Wednesday, August 29, 2012

My Book Review: “Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values” by Roy Williams and Vic Preisser

Regardless if you have $1 to your name or if your last name is Kennedy, “Preparing Heirs” is a magnificent must read for anyone that has a family or plans to have a family. The book itself delves into two main categories.

The first is establishing the statistical and in your face fact that 70% of family wealth transfers from one generation to the next are unsuccessful. A successful wealth transfer is defined as, “When the heirs receive and manage assets in a manner to foster their development and lifetime goals.” So you can use your imagination as to what an unsuccessful wealth transfer would look like. Another statistic that I found startling was that on average family wealth does not extend beyond 3 generations. So piecing this together with Thomas Stanley’s timeless classic “The Millionaire Next Door,” which states that 80% of millionaires are self-made first generation wealthy gave me an interesting insight. The insight being that the first generation works their tail off to build wealth while the second and third generations live off this wealth, and possibly at best preserve the wealth, but never successfully build their own.

The second main category of this book I found to be universally appealing across all families. This explored why 70% of wealth transfers fail and what can be done to buck the trend. The book does an excellent job pointing to and exploring trust and communication issues within family dynamics as the major catalysts for successful and unsuccessful wealth transfers.

And to a greater degree the book focuses on what it takes to create a family filled with respect and understanding while avoiding enabling. The whole thing from front to back cover got me thinking about the household I am creating. I was lead to ask whether the household that my wife and I are creating and plan to make with our children will facilitate our next of kin to foster their development and reach their lifetime goals on their own. “Preparing Heirs” really made me re-evaluate our family’s wealth transfer plan, which you can look forward to in a future post.  

Overall this book offered a ton of tangible and real life practices and suggestions that can immediately be implemented in the day to day life. It does a great job of laying out information on an easy to reach shelf and I was impressed with how William and Preisser translated their observations and recommendations from their professional practice without coming across as overly snooty.

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