I’m sure we’ve all heard the old proverbial saying before that goes, “Shirtsleeves to shirtsleeves in three generations.” As in, the wealth that is made by one generation, will be lost by the third.
It’s Never About Money guest, Mike Boyd, thinks that this fate can, and should, be avoided.
Mike is the co-owner and CEO of the Vroom group, founder of Prosura Insurance, investor at Mudbrick Capital, an active YPO member and host of The Business of Family Podcast.
Mike is a forward-thinking entrepreneur with incredible insights and knowledge of multi-generational wealth and family business.
So, is there a key to maintaining multi-generational wealth? Is there a way you can prove that old adage wrong?
Mike believes that stewardship within these business families is the key to preserving wealth beyond the third generation.
What is Stewardship?
Stewardship isn’t a new concept. A term usually used in agriculture, stewarding means not abusing the land (with intensive cropping or running of cattle etc) so as to not inhibit the use of that land in the future.
This concept has been applied for the passing of wealth from generation to generation.
“If something comes into our care or custody as a steward, our job is to look after it, improve it, and pass it onto the next generation or group of stewards in a better condition that we found it. Rather than consuming it.” – Mike Boyd
Mike compares inheritors of family wealth to people who get a financial windfall through the lottery. We often hear stories of lottery winners who end up broke within a couple of years because they’re not equipped with the understanding of managing money and the value system that comes with it.
Stewarding entails setting up systems to keep the family wealth together, as opposed to dividing it up between the individual inheritors. Mike stresses the importance of the “what’s mine is ours” mentality.
The alternative to dividing up the wealth is by putting it in a “family bank” and installing a council to look after it and make decisions about how to invest it for the next generation.
Mike believes this is key to perpetuating and maintaining family wealth for future generations.
Find out more about Mike Boyd and the concept of stewardship in Episode 29 of the It’s Never About Money podcast:
Connect with Mike on LinkedIn: https://www.linkedin.com/in/mikeboyd08/
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