Review of: Family Fortunes
Family fortunes: How to Build Family Wealth and Hold on to It for 100 Years
by Bill and Will Bonner copyright 2012, published by John Wiley and Sons Inc, Hoboken, New Jersey
Summary:
The Bonner family is a young (first generation wealth maker with grown second generation and one third generation baby) who made their money in the publishing business.
The wealth creator (Bill Bonner) and his spouse decided that they would use hard and soft structures to set their hard earned wealth to work for the whole family instead of using it up themselves or passing it along to their children. They define hard structures as wills, trusts, tax strategies and estate plans; and soft structures as family council, family mission and constitution, family bank, investment and philanthropic committees.
Family wealth, they say, is different than personal wealth.
“It’s no one’s asset, yet it belongs to all the family. It does no one’s work, yet it is at the service of the whole bunch. It increases no one’s standard of living, yet it should increase the quality of life for them all.”
Family wealth should be held in a perpetual trust, protected from taxation, family members who would make it disappear, investment fees and other antagonist who would suck it dry.
The Bonners lay out their views on why families are better at helping family members than the governments are; the importance of family – its care, education, experience and human capital – in keeping wealth once obtained; how to make a fortune; how to invest to keep the fortune and the necessity of having a family stronghold to go to in case of societal collapse.
The authors seem to be following the concepts and ideas laid out by James E. Hughes in Family Wealth–Keeping It in the Family as well as Mark Haynes Daniell in his books: Strategy for the Wealthy Family: Seven Principles to Assure Riches to Riches Across Generations
There are some great examples of families gone wrong as well as some detailed ideas on how to get and hold long term family wealth. It is a very readable book, and the authors don’t hesitate to express opinions contrary to ones popular today.
Read this book to understand and address:
- Why to set up your money as a family wide resource (a ‘Family Fortune’).
- Roles and structures needed to keep the ball rolling past the second generation.
- Common pitfalls in achieving successful wealth transfer across generations.
- The importance and components of family culture in retaining generational wealth.
What I liked:
The book is liberally sprinkled with real life examples, from his own family as well as historical and current families of wealth. The authors get down to the nitty gritty with suggestions on how to accomplish the goal of setting up wealth as a family wide resource and then managing it for a long time.
What I wished for:
I wish that in certain chapters, the authors had shown less bias about their own strongly held opinions on the role of women, and perhaps trimmed some of their supporting examples.
Favorite quotes:
“Well, once you’ve made your money, you might think the hard part is over. You might think you don’t need to take chances or work so hard. All you have to do is put your money in ‘safe’ investments and kick back, right?” “Wrong” p3
“It’s no one’s asset, yet it belongs to all the family. It does no one’s work, yet it is at the service of the whole bunch. It increases no one’s standard of living, yet it should increase the quality of life for them all.” p31
“Successful families are those that develop their own family culture: a set of beliefs and a sense of mission, as well as a common narrative about who they are, where they came from and what they are doing”. P 55
“Family properties are the most familiar and often-used assets in the family portfolio. This also creates an opportunity to draw family members into the family enterprise by asking them to manage family property . Properties also hold emotional value for family members. Memories are tied to family property “ p. 62
“They [the Rothschilds] answered the question of what it means to be a Rothschild, and they continued to answer that question through the generations as the answer changed. They maintained a firm identity and successfully passed along the ability to generate new wealth in the family business.”
“Success is usually the product of compound effort over time” p 146
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