Aligning Impact and Intent | AWM Insights #127
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Episode Summary
Money is just a tool to drive impact. What that impact looks like is different to every individual and family.
The anxiety of preparing the next generation is universal across wealthy families. Building the mindset to raise kids well and not spoiling them while giving them the foundation to live productive lives is the cornerstone of generational success.
How do you measure success when you’re giving? Are your money and time making the impact you strive for? Is the impact aligned with your intent? Should you start a foundation or use a Donor Advised Fund as your tool?
In today’s episode, Brandon and Justin address these questions and discuss how to approach preparing the next generation to establish your family’s legacy.
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Episode Highlights
(0:57) As a family office, where can we add the most value to our client’s lives?
(1:17) Building the mindset to raise kids well and not spoiling them while giving them the foundation to live productive lives is the cornerstone of generational success.
(2:09) How do you properly prepare for charitable intent?
(2:37) If you want to make the most amount of impact, you should aim to do it best-in-class. Doing it with a strategy can increase the benefits of giving.
(2:47) Does it make sense to have a foundation? Do you have a Donor Advised Fund yet?
(3:12) One good way to measure impact is that for every dollar given, how much makes it to the cause at the end?
(3:30) If you can’t accomplish everything you want with a Donor Advised Fund, then you should evaluate the foundation route. Foundations have a high burden of ongoing costs.
(4:38) You don’t setup a foundation so you can put your entire family on the payroll and deplete what is left for charity. That is not impact and taking ownership of your wealth.
(5:18) The key to focus on is intent. How do you make it part of your legacy?
(5:55) If you are super innovative and really trying to do something new then a foundation or nonprofit may be the best tool.
(6:03) If you are trying to give to the many already established well-run charities, it’s tough to beat the advantages of the Donor Advised Fund.
(6:38) Many billionaires want to offload wealth from their children. Warren Buffett, Bill Gates are the ones that are doing this and they are taking the wrong approach.
(7:07) You have the ability to train, form, and shape for twenty years to handle wealth. They can carry on your legacy into the future.
(7:37) You should bring the competitive drive to ask what is success and how can we measure the impact of giving.
(8:55) The conversation needs to go a layer deeper when it comes to legacy and family governance. Intent can be clearly established and built up over a lifetime.
(9:40) It’s never too late to start. Adult children can be brought in and the groundwork can begin on family legacy.
(10:10) It’s never too late to start. Simply starting with save, give, spend boxes and the small conversations that stem from such a simple exercise will pay off in the future. Who is the money going to and why? Intent can start early.
(10:54) Discipline, determination, and hard work are values all athletes possess that you want to pass on to your children.
(11:11) Shirtsleeves to shirtsleeves or rags to rags is the common problem that money doesn’t transfer over generations. It is because of the lack of preparation over multiple generations.
(12:15) Money is a tool to drive impact. What that impact is different to every family and to every single person within that family.
(13:05) Our mission is to have a multigenerational business serving multigenerational families.
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+ Read the Transcript
Brandon Averill (00:03): All right, Justin, we're back and we're going to continue down this series here. This is where the fun starts, in my opinion. We've been talking-
Justin Dyer (00:11): I would agree.
Brandon Averill (00:12): Yeah, we've been talking a lot of tactics here. Should you need an advisory team if you're in that ultra high net worth segment, let's say $30 million and above. You've made the money, you know probably something about business, et cetera. Do you still need the advice? The resounding answer on our side is obviously yes. I think hopefully over this series, we've discussed some of the tools and tactics that would help you to be even more successful and the benefits of having a team on your side. But I would argue today's topic is, by far and away, probably the place we can add the most value to our client's lives. And it's really thinking about the purpose of money and shifting, and really understanding that money is a tool. I think we live in such an individualistic society, now. It's such a consumption-minded society.
(01:04): And then the natural tendency is, "Hey, I've accumulated all this money. What can it buy me? What can I do with it?" But everybody actually has still the same anxiety about, "We want to raise our kids well. We don't want them to feel spoiled. We want them to have responsible lives," et cetera, so how do you balance these things? So that's today's topic. We're really going to dig into what do you do ultimately with money as a tool? What are some of the options available to you? We'll get into the charitable side, if you want really benefit others and give that money away. We'll talk about just the estate planning for a legacy in general. And then lastly, how do you actually prepare people? How do you prepare the next generation to tackle some of these challenges? So let's jump in there, Justin. I'd love for you to hit on some of that charitable side, that charitable intent. If you have that, if that's something you're passionate about, maybe outline some options for us. How do we plan through those things?
Justin Dyer (02:08): Sure. So I think the overarching question or challenge with this whole topic is one of being best in class and what that is to each and every individual is different. Their individual impact, how they want the legacy they want to leave, is different depending on who you are. That could be your family. That could be charitable. I'll touch on the charitable side briefly here. But what we always want to bring it back to is how do you have the most impact? And so if it is a charitable goal that you have within your legacy, or your definition of impact, doesn't make sense to have a foundation, so that's a very common tool that people go to.
(02:52): Do you want to set up your own 501c3, your own charitable organization? Or do you go and simply use something called a donor-advised fund? It is a phenomenal tool and incredibly efficient, easy to administer. Very, very, very impactful. In my mind, I'm thinking about impact there as for every dollar that you've dedicated to some sort of charitable intent, how much then gets passed through to whatever cause that you're focused on, and a donor-advised fund is typically the place to start. Okay, let's look at this. Let's make sure all of what you want to accomplish can be done through a donor-advised fund. And if not, then let's go down the ladder, so to speak, where maybe it does make sense to have your own personal foundation where there's a little bit more flexibility involved or customization, right?
(03:47): Now, the wrinkle or complication there is there's a ton of administration. There's minimums in which you have to gift, so there's trade offs to all of this. And it goes back to having that frank, honest conversation with yourself, your family, as to what really is important and what your definition of impact is. Kind of, Brandon, what you were alluding to, I think often what happens with the ultra high net worth, the ultra wealthy. There's almost still this game to play, or there's this very strong ego involved. And again, there's this big competitive drive that typically exists.
(04:22): What you can often see is people go to set up a foundation and it's an ego play. They get their own foundation, or they do it to shelter their assets and pass it on more efficiently to the next generation, as opposed to purely doing it for charitable intent. If those two things go hand in hand, there's something to that, but you don't set up a foundation just so you can put your entire family on the payroll and then deplete what is left for charity. That is not impact. That is not best in class. That is not really taking ownership and owning your wealth, as we really say and what we truly believe in. So this overall concept really does take some self-awareness, self-reflection, and true ownership amongst all of these things that you hit on, but obviously with the charitable piece, specifically.
Brandon Averill (05:11): And I think that's a great point because, again, whatever tool you're going to use, whether it's the private foundation, the 501c3, donor-advised fund, there are some others. But the real impact comes right on intent. What is the intent of this? And if we're starting to think about legacy, if you've accumulated enough and you're really able to have this robust charitable strategy, how do you potentially make that a part of your legacy? So what do you want this charitable program to say about you? And we would argue you could probably accomplish that, whatever it is for you, you could accomplish this with any of the three tools. It's really dependent upon what the uniqueness is you're trying to accomplish.
Justin Dyer (05:59): Right.
Brandon Averill (05:59): So if you're trying to really do something truly innovative, then yeah, maybe a foundation or a 501c3 makes a lot of sense. If you're really just super passionate about supporting those that have come before you in some of these charitable ventures, the donor-advised fund's almost impossible to argue against. So really thinking through, I think the more softer side of these things, "What's our intent? What's our plan? What's our legacy? What are we trying to really get into?" I think that's something that's really interesting to think about. You hear this at conferences. You hear this with clients. You hear this in society. "I only want to leave so much money to my children. I don't want to kind of taint them with the responsibility of inheriting all of this money."
(06:49): I mean, it was Warren Buffet's approach, Bill Gates' approach. There's lots of well-known ... We would argue that that's actually the wrong way to look at it. We'd actually challenge you to flip your mind a bit because when you're doing that, if your only intent is just to offload this from your children, you're putting that on somebody else's kids. These are people, so they have parents, so they're kids. So all you're doing is diverting it from your children, when you actually have the ability to train your children for, call it, 20 years to handle this wealth. I mean, in what other world do you get 20 years to form and shape the people that are going to actually take your legacy and help live it on. And we kind of say that tongue-in-cheek because let me tell you, this is the most difficult work you probably ever going to do.
Justin Dyer (07:37): For sure.
Brandon Averill (07:38): But you have the opportunity to do it, which we get really excited about, right?
Justin Dyer (07:43): We definitely get excited about it, and it goes back to this whole idea of best-in-class. Best in class should involve establishing your intent, and best-in-class is high performance as well, right? Going back to what I said earlier about competitive people, you should take that competitive drive and bring it into this overall, overarching conversation to drive all this, and to really take a step back and say, "What is best in class? What is the high-performing avenue or high-performing outcome for this particular conversation," or whatever the topic may be? It's exactly what you just said. I think the easy way out, if you will, is just, "Oh, well they should only get X amount of dollars, right?
Brandon Averill (08:29): Right.
Justin Dyer (08:30): The high-performing answer is exactly what you just said. No, let's attack this head on, or let's communicate openly and go through the process, which is not an easy process at all. But it's a process, and it's a process that's rewarding and it's challenging, and it will drive impact at the end of the day. So hopefully, there's some sort of conclusion within that statement, where there's more to kind of the common practice within this whole, overarching, family governance, legacy type conversation that it needs to go a layer deeper, or a level deeper, if you will. Peel the onion and have those conversations, and don't just say, "Okay yeah, we're going to have one conversation each and every year. Here's our family vision values and mission statement," et cetera. It's way more than that. It's impactful conversations and sitting down with intent ahead of time to really meaningfully set the foundation, set the groundwork for the next generation we're talking about here. But this can be applied to so many different other avenues and people.
Brandon Averill (09:42): Yeah. No, definitely, and I think this is such a big, meaty topic. And like you said, visiting it once a year, probably not sufficient. But also, if you're sitting there going, 'Well shoot, my kids are in junior high. They're in high school," it's never too late to start. Those are very formative years. You can still really have an impact here. We deal with some families that are later in life and they really are passing well to the next generation and their adult children. Again, not too late to start. It's just really reframing and making this a priority to sit down and have these conversations. And then on the flip side, we have very young children. It's not too early to start.
Justin Dyer (10:28): Right.
Brandon Averill (10:28): Introduce key concepts. For our clients, and even for our employees ... My daughter's birthday was yesterday, she turned four and the company sent her these "Save, Give, and Spend" boxes. Giving's a big thing in our family, and so putting intent around that. When you put the money in, where it's going, why it's going there, small conversations. She's only four. She's not going to grasp all of it but, ultimately, it is a building block to continue to instill," How do we value money? How do we build what wealth we have?"
(11:08): And we talk a lot ... Even athletes, right? You've demonstrated an incredible discipline and determination and hard work. Those are the values you want to pass on to your children, and that's going to benefit you, certainly, legacy-wise with money and without money, but that's going to end ... You're going to hear these terms, shirtsleeves to shirtsleeves, rags to rags, and three generations. It is sad what ultimately happens to wealth and why it doesn't transfer. What we know from the data and the research is this is the whole reason it doesn't transfer. So if you think you want to have a family that lasts generation to generation, it absolutely can. It just takes some work, and it takes some work in this area.
Justin Dyer (11:51): Yeah, most definitely. And it's not to say that the wealth has to last generations to generations. Maybe your goal is it is all given away, but it's all given away collectively as a family and the values that are important to you are established within that conversation or within that intent. I think that's an important piece to highlight, as well. Or maybe it is setting up a foundation and your family's super involved, or it's a donor-advised fund and your family's super involved, and it still carries out through multiple generations, but it's not necessarily directly owned by second generation, third generation, whatever the case may be. But the values are driving the overall impact of the money, right? Money is a tool, in our opinion, to drive impact. What is that impact that is unique to each and every individual and family that we work with. It's a really powerful framework and service that we get to work on and offer.
Brandon Averill (12:50): Yeah, and I love that you kind of brought that up here at the end. It is individualized to everybody. There is no right way to go about it. The only right way is to be prepared and go through the work. Everybody has different values. Everybody has a different mission. Everybody wants something different to come out of what they've built, and so it's just going through that process. We'd love to go through that process with you, by the way. If you're listening to this, you're not a client, by all means, reach out to us. These are conversations we love to have because, ultimately, that's our mission. Our mission is to have a multi-generational business serving multi-generational families, so this is a huge part of that and we love doing that and having that conversation. So we'll close out for the day, but before we go, again, shoot us a text 602-704-5574. We'd love to hear from you. We'd love to have this discussion with you. And until next time, own your wealth, make an impact, and always be a pro.