Educating the Next Generation: How to Ensure Successful Heirs
Photo by Karen Fedida
Preparing your children for life is an essential task for parents to complete. Many fret about this and worry they are not appropriately preparing their children. But what is appropriate?
Does it matter if the family is wealthy or not? Does it matter what the children want? Does it matter what the parents or grandparents want? What is within the parent’s responsibility and what is the school system’s responsibility? These are just a few crucial questions to ask yourself and answer before embarking on this task.
Preparing the next generation of family members is the best investment a family can make if they want their legacy to continue. Family continuity and wealth preservation strategies, that lack a solid education agenda will most likely fail to deliver. The next generation is in a prime position to destroy what their parents built, if they lack interest and the right education. Many families try to structure this away through trusts and whatnot. However, teaching your family members to become responsible wealth owners is the most effective way. As we will explore in this article, parents often have honourable intentions behind their actions and decisions, however, they paradoxically lead to exactly what they wanted to mitigate through them.
What Is the Goal?
Before getting into the details of how to best educate your upcoming generations it is crucial to define the goal of an educational program. This goal may differ slightly from family to family, but by and large, they are the same.
From the perspective of a parent, the goal is to equip your children as well as possible to forge their path in life. To give them the tools and help them build the character it takes to navigate our increasingly complex world. This should be the purest and most genuine aim for a parent.
From the perspective of a wealth owner, the goal is to equip family members with the knowledge and skillsets to be responsible wealth owners; preserving and developing the family legacy, growing the family worth and behaving appropriately. You will even want the future generations to learn how to leverage their wealth and power to do good in the world.
These two goals may seem to contradict each other. However, two goals in conflict can produce amazing outcomes if combined well. One comes from a place of love for your child, while the other comes out of a fear of losing the family legacy. In general, fear is not a great motivator and can lead to atrocious results. Reframing the goals of family legacy preservation to a goal of family legacy evolution and development is essential. This is a much more positive way of looking at it. Also, depending on the stage your business family is in, it can be important to realise that future generations need not be part of the operational wealth management or business management. At the same time, it should be possible for them to be. Giving the upcoming generations a choice in this matter is of utmost importance.
What does not lead to good results in the goal setting for education? An often well-meant but terrible goal is to protect the children from the family wealth or family legacy. This can have catastrophic results on many levels. A person who does not learn how to handle wealth and one day has access to it is a thunderstorm waiting to happen. It will overwhelm them, scare them, make them targets, and have the opposite effect of the intention. It is paramount to teach family members as early as possible and in age-appropriate ways how to handle wealth; the upsides of wealth and the downsides of wealth. The earlier they experience them and learn how to handle them the better for their development. Another goal that often leads to bad results is to designate family members from their day of birth as successors or already have positions within the family business in mind for them. Before a person has had a chance to develop you cannot make these kinds of decisions. It is unfair to put this pressure on a young child.
What kind of person do we ideally want to bring up? Someone who is at peace with who they are. Someone who is emotionally stable and well-developed. Someone who knows how to manage themselves, their health, their environment and their relationships. A self-confident yet humble person. A person who has enough understanding of the family assets to be a responsible owner. Someone who has learnt to take calculated risks. Someone who can gauge people well and knows how to ask the right kind of questions. Someone who is curious and enjoys life.
Ask yourself if you and your family are offering the right environment to create the kind of person described above. If you are, I congratulate you. If not, then we will look at how to get there.
Areas of Education
Photo by Gautam Arora
What are the areas that you should educate your rising generation in? Is a school education sufficient? With the above goals in mind, we can already answer that a standard school education is insufficient to reach the goals defined. While a school education teaches your youngsters essential skills, it will not teach them everything that will make them successful and content adults. Discussing the school system and the different options of schools is a whole topic on its own. So, let us stay focused on the things your family can take into their hand and what you can do to support your upcoming generations. All the mentioned areas are important puzzle pieces and there is no order to them.
Emotional Education
Most of our time and energy we spend grappling with our emotions; how we feel, and what we think and worry about. Learning how to handle our emotions and the emotions of others is an essential part of anyone’s education. Your kids will most likely not learn this at school. They will not learn it in an internship either. The key ingredient to teaching this lies with their caregivers, the parents, grandparents and nannies. When do you start teaching them this? It starts at day zero. The moment they are born children start to observe how their family in particular their parents behave. How do they speak with each other? How do they handle their emotions? How is conflict handled? Are people’s boundaries respected? There are a few essential ingredients in these early years to make sure you bring up emotionally stable children. The first is that I hate to break it to you, you need to work on yourself. Your children will mimic you and become smaller versions of you when it comes to handling themselves. You need to lead by example. Secondly, the time you spend with your children becomes crucial. It is fine to engage nannies and share the care work between mother and father. Although the first year of a child’s life is enormously mother-focused, so be careful with sharing the responsibilities in year one.
What kind of things should parents be particularly paying attention to?
How is conflict handled in the family? Learn to have productive conflict.
How do you deal with emotions? Children need to learn to feel their emotions and deal with them in a healthy way. And no, being strong and eating them in is not a healthy way. If they cry or throw a tantrum let them go through the process. Don’t tell them to stop or try to restrain them. It is a learning process for them.
Teach them how to handle the emotions of others healthily. Just because the other person is angry, does not mean you need to get angry too.
Let them try out things and make mistakes. This is important for them to learn to handle mistakes. Some families discuss daily mistakes in a productive manner.
Teach them to be grateful for the things they have. You can do a gratefulness journal together.
Physical Education
Movement and exercise are crucial components in a human’s development. Especially as our lifestyle has become increasingly sedentary. Does this mean you want to train your kids like professional athletes? No, it does not. Should you force them to do certain sports? No, you should not. Let them try out sports and have fun. Of course, certain sports have dangers, and it is the parent’s responsibility to decide. Think about American football or rugby. The concussion risks are high and can have detrimental effects on a child’s and adolescent development. Each choice of sport has its ups and downsides. Do sport together with them and make it a family activity. I remember enjoying sledging and skiing with my family. My dad would also play football (soccer) with me regularly. Make movement a part of your daily life. Walk when you can. If you have a dog, let the rising gen do the walking of the dog.
Physical movement and sports have a lot going for them in terms of development for young adults. A healthy body makes for a healthy mind. Studies have shown a direct proportionality between muscle mass and cognitive performance. Sport is a great way to relax and balance your nervous system, relaxing your Vagus nerve. Team sports can teach people teamwork, camaraderie and other social skills. Trying a competitive sport can instil discipline, resilience and perseverance in young people. Certain sports can improve cognitive performance. People like to argue if chess or computer games should be defined as sports. They do have their perks, nevertheless. Improvements in reaction speed, information processing and tactical and strategic thinking.
The wider the range of sports you let your kids get in contact with, the more they can learn from them while keeping them healthy.
Health Education
The most important resource we have at our disposal is ourselves. Maintaining and enhancing ourselves is thus one of the best investments we can make. The sad part is that we are generally not taught early enough what a healthy lifestyle is and what the consequences of a bad one are. I started to get into this when at the age of 24 I was facing my first health issues. Thinking back, I would have preferred an earlier education on health topics. Diet is a big one, but also addictive substances, like alcohol etc. The problem you will see with your next gens is, that they have more money, which means they can do unhealthy things in much higher excess. The money, connections and power of the family can help them to cover up missuses, while not facing the consequences until it’s almost too late. Getting ahead of this early is important. You can make them do voluntary work at addictive centres or clinics, to see the damage this can do.
Walking through life in a health-conscious fashion need not be self-limiting. I like to see it in a Pareto kind of style. If you can make sure you stick to a healthy lifestyle 90% of the time, you already come a long way. The odd escapade here and there will not do the damage that a constant unhealthy lifestyle will bring. The key ingredients of health are sleep, diet, movement and social connections. These four areas cover the bases and make for a very strong foundation.
Teach your children about food. What to eat and what not to eat. Show them by having healthy dinners and they by no means have to be boring. Prioritize sleep in your family. Sleep is often overlooked, especially in adolescence, where it is of great importance to your rising gens development.
Intellectual education
This is a part where our school system does a lot of the heavy lifting. However, leaving the intellectual education of your next gen up to the school system is not enough. We know from studies that the success of your child at school and school sports depends highly on their birthday. The earlier in the school-year cycle you are born the more developed you are in comparison to your peers and the better you perform. This is equally true on the opposite side of the spectrum, the later you are born in the year cycle the less developed you are and the harder it is. It is important to support your rising generation here. They might be bored at school, or they struggle. If they struggle keep in mind, that this can be due to their birthday, and it does not make them less smart. If your kid is doing well, it does not make them a genius either. Be wary of treating them as such, as this can cause some uncomfortable wake-up calls once they go to university. Similar dynamics unfold at university. The top students at a mediocre university outperform the bottom students at an elite university. Having success breeds more success and increases confidence and motivation. A person constantly facing adversities and failure is less likely to have motivation and self-confidence. We tout adversity and failure as a great thing. However, it should be a minority compared to the success our upcoming generation faces. The ratio is incredibly important.
What our school system also lacks is flexibility. In many countries, the system has not changed much in the last 100 years. But oh boy the world has changed greatly. Many skills that will be essential in the future are not taught at school. Many of these are way more important than most of the curriculum that is being taught. Try to look ahead and see what your children should learn that they will need in the future. I remember that in my school the class for learning how to type on a keyboard was not required to be attended. Later when coursework became a thing, the kids who did not attend these classes struggled to perform well. Not because they were less knowledgeable, but because they were just much slower at getting their ideas and knowledge onto paper. Things get even more important should members of your rising generation be neurodivergent. Autism and ADHD are two that fall into this bracket. This is often seen as a disadvantage. However, both autism and ADHD have some advantages, that you can nurture in the right setting. School most likely is not the place to do so, so it is up to the family to help younger members here.
Practical Education
How to do your taxes? How do you pick the right insurance? How do you do a due diligence? How do you sell something? How to negotiate is another big one. These and many more are skills I like to put under practical education. Knowledge and skills you need in life but will not learn at school. Business is very heavy on these topics. However, most of the time an MBA from the most prestigious school will not prepare you for what you will face in the business world. If you think about it: how much would it have helped you, if you had learnt these practical skills while still young? If you are one of the few who was taught, imagine not having been taught.
In my case, there are a lot of practical skills that I was taught and many more I was not but wish I had been taught. I learnt public speaking very early. I had to learn about finances, interest rates and stock investing very early. I was taught knowledge about forestry (which was our core business). These are all skills that helped me a lot later.
If you are from a wealthy family, it is paramount to teach your rising generation how to invest, how to do due diligence on a person, how to have situational awareness or even how to defend yourself. People might be out to get their money or try to befriend them for gain. Let them learn what to look out for in a person’s behaviour. Teach them to ask the right questions of themselves and others. And to be trusting, while not too trusting, without being paranoid.
How to manage yourself in a stressful setting is also crucial to teach the rising generation. You can put them in stressful situations within a secure setting. Let them make some initial investments. Let them start their own little business early. Teach them to be entrepreneurial. With this, they can develop decision-making skills. This is something that any family member should learn early on. How do I make decisions? When should I trust my gut feeling? What even is my gut feeling? Where do I get the data from? How much can I trust the data? And so on.
Family-specific Education
Family history can be a powerful tool to create a feeling of belonging in your upcoming generations. Not only are there parts in the story that they can learn from, but it is also great to learn your family’s origins. This is something that in my opinion should be done early. You can teach a three-year-old about family lore, as long as it is done in a child-coherent manner. Even if your family has already sold their original business or estate, you can still take them there and show them. Explain to them the story behind the paintings in your family house. The meaning of the family name and so on. Without this storytelling, they will not understand the magic behind a family history. It is important to tell them about the good times and the bad times. Help to understand what family they are from. If you do not do this, others will tell them what their family is about. And believe me, this is not going to be good.
It can be quite a huge burden on the rising generation if they do not have a good understanding of their family legacy. This is not just the family history and their assets, but also the vast network the family has and an explanation as to why the family has all of this. Understanding the size of the family and who are relatives and meeting them regularly is of great importance for the development of the upcoming generation. If you do not educate them on these matters, it is more likely that they turn away from the family. They may feel shame for the wealth or develop a hate for the family’s legacy.
Spiritual Education
A spiritual education is another essential building block. Some families educate their rising gen religiously, which would fall under this block. Religion offers a lot if practised well but can also be harmful should it be taught fanatically. The ground basis of most religions is pure and very philosophical. However, once politics gets involved, they can turn extreme and blinding. Spirituality can encompass so much more than just religion. Philosophy and ethics are subjects that can have a great impact on the next generation. Books such as “A Man’s Search for Meaning” by Viktor Frankl, “The Power of Now” by Eckhart Tolle or “Daily Meditations” by Marcus Aurelius should be in every family’s curriculum. These impactful and timeless pieces greatly enhance a person’s way of living and decision-making. When we speak about spiritual exercises meditation, particularly combined with mantras or prayers, is important to mention. Meditation while rooted in spirituality is an amazing tool to calm the nervous system and create clarity in one’s mind.
Culture
Every family has some sort, or at least should have a cultural code they adhere to. Often described as the family’s values or other codes of behaviour. A family culture is structured and can be taught and not just shown. This is where a family constitution plays a role, albeit not if it is sitting on a shelf collecting dust. It must be lived by the family and constantly innovated as time passes on. The culture of a family is an important type of capital. With the right value set and code of conduct a family can bounce back from financial losses easier. The internal culture also plays an important role for the reputation and external social capital of a family. When the next generation is taught the specific family culture, it is important to be able to explain the reasoning behind certain cultural rules. This is often forgotten specifically when a rule is already a few generations old. By taking the time to understand these rules yourself you are equipped to teach the next generation. If you own a family business or family office, it is important to teach the next generation the internal culture of these businesses. They need to understand the social fabric of their employees. Not understanding the culture of your assets can essentially mean that you make decisions that can end up destroying value. Internships from an early stage are an easy and great tool for this.
Networking and Serendipity
How do you network properly? And how do you leverage your character in this? What is the goal of networking? There are many different forms of networking. I for example hate networking with strangers on big events. This is not my thing and probably never will be. However, this was the sort of networking I was being predominantly taught. I hated it. I am more the guy for smaller dinners. Attending events with a few people I already know to introduce me to others. Or one on one coffee dates. Tim Ferris has a specific approach to networking. He says that all you need is to connect with one person who is insanely well-connected and loves networking. They will take care of it for you and love doing so. Being open to networking is essential in the creation of serendipity. Teach your next generation what the right kind of networking for their persona is.
What Is the Right Environment for Educating the Rising Gen?
Education can be approached like building a habit. One of the key ingredients is the environment you put your rising generation in. The environment covers the how and where of education. Who do you want to be around your kids while they grow up and learn? And who is appropriate at which age group? When is the right time for which topic and how can you present each topic in an age-appropriate way? My dad educated me very early about the stock market. However, he started too early with too difficult topics. While after some time it did hit home, we could have made faster progress if we started in a more age-appropriate way. A ten-year-old is not so good at understanding chart analysis and macroeconomics. Moreover, parents, grandparents, aunts and uncles should never stop to strive to improve and lead by example. If you preach something but behave the other way, children and young adults notice and will not only copy it but will stop taking your words seriously.
The stress performance curve is a well-known part of training for pilots and athletes. It also applies to the rising generation. If you do not apply enough pressure you will end up creating trust babies. The rising gen needs a certain amount of pressure and responsibility to flourish, but too much is not good either. If you apply too much responsibility and pressure, you will only end up breaking them. Challenging them is important, however overwhelming them will not make them stronger. You will create an adult who will spend a lot of money either on therapy or more destructive things like drugs and alcohol.
Who Can and Should Take Care of Education?
Photo by Andrea Piacquadio
In general, there is no one-size-fits-all solution for who should take care of what. However, there are some general pointers that will be helpful. There is only a certain part of education schools can cater to. Predominately the education in the subjects needed for children to go to university. But as we discussed already there is so much more to preparing the next generation than this. For the sake of this article, we will focus more on the parts where the family itself and any family institutions, such as a family office come in. Of the things we outlined above, whatever is not covered by the school should be organised by the family.
Some wealthy families for example go with a tutoring model, such as from Tutors International. In a tutoring model, the children are not going to school, which means that the education of the children can be tailored to their specific needs. This of course gives a totally different kind of flexibility to a standard school model. It can be a great model should a family travel around the world. Not every family however will have the money or want to spend the money this would require.
Most will work with a mixed model, where the kids go to school and receive additional tutoring, join sports teams and extracurricular classes. The things that can be offered to your children also depend on the area your family lives in. If I take the area where I grew up, there was a rather limited offer of sports and music education. I could not learn whatever instrument I wished for. You may find yourself in similar situations. However, with digitalization, more possibilities are created than there used to be. Tutoring can be structured around online methods. E-sports and gaming offer another new avenue for educating your children. Gamification is one of the best methods to engage young people. Learning and improving do not have to be hard work.
Let us move to the part where the family and their institutions come in. Some things are best learnt from family members, such as the family history or the family culture and values. This is a task that is particularly adequate for the grandparents to take over. Not only do the grandkids respect them more than they respect their parents (sorry but it is the truth), but they can show the grandkids more leeway. Have you ever seen your kids glued to their grandparents when they tell them a story? And when you tried, they just were not interested? Similar roles can be taken by uncles and aunts. Spoiling your niece or nephew is not only great fun, but if done correctly, can teach kids things, they would not learn in school. Specific family knowledge, emotional education and practical know-how are best taught by the family. A lot of this is best taught by living it and the children observing it.
How can a family council come in here? A family council becomes particularly interesting when a family has become larger (often at G3 or G4). The council can create curricula for everyone in the family to learn. It can facilitate internships at family ventures or other businesses. It can plan and execute group sessions for the upcoming generations or group activities. It can set up shadow councils, shadow boards and shadow committees for younger generations to sit on and practice being in charge. Or it can set up a philanthropic trust where the next generation decides what to do with the philanthropic money. To encourage entrepreneurship in the next generation a family internal bank or VC fund can be set up, that invests solely in the projects of family members. The next generation has to prepare documents and apply for investments or grants from their own family to kick off their ventures. Not only will they be able to practice entrepreneurship and fundraising, but they will have access to these funds at a much earlier date than their peers and get to practice early.
