In this episode of the Disruptive Successor Show, Jonathan Goldhill discusses the complex dynamics within family businesses, particularly when it comes to compensation, values, and succession planning. He's joined by Mike Alves, the founder of VIDA Private Wealth, to shed light on the challenges faced by families in business and share insights on how to manage them effectively. He emphasizes the importance of open communication and aligning values across generations to ensure the continuity and success of family businesses. Jonathan and Mike delve into topics like fair compensation for family members involved in the business, the importance of defining and passing down family values, and the role of next-generation financial education in preserving multi-generational wealth.

KEY TAKEAWAYS

• Sudden Wealth Syndrome: Many families, including those in multi-generational wealth, face challenges due to a lack of financial education, leading to issues like sudden wealth syndrome.
• Next-Generation Financial Literacy: Mike Alves highlights the significance of early financial education, teaching young individuals about saving, investing, and philanthropy.
• Values and Legacy: Successful family business succession involves not only transferring wealth but also passing down family values and a sense of stewardship.
• Family Meetings: Facilitated family meetings are crucial for addressing conflicts and ensuring clear communication among generations.
• Aligning Passions: Encouraging the next generation to pursue their passions and values can lead to fulfilling lives while preserving the family legacy.
• Compensation Clarity: It's crucial to differentiate between ownership and compensation in family businesses. Family members actively involved in the business should receive fair market compensation, while dividends and ownership shares are based on ownership stakes.
• Passing Down Values: Family meetings and communication are vital for passing down not just financial assets but also family values. Technology can aid in recording messages from founders to future generations, ensuring their values are preserved.
• Value Discovery: Uncovering and understanding one's values is a critical step for both adults and children in the family. Aligning these values with financial decisions can lead to greater fulfillment and success.
• Entitlement Awareness: Entitlement can be a pitfall in wealthy families. It's essential to instill a sense of responsibility and avoid entitlement by educating the next generation about the family's financial values.

QUOTES

• "We don't want to have this issue of 90 percent of wealthy families losing their wealth by the third generation and the sudden wealth syndrome."
• "Follow your passion, follow your why. Money will come along, maybe not immediately, but it will eventually come."
• "It's all about communication of those values and education of the next generations that come."
• "Compensation to be market rate. We look at dividends to be based on ownership."
• "Values to a family are going to be different. Developing family values that are articulated and communicated at family meetings are so important."
• "No one wants or feels proud of a child who's overly entitled."
• "Aligning values with financial decisions changes everything."

Connect and learn more about Mike Alves in this link below.

• LinkedIn: https://www.linkedin.com/in/mikealves/

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