The Heirs Curriculum
What your children need to learn.
What is the goal of heir preparation?
Before we get into the nitty-gritty execution of preparing heirs, let us define the goal of preparation. From a wealth perspective, the goal is to carry on the family legacy and build upon it. From a family perspective, the goal is to develop family members who can confidently navigate life. We want to have antifragile family members who can weather any storm and grow. Heirs who are not crushed by the weight of their own surname. People who are content with who they are and the life they live. People who can make choices in life, also the hard ones. You can add anything else that you perceive as important.
“The gem cannot be polished without friction, nor man perfected without trials.” – Confucius
Reading the list above, we can quickly surmise that educating the next generation is not a simple task. It is also not a task that we can fully outsource. What we can outsource and what we need to get our hands dirty will be the topic of today. More importantly, we shall look at examples of how this is done.
What should heirs learn?
We touched upon this briefly in the last article. However, for today’s edition, we need to get more granular on each. Each of the topics is an essential ingredient of the five family capitals as described here.
Entrepreneurship
Most family fortunes were built through entrepreneurship. While the mindset and skills behind an entrepreneur and an investor differ, it is paramount for the next generation to have some entrepreneurial experience. And entrepreneurship is not learnt at school or university. Yes, I know there are courses where you are supposedly taught how to be an entrepreneur. However, they are nothing like the real thing. Your family members need to get some experience under their belt. So make this part of your curriculum. Encourage them at an early age to take risks as entrepreneurs.
With every generation, the family grows in numbers. Inflation increases the costs of living. Every generation that does not practice entrepreneurship forgets the hardships that have created the wealth in the first place. To stop all of these, each generation needs to be behind growing the wealth accordingly.
Leadership
Every family member is in a position of leadership. It might not be a formal position of leadership, yet everyone is in an informal position. We have authority and influence that constitute leadership. This also applies to the in-laws. You can keep them out of the board room, but you cannot keep them from influencing their spouses and children. You can try to keep people out through structure; however, you cannot stop them from having influence. Train them, or their influence will be unguided.
You might as well teach every family member how to be a good leader. Because they will be one, whether you want it or not. And also, ideally, your family members have leadership experience before they have to step into a leadership position for the family (be it in a family council, in a portfolio company, or the family business).
Family History
Knowing the family history is not just a nice-to-have; it is essential. I used ft he it was unimportant. It took me till I was about 30 years old to understand ist gravitas. Knowing your family’s history helps with integrating the family wealth into one’s identity. Storytelling ft he key here. The family’s history ft he of who you are. And if the history is noted down, it becomes a treasure trove. There are so many lessons from our ancestors that we can utilise. Knowing the stories behind each actor also helps to put things into perspective and not to suffer from the looming shadows that they cast upon us.
Family Culture & Values
“Sub Umbra Alarum Tuarum Protege Nos.”
– The Pilati Family Slogan.
Not every family has a family slogan. We in the Pilati family do, however, have one. We do not impose a specific meaning to it. Maybe this used ft h the case, but it was lost ft he centuries. However, now everyone finds their own meaning in the slogan. “Under the shadow of thy wings protect us.” My personal interpretation ft he ft he a responsibility to stand up for others and take them under our protective wings.
This gets us further into culture and values. Family culture and values serve as a north star to each member. How do we as a family want ft h seen, and how do we see each other?
Negotiating
Heirs will be faced with negotiations at every corner. With wealth comes responsibility, reputation, and power. All three increase the stakes. Not only outside the family but also within negotiations are daily business. Depending on the size ft he family and the degree of dispersion of control, family members must constantly negotiate with one another. Business in general is all about negotiations with counterparties. If an heir cannot negotiate their position, they will inevitably become a passenger in their own legacy.
Photo by Cytonn Photography on Unsplash
Problem Solving & Decision Making
This is part of entrepreneurship; however, being entrepreneurial is not enough to learn this. With wealth and the responsibility comes a lot of problems. Wealth can mean a lot of freedom, but at the same time, it means constant problems. That is the paradox you face, and that requires knowing how to solve problems. Not only that it require being able to make decisions. Not just day-to-day decisions, but handling critical pivots. Some of your decisions change other people’s lives. Business partners, employees, stakeholders, and family depend on your judgment. It is ludicrous to send an heir into this without ever teaching this. There are great decision-making frameworks and problem-solving frameworks out there. Gut feeling needs to be developed, just like you have developed it. This can be intentional, and it should.
Specific Industry Knowledge
This depends on the kind of industries your family operates in. Your heirs don’t need to hold a degree in pharmacy if your business is pharma. However, a certain understanding and basic knowledge of the trade is paramount. You can send them on courses, or you can design your own program to teach them. Often, what you learn in a course is not the specific knowledge that is needed. I often see people giving their children a choice in what they learn. And rightly so, your next gen’s career is their own choosing. However, if they become owners, they have to learn the ropes. This needs to be mandatory. They can go off and do their own thing, as long as they also acquire industry knowledge.
Financial Literacy
Financial literacy is huge. Not just understanding how to invest and markets etc., but the psychology behind money. So many heirs come of age and have terrible money scripts. They throw money around, they don’t know how to keep an eye on expenses, nor do they understand what their allowance is for. Teach them the worth of money. Teach them how to invest properly. Teach them budgeting. What are stocks and bonds? What is venture capital? What is the difference between price and value? How is price determined? The list is long, but the goal is simple: You must understand the difference between spending power and staying in power.
“A wise person should have money in their head, but not in their heart” – Jonathan Swift.
Social Skills (networking, power dynamics, etiquette, etc.)
If there is one thing aristocracy gets right to this day, it is teaching social skills. I was tortured with this as a child. I hated it. The memory makes me shiver. Mostly because I struggle with social interaction. However, learning this was very important. If you don’t know how to move in a room, every event is terrible. If you don’t know how to make polite conversation, you are isolated. Being able to get your point across to people in a direct yet polite manner is crucial. Finding a way for you to network can be hard, yet it is rewarding in the end. Understanding power dynamics can be the difference between success and failure. To learn etiquette, you won’t have to sit and eat soup with a book under each arm and on your head, like I had to do. Anyone who knows me can imagine how successful this was. To this day, I laugh at my mother and me being splattered in soup, till she gave up.
Health
In wealthy families, there often is an obsession with money and the skills needed to make it or preserve it. Being healthy is the most important thing. You only have one body and one mind. If that gets broken, no money in the world can fix it. Or at least it will be very painful, expensive, and arduous to do so. I know what I am speaking about. Overexploitation isn’t cool in nature, and neither is it for your body. Family members should understand the value of physical movement, of resting properly, sleeping enough, having a good time with friends, and working on their mental capacity & health. The basics here are dead cheap and simple. Take a look at yourself and ask yourself if your lifestyle is good for you. How do you feel when you get up and when you go to bed? Could you do a better job? And how are your heirs behaving? To have an antifragile family, your family members need to be antifragile through and through.
What is Next?
In the next article, we are going to look into practical methods that you can employ in your family academy. Methods that were used on me and that are being used by other families. These real-world examples will spark thoughts for your own.
Stay tuned, and in the meantime, please share and subscribe to my publication!
