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Mitch Anthony's Intuitive Advisor

Are You Taking Care of the Business of the Family?

by Richard Orlando, Ph.D
Founder & CEO of Legacy Capitals

Richard Orlando"Shirtsleeves to shirtsleeves in three generations" is the American equivalent of the Chinese proverb "Wealth does not pass three generations." The same phenomenon is found throughout the world, where it is referenced by different phrases. In England, they say, "Clogs to clogs in three generations." In Italy it is, "From the stables to the stars to the stables in three generations." It is well known in countries around the world that someone in the first generation of an affluent family works really hard to create wealth. The second generation reaps the benefits of the wealth, and the third generation is likely to squander it.

Interestingly enough, the failure to transfer money to, and beyond, the third generation does not usually result from the original wealth owners' failure to put a solid tax, estate, and financial plan in place, as most people would assume. Nor does the failure usually stem from the fact that the wealth is dissipated by being passed into the hands of a larger group of people. The primary reasons that family wealth dissipates in a few generations are a breakdown in communication and trust within the family, and the lack of readiness of the heirs to receive the wealth. They have not adequately addressed matters relevant to their legacy or what we like to call the business of the family.

Why is this important to your success as an advisor? It is vitally important for the following reasons:

  • 41 trillion dollars are being passed down to the next generation by 2052
  • 90% of the families' wealth does not make it past the third generation (similar for family businesses)
  • 80%-90% of heirs reject their parents' advisors soon after receiving their inheritances

This is an opportunity of a life time! As an advisor, you have the opportunity to expand your value to the family and at the same time, benefit your practice—a true win-win. More specifically, as reflected in the latter statistic above, if you are interested in growing your business and having it last for more than one generation, then it is important to intentionally build value-based relationships with the children of your clients. However, to do this you need a proper understanding of legacy planning.

Too many people are misinformed. Legacy planning is not really about making an end-of-life plan or focusing on which financial assets we will leave to our heirs and charities. Legacy is about how we choose to live each moment of our lives. In this sense, planning is not about leaving a legacy, but about living our legacy. It is about reaching our human potential and intentionally making a positive imprint on the world each day of our lives. Death only cements our legacy; it doesn't create it.

Therefore, it is vitally important that you expand your value to clients by going beyond your core competencies (e.g., tax or financial planning) and integrate into the planning process what I referred to earlier as the business of the family (I am not referring to the family business). The business of the family has to do with how a family makes decisions together, how they communicate about important topics, and the preparation of the next generation; as the family's advisor, you can play an important role in this process. In doing so, you have the opportunity to show value and build relationships with the next generation. For example, when I run multi-generational family meetings for client families in partnership with their other trusted advisors (wealth managers, CPAs, tax and estate attorneys, and so forth), it is quite common that the parents will turn to the children in the meeting and encourage them to spend more time with the advisors.

To be more specific, here are seven statements pertaining to the business of the family. I recommend you use them as your guide and add them to your process. You can discuss the following seven questions with your client-families and, on a scale of 1-5 (with 1 being low proficiency and 5 being very high proficiency), rate them. Where they rate high, build upon their successes. Where they rate low, help them create a plan of action to raise their rating.

  1. Does the family have a multi-generational vision for their wealth?
  2. Does the family have a clearly defined value-based purpose(s) for their wealth?
  3. Do family members effectively make important decisions together (e.g. about shared assets like a foundation, business, or second home)?
  4. Does the family have the ability to communicate about matters that impact family members?
  5. Does the family have an intentional plan in place to prepare the next generation(s) for their success and happiness?
  6. Do family members have clearly defined roles and responsibilities as stakeholders of the family, as well as if there is a family business?
  7. Do family members effectively manage differences?

Legacy planning is not about product, it is about process. This process must factor in the business of the family. Helping your client-families navigate the legacy planning process will be of great value to them and personally rewarding to you.


© 2014 Richard Orlando

For the past quarter century, Richard Orlando, Ph.D., founder and CEO of Legacy Capitals LLC, has worked globally with executives, entrepreneurs, professional athletes, and entertainers, as well as families, work teams, and organizations, who strive for success or have already reached significant levels of success.

Author of LEGACY: The Hidden Keys to Optimizing Your Family Wealth Decisions (January, 2014, $27.95 hardcover, $9.99 ebook), Richard Orlando serves as a trusted advisor, consultant, and coach to some of the world's wealthiest families—some of which lead very successful family businesses. In addition, he has worked with Barron's Top 100 Financial Advisors, as well as leaders and high-performing teams nationally and internationally.

Dr. Orlando has an interdisciplinary background, holding degrees in computer science, business, and psychology. After earning a Bachelor of Science degree in computer science and business from St. John's University, he pursued a career on Wall Street and earned his Series 7 and 63 licenses. Returning to school, he received a master's degree in counseling/theology from Trinity International University. Continuing his education, he earned a doctorate in family systems from Seton Hall University, during which time he interned with the New York Giants football team. His dissertation research focused on wealth management family teams. Dr. Orlando also earned a certificate in family wealth advising from the Family Firm Institute and holds a certified professional coach designation from an International Coach Federation accredited program.

He has been referenced in numerous publications including the New York Times, Wall Street Journal online, Private Wealth Magazine, Family Wealth Report, CFA Magazine, Merrill Lynch Advisor, Research, Bloomberg Wealth Manager, On Wall Street, and Registered Rep. He has conducted hundreds of presentations to various groups and organizations, including Merrill Lynch, U.S. Trust, HighTower, Dynasty Financial Partners, Vorys, Sater, Seymour and Pease Law Firm, Purposeful Planning Institute, Kegler, Brown, Hill and Ritter Law Firm, Janney Montgomery Scott, Taco Bell C-Suite, Wealth & Legacy Group, Young Presidents Organization, and Vistage International. He's also spoken at the conferences of Barron's, Attorneys for Family-Held Enterprises, Securities Industry Institute, and Investment Management Consultants Association.

Dr. Orlando is on the board of director's at Urban Hope in Staten Island, New York. He was born and raised in New York City, and currently resides in Bucks County, Pennsylvania, with his wife and their children.

Contact Richard at LegacyCapitals@gmail.com.


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