Tag Archives: family governance

Managing Exceptional People

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While certain personality types tolerate constant correction, it’s corrosive to a relationship with an Alpha Child.

Here’s what works…

One Thing – What one thing, if it happened, would take performance to a new level? Pick your battles (or you will be constantly battling).

Default Position – When managing the highly competent, what’s your default position? Is it frequent, small doses of approval backed by admiration? It should be.

Skill Acquisition – Your Alpha Pups are keen to please by learning skills and completing tasks. ABC => Always Build Competence.

Mistakes – Make mistakes visible, teach a different approach with better outcomes then get back to your One Thing. Learning to forgive your own mistakes will help you forgive others.

If in doubt keep my mouth shut and work on my own one thing.

If you were taught constant-correction management (particularly in childhood) then it’s going to be tough to change.

Keep It Simple!

Pause.

Ask yourself…

What’s my One Thing, here?

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With my oldest…

  • One Thing – reading
  • Default Position – let things happen
  • Skill Acquisition – swimming, camping, sailing, enjoyment of nature, aerobic capacity, strength, reading, math, writing, persuation
  • Mistakes – teach via mantras AFTER the energy of conflict has left

The main thing people need is love.

What I Learned This Year

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2016-11-23-18-33-09-2The #1 thing is to make choices about time allocation based on how it impacts my mood.

Continually, and gradually, phase out sources of stress. I’ve been chipping away since 2000.

Making an effort is worth it — having an exceptional marriage, loving kids and a lot of self-directed time requires a commitment to gradual self-improvement.

Twenty years ago, I was lousy at most of what gives me pleasure today.

2016-11-08-09-33-49What is the system that gives me the energy required to endure the discomfort of change?

  • Sleep
  • Eat huge salads
  • Daily movement in nature
  • Relate to the world in my best environment
  • Perform small acts of kindness
  • Don’t compete

There’s an article in each bullet and I’ll get to them December.

2016-11-18-07-06-50***The stuff we put in our lives is important for what it displaces***

We are really poor at seeing the cost of the status quo.

At 47, athletic competition inserts fatigue, removes me from my children, impairs my sex drive and eliminates my willpower.

If you are a sociopath with tendencies towards addiction, promiscuity and petty crime… then adding athletic competition might be a very wise move indeed!

Pay attention to what works.

Then, pay attention when it stops working.

2016-11-19-20-10-53Finally, I’m a good parent but I don’t always enjoy parenting.

I think we should be more honest about the way things are.

Regime Change

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A friend asked for my thoughts about “what he should do” regarding the changes that are about to happen within the US Government.

My quick answer was “do nothing.”

2016-11-25-16-16-29..but there is a lot we can do.

I spent the days after the election teaching my kids to read, helping with math and working on the family’s open water skills.

My advice to “do nothing” is based on the following…

#1 – if you are adjusting strategy more than once a decade then you don’t have an effective strategy // if you truly feel the need to change then there is a structural problem within your family plan

#2 – you should consider tweaking strategy when your life changes (not the ruling party) – unemployment, impending retirement, new dependents, less dependents, major illness, wealth transfers // external surprises are going to happen all the time — spend your emotional energy preparing yourself to stay-the-course, not feeding your fears

#3 – the best time to sell high-quality assets is “never”

2016-11-25-16-31-59#4 – all the emotional energy and financial wealth spent on elections is better allocated to the next generation of your family

#5 – the richest people in America are about to feel a whole lot richer // stay invested and, if you sell to rich people then, raise your prices

#6 – with Elaine Chao’s appointment, the pieces are falling in place for a major domestic infrastructure initiative — this strikes me as a whole lot better (for everyone) than nation building via Asian land wars

#7 – don’t build capacity, or leverage, to the peak // the next recession is likely to be large

#8 – there will be excellent buying opportunities in all our futures // I’ve been researching my next major purchase since before the last recession

2016-11-26-10-29-40The hive-mind has been wrong all year. Glaringly wrong!

I ask myself, “Have they ever been right?!”

Spending time infecting our minds with media noise is the worst thing we can do for clear thinking. Turn off the media, learn persuasion psychology and study history.

Know that the largest gains in your family’s human capital come from self-improvement, ever stronger marriages and educating the next generation.

  • Financially – stay the course
  • Individually – incremental positive change

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High Finance

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2016-09-24-10-14-55Keep your ears open this week. There will be a rare opportunity to learn about finance.

For my international friends, many of the American techniques (in the news) are available in your home countries. I have been applying finance, across four continents, for more than 25 years.

2016-09-25-18-48-42The overall financial system works great. However, when I try to explain certain shortcomings to my friends, their eyes glaze over and I lose them.

I wish I was more skillful.

Whether your favorite billionaire is a Cuban, a Koch, or a Buffett, we can learn a lot from insiders. A constant refrain from wealthy insiders is “complexity creates opportunity for the system to be gamed for economic benefit.”

Finance is a complex system. The system has been gamed extensively.

  • Offshore accounts (Panama Papers type stuff)
  • Thinly-capitalized investment vehicles, with lots of debt
  • Applying non-cash losses today, while deferring cash gains to tomorrow
  • Receiving preferential tax rates on gains associated with financial work
  • Using trusts to avoid estate and generation skipping taxes
  • Using special accounts to shelter income and gains across generations
  • Income reclassification to avoid income and payroll taxes

If the collective wants to run the system like that then I’ll bow to its will. However, I’m not sure the collective knows what’s up.

2016-09-28-10-43-49-1Like professional sports, my beef isn’t with the system. What irks me is the lack of integrity when insiders pretend the system is different than reality. The politics of the people I named above are different but their observations are often similar.

I’m grateful I can explain my personal reality without fear of banishment or loss.

Living a life you can disclose saves a lot of suffering.

Reaching For Success – Young Families

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2016-08-20 10.51.46

What makes a successful family system?

If you ask around then you might hear love, kindness, tolerance and forgiveness. All good but, with a room full of youngsters, these “higher states” often seem unattainable.

Let’s focus on specific tactics.

2016-08-17 17.20.34Renunciation – As an elite endurance athlete, this was a strength of mine. However, what serves a high-performer’s goals is unlikely to serve one’s family.

What happens when deeply help beliefs get in the way of being a good father, a good parent, a good son?

Most of us have past habits living inside of us. Feeding these desires as a single adult have limited repercussions in our lives. As a father, self-indulgence leads to misery.

What beliefs/habits are holding me back from being a better man?

The difficulty of change is completely worth it.

2016-08-17 10.52.28Intangible Assets – What is peace of mind worth?

What price are you willing to pay for a happier spouse?

How much is it worth to teach a three-year old conflict resolution skills?

I promise that you will undervalue the intangible benefits of greater serenity and you will greatly overestimate the pleasure you receive from hard assets.

In my family budget, “luxury” spending is focused on two areas:

  • Pre-K for the kids
  • Childcare for your marriage

At the end of 2012, we downsized our home to ensure we could fund the above.

2016-08-16 11.24.53One-On-One Time – It takes one-on-one time to get inside your child’s world.

Spend the same amount of time (overall) with your spouse.

Hold sacred your daily quiet time with yourself.

With kids, spouse, self, job, PTA, laundry, parents… we have endless demands on our time!

It is “ok to say no.”

Get more comfortable doing enough for the family, rather than your best for yourself. You might never be fully comfortable with time compromises. Discomfort is OK.

2016-08-14 12.26.58Patience – it will take work, over time, to learn skills to maintain your sanity, within the natural chaos of a new family home.

Give yourself 1,000 days to see where you need help.

Go get help!

Experienced preschool teachers have a wealth of knowledge you can tap to become skillful at home.

Most my “problems” are created when a lack of skill meets my emotional habits of anger, retreat, sadness, aggression and revenge.

2016-08-13 21.00.46Renunciation, self-care, connection and patience.

 

Wisdom

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2016-06-20 09.38.59Last month, Dr. John wrote an excellent blog about medical wisdom. I’d urge everyone to read it. I took that post one step further and read Ending Medical Reversal, which was recommended in the article. If you want to make better life decisions then you need to make time to read and consider the book. At a minimum, ensure that the book is read by a leader within your family, firm or practice.

Aside from the specific examples, which are fascinating, I hope you take the following away from the book.

2016-06-18 08.42.46-2HUMILITY – medicine is a global field where we have tens of thousands of our brightest humans spending trillions of dollars. The book makes are strong case that 30 to 40% of that expenditure provides no net benefit to humanity.

The authors lay out numerous examples where billions are blown for no net benefit. It is a wonderful reminder of our shared capacity for irrationality and misjudgment.

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2016-06-18 08.44.11PARACHUTES – one of my favorite parts of the book is when they explain that there aren’t a whole lot of parachutes left in medicine.

What does this mean?

If all of humanity has to jump out of an airplane then nearly all of us are all going to do dramatically better if we’re giving a parachute.

A parachute is an intervention with big positive outcomes for a large slice of the population.

What are parachutes that you can apply in your life?

They probably include items like: exercise, germ theory, antibiotics, vaccines, not smoking and seat belts. In a capitalistic society, there’s a clear role for government to play in keeping society focused on the big ticket items.

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2016-06-18 08.33.54EXPECTATIONS – let’s say you do your part and follow the “parachutes,” what’s a reasonable expectation from modern medicine?

Keeping in mind that 30-40% of modern interventions are bunk, I was left with an expectation that most procedures will usually make most people a little better.

That’s it.

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If we have the courage to consider:

  • widespread error
  • limited number of high-value options
  • realistic expectations

then we might find that there are new resources to focus on parachutes in other areas of our society. The cost of the status quo is often hidden from view.

There are plenty of good ideas: universal basic health services, early-childhood programs, pre-K, drug treatment, parent coaching and financial literacy training (see Kristof at the NYT). Other authors prefer infrastructure projects.

Whatever your preference, it’s clear that uninformed choices can waste valuable resources.

 

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A final note about change.

Even clearly harmful treatments can take a decade to exit the system (plenty of examples in the book). Strangely, I took this as a message of hope.

You might not be able to reform the healthcare system but you can certainly make better decisions within your own life.

Keep at it.

Ultimately, the truth wins.

Breaking Down Family Risks

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2016-06-09 17.39.38In May, I wrote about a misplaced sense of entitlement being our family’s greatest source of loss.

There are two components implicit in the article’s discussion of loss.

#1 – permanent loss of capital

#2 – loss of purchasing power over time

A wise advisor will keep these two factors front and center when discussing the risks associated with your assets, income and spending.

Unfortunately, wise counsel runs counter to human nature which likes to discuss…

Prediction of the future – we love stories about how our decisions will do better than other people’s decisions.

Fear of price volatility – nearly all price movements represent noise that can be ignored.

Two phrases for you to repeat daily….

No one can predict the future.

Volatility is not loss.

2016-06-09 21.25.10Instead of scaring yourself witless with the news, do something useful.

Turn your electronics off (ideally, for a week) and consider…

#1 – Where is the family exposed to permanent loss of capital?

#2 – Does our life situation protect us from the loss of purchasing power over time?

Consider further…

#3 – Where are our uninsured catastrophic risks – health, life, fire, earthquake, flood, asset concentration, counter party, addiction, fraud, abuse…

#4 – What is our ratio of net assets to core cost of living – how many years, months or weeks do we have?

#5 – What is the ratio of net assets to actual annual spending – most families have significant discretionary spending that can be cut in crisis. If necessary, do we have the ability to change and extend the years, months and weeks of cushion?

#6 – What percentage of our cost of living is covered by passive income (rental income, dividend income, interest income)? How does this income change over time?

a – rental income // an indexed source of income based on local economic growth, there’s also a potential capital gain associated with the land value, However, there is the potential for vacant periods as well as the need for occasional large investments with the building

b – dividend income // in a low-cost index fund, this source will be indexed based on national/international economic growth. There’s no potential for capital calls and you will have the ability to sell in small increments

c – interest income // this is fixed source of income, where the best you can do is get your money back at the end of the loan period.

If you put a number beside each of a/b/c and lay out your other sources of income (employment, pension, social security, partnership) then you will see how you are funding your annual spending.

Most families will have concentration in income, as well as assets. Concentration is a source of risk.

Are we acting on the right things?

Change slowly.

 

 

Family Risks

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cargobikeWhen you consider risks to your family’s capital, what sort of things pop up in your mind?

  • Stock market crashes
  • Unemployment
  • Death of main breadwinner
  • Divorce
  • Underperformance of family business
  • Change in political situation
  • Change in interest rate policy
  • War and civil unrest

If we broaden the scope to human capital, what might you add?

  • Addiction and Substance Abuse
  • Remittance dependence
  • Health and wellness
  • Dementia and eldercare

I’ve known five generations of my family and we’ve experienced all of the above.

Surprisingly, the top-of-mind risks are not our source of greatest loss.

Aside from mental illness, our greatest source of turmoil has been due to developing an abnormal sense of normal. More specifically, we’ve looked up to friends & family that led us astray with regard to our financial aspirations.

DaddyGIf you happen to be a self-made individual then you will, quite rightly, say “it’s my life and I’ll live the way I darn well choose.”

You are right.

I commend you.

Self-reliance is a wonderful gift to our communities and I hope to teach it to my kids.

…but I remind myself of the cost of benchmarking at ever higher levels of achievement.

  • The cost comes in time not spent with my spouse and kids.
  • The cost comes from choosing work that is ethically ambiguous.
  • The cost comes when spending time becomes spending money.

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This caution also applies to risk.

As a young man, I tracked into higher and higher levels of “acceptable risk.” A good friend died. Another went bankrupt.

Teach your kids to notice risk-seeking behavior in themselves, and others.

  • Mountaineers => good, great, dead
  • Property Developers => good, great, bust
  • Professional Athletes => good, great, disgraced

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Finally, consider the impact of neighborhood and peers.

A friend jokes that his daughter was one of the few kids at her Bay-Area school that didn’t have an elevator in her home.

What’s my children’s definition of normal?

Choose wisely.

Healthcare Tradeoffs

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2016-05-13 12.25.44I’ve been helping an elderly friend navigate the healthcare system. It is easy to get present-procedure focused. No one took a long-term view of my buddy’s life path.

It’s going to be easiest to explain by putting myself in his shoes.

Let’s say I’m 80 years old and have a stroke, from which I will recover. At the hospital, they discover I need a pacemaker. The pacemaker is required because I have a condition, which is causing my heart to stop beating for up to 5 seconds at a time, mainly when I sleep.

The heart surgeon says I should fix my heart – he’s done the procedure close to 1,000 times. I am likely to see additional years of life.

Why would I hesitate?

I might hesitate because I know my family history.

By the time the pacemaker battery needs replacing (my late-80s) all my grandparents would have been dead, or nearing death.

Here’s what my family tree has been serving up…

  • Organ failure with Alzheimers (pacemaker kept on ticking until kidney failure killed the heart)
  • COPD with dementia
  • Cancer
  • Stroke

“Doc, I have a concern we are helping my body last long enough for me to lose my mind.”

No easy answers…

…but here are some questions:

  1. What’s my mental, physical, spiritual state now? How am I doing relative to peers and family history? There could be very good years left before dementia hits hard.
  2. Are there conditions/diagnoses where we switch off the pacemaker? Do I want to specify, now, what my power-of-attorney should do? It’s easier for a POA to follow my instructions than struggle to balance the considerations of: past self, ever changing conditions and future self.
  3. Does my POA have access to a medical advisor with the skill, and compassion, to navigate these decisions? Look for a middle-aged MD, with a large family tree, where the elders frequently live into their 90s.
  4. Do I have the capacity to continue to bring love into the world? I’d be willing to suffer quite a bit if it was a win for my children.

Lifestyle, diet and modern medicine can greatly reduce our chances of dying early. In each of our family trees, there comes a point where we’ve done about as good as we can expect.

I’ve preemptively forgiven my POA for the decisions that will need to be made.

I’ve had a wonderful life.

Non Financial Aspects of Estate Planning

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2016-03-09 15.23.39A friend asked me to give this talk to his firm, but I prefer to write short articles. 😉

When families talk about estate planning the discussion can center around cash flow, assets and tax minimization. While those topics need to be sorted, dollar-centric living can lead to regret.

If you apply last week’s tips about family leadership, you might discover certain realities about financial wealth.

2016-03-16 13.56.23Namely…

The highest use of an asset lies in its capacity to enable better choices…

  • flexibility to allocate time towards shared experiences
  • the ability to control one’s schedule
  • the opportunity to tag along when other people are doing what they enjoy
  • health in the context of body, mind and spirit

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2016-03-13 21.51.50Cash flow without education, connection and meaning can be a negative. Examples are the challenges faced by lottery winners, professional athletes and young, highly paid professionals.

With cash flow, I would go further and point out that excess family cash flow will ultimately be consumed by the least responsible adults in a family system.

You might tell yourself that you are “doing it for the kids” but the money ends up being blown by someone’s aunt or uncle.

2016-03-11 20.04.44-1What to do?

  • In your lifetime, use money to acquire time.
  • Share time with people you wish to influence with your values. Be the brand.
  • Remember that it’s better to earn, and spend, our own way in life. It’s what you did.
  • Have a bias towards “assets used for shared experiences,” rather than cash flow.

Ask the question, How do I wish to be remembered?

Be that person, today.

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2016-03-10 08.52.21Shared experiences, both positive and negative, bridge generations across time.

As a child, I had four grandparents and three great-grandparents. Of my childhood elders, only one made the transition into my children’s consciousness. The elder that bridged across did so because my daughter and I were involved in her end of life care.

Love, not money, is what travels across time.

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