eliminated, perhaps it can only be transformed.
In his book Family Wealth, James Hughes tells us, “Family wealth is not self‐perpetuating. Without careful planning and stewardship, a hard‐earned fortune can easily be dissipated within a generation or two.” He has made a valuable contribution in proposing a theory and method for practicing successful wealth preservation. Throughout my writings, you'll find James Hughes' work has had a significant impact on my way of thinking and understanding the preservation of family wealth. I am deeply grateful for his impact and influence on my understanding and thinking.
Sir Isaac Newton said, “I'd rather stand on the shoulders of giants than in their shadows, for then I can see further.” James Hughes is one of the giants on whose shoulders I'm standing to see further. I have indeed spent many hours pondering a possible transformation of the energy of the shirtsleeves‐to‐shirtsleeves proverb. This book is my contribution to offering possible ways to do that.
Another giant on whose shoulder I'm standing is the human behavior specialist and polymath, Dr. John Demartini. Throughout this book, his impact and influence on my understanding of human behavior will be keenly evident. He has taken my understanding of human behavior where my training as a psychologist could not.
My wish is that the combination of many masterful minds will shine light on the transformation of the energy of the shirtsleeves‐to‐shirtsleeves proverb.