What is this book about, and for whom was it written?

The essence of this book is to provide help to private and family investors to protect and grow their wealth over time – and in a manner consistent with family vision, philosophy and values. It was written for family leaders, family members, staff of family offices and the wide set of advisors – lawyers, bankers, investment managers and others – who seek to advise their clients wisely on long term family wealth preservation, growth and transition.

What lessons did families learn in the recent credit crisis? What should they have learned?

Different families learned different lessons, but many common perspectives emerged on the surprising correlation between assets and asset classes presumed to be non-correlated, the real risk of extreme ‘tail events’, the value of liquidity, the need to manage costs and monitor managers carefully, and the need to diversify in a different manner going forward.

How will the future evolve, and what are the implications for investors?

The future is, of course, never entirely predictable, but the following are very likely to play a key role in investment decision-making for some time to come: increasing pressures for tax revenues from the wealthy, continued low yield on savings and deposits, increasing regulation and compliance requirements, a shift of the world locus from west to east (i.e. Asia), continued work-out for debt-burdened countries and consumers, civil unrest due to rising wealth gap, a massive transition of wealth from boomers and their parents to the nexyt generation, and need to blend family and financial perspectives, particularly given the increasing complexities within families. Investors will need to cope with these callenegs in addition to the ‘regular’ ones of generating enough return to meet their needs, at acceptable risk levels.

Where are major risks and opportunities for families?

The major risks are both family-related (too much spending, divorce, disengagement, dispute, etc.) as well as financial (bad investment decisions, over-concentration, behavioral errors, poor advisors, high fees etc.)

Failing to learn the lessons of the past on matters both family and financial may be the greatest risk of all, and, conversely, adopting a comprehensive and fully modern approach as advocated and spelled out in great detail in this book, may be the greatest opportunity for families interested in beating the heavy odds a ‘shirtsleeves to shirtsleeves in three generations’ outcome, with very unfortunate consequences for both family and fortune.

This is a big book. Why so much material?

This is a complex and serious subject with many interrelated parts that need considering as both individual elements and as part of an integrated whole. This is not a subject that benefits from ‘one minute management’, slick phrases or faddish themes. Long term successful investing for a wealthy family requires mastery and integration of many elements.

This book shows how it can be – and has been – done well, and we wanted to provide for our readers a very substantial input into their own plans, strategies and aspirations.

What do you have to say that is new about a subject that has been around for a long time?

While not a new subject per se, there are few works which provide an integrated family and financial approach, challenge much of received wisdom, and set out a comprehensive approach needed to maximize the odds for recurring success.

What big mistakes have families made over the years? Is this changing?

There are as many mistakes made as there are family failures. Some recurring issues include not taking time to set out and prioritize family goals, falling prey to the dangerous patterns of behavioral errors (such as overconfidence, narrow framing and anchoring), failing to adapt to changes in the environment, and proceeding without sufficient diligence or documentation.

Is ‘shirtsleeves to shirtsleeves in three generations’ an inevitable pattern?

Not inevitable, but highly likely unless family investors and their advisors put in the effort required to set out clear goals, develop a forward-looking family culture, establish a strong risk management regime to reduce the odds of these sad words applying once again.

Did you two co-authors agree on all points as you went along?

We came at this issue from two different approaches developed on opposite sides of the world: Mark bringing in his experience, primarily in Asia and Europe, with fewer, larger ($1+ billion) investing families, and Tom contributing his experience, primarily in North America, with a larger number of substantial, but relatively smaller ($10 million – $1 billion) wealthy families.

Despite these initially different bases of experience, we shared a common set of family-centric values and were able to forge a common way forward that was well adapted to all legacy families and their advisors who are looking to apply the best available knowledge to their own investing objectives and challenges.

What was your biggest challenge in writing the book?

Actually, paring back and providing a simple framework was our biggest challenge! There are so many important ‘moving parts’ to a successful family wealth managemenmt program that we were constantly balancing the need for an integrated overall approach interesting for everyone with the fascinating detail (and real life examples) of the individual elements. We hope we have found the right balance.

How can a family best put this book to use?

The best way a family can put this book to use would be for a few members (probably those who are, or will be, most engaged in wealth management) to read the entire book and understand its applicability to the unique family environment of their own family. They then can provide a summary and adaptation of lessons learned to other members of the family for whom the whole book may be a bit daunting.

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