Mentoring for success is a hallmark of families that successfully sustain their wealth and unity. We call these activities “pre-inheritance experiences.” They prepare the children for the responsibilities they will take on later in life in small bites, with relatively small amounts of money. Mentoring happens in many arenas; philanthropy provides the opportunity for children to learn about the impact of giving, along with joint decision making if the gifts come from family funds. In business and finance, mentoring can involve investing and spending real money to learn skills, decision making processes, and lessons.
Focusing on process (how to make decisions, invest, and communicate) over performance allows the heirs to make mistakes, and to learn in a controlled environment. We are accustomed to management training programs in corporations, but do we ever adapt that philosophy to the development of our families? We’ve seen some of the most acute families learn invaluable lessons when the children make decisions together with the smallest portion of the family finances.
We have many families that have set up a “family fund”. These funds have multiple purposes to support the family, and provide a training environment for future generations. These funds can be dispersed for college educations, family vacations, or (with an application and limits) a down payment for a first home. Some families will set aside funds for those family members who wish to start a business. Rather than making a distribution for start-up costs, the family fund provides a loan or takes an equity stake in the business. Then other family members who have success in business serve as a board of directors for the new business. This provides family members opportunity with “credit” to start a business, and have the mentoring and support needed to be successful. And of course, if there is a business that is the centerpiece of the family wealth, great care is given to train successive generations on both what it takes to be successful in that particular industry, alongside the family vision and intangible necessities that brought the success that the business now enjoys.
Successful families intentionally train and equip succeeding generations to mentor their children. For many parents, the words "leadership transfer" suggest loss of control, influence, and authority. When family members have identified, prepared for, and are capable of contributing to the long-term success of the family, they must be invited to begin taking on leadership. Effective leadership transfer happens intentionally. Families who develop leadership in each succeeding generation are able to pass the torch by the handle, rather than by the flame.
