Webinar Transcript: “Common Mistakes Wealthy Families Make With Their Money (and Strategies to Avoid Them)”
Host/Speaker: Jonathan I. Shenkman, AIF®, President & CIO, ParkBridge Wealth Management (Contact: Jonathan@ParkBridgeWealth.com)
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Jonathan Shenkman: Good morning. I'm just gonna give a couple more seconds and let people log in, and then we'll get started.
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Jonathan Shenkman: Okay, good morning, and welcome to the Park Bridge Wealth Management, Winter Webinar Series. This program is entitled, Common Mistakes. Wealthy families make with their money and strategies to avoid them, as always. My name is Jonathan Shankman, and I'm the President, chief investment officer of Park Bridge. Wealth management. In that role I serve in a fiduciary capacity to help my clients achieve their financial objectives. The goal of my programs is to bring professionals together to help them better serve their clients. This is done by educating attendees
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Jonathan Shenkman: on the latest topics in wealth, planning, and by encouraging collaboration between a client's attorney, Cpa. And financial advisor, where appropriate my practice focus on working with high net worth families, businesses, and not-for-profits. I manage individual investment portfolios, trust accounts.
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Jonathan Shenkman: corporate retirement plans and endowments to help my clients achieve their financial goals. In addition to the 20 or so events I run every year. I also do a fair amount of writing on the topics of investing and financial planning. You could read my work in a variety periodicals, including Barron's Cnbc. Forbes, Kiplinger, the Wall Street Journal, and Trust and Estates Magazine to name just a few.
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Jonathan Shenkman: You can see all my work on my website at parkbridgewealth.com forward slash articles, or by following me on social media, Jonathan on money. Additionally, you could check out my weekly, podcast which is also called Jonathan on money. And you can listen to that on apple spotify, or wherever you get your podcasts.
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Jonathan Shenkman: Okay with that introduction. Let's now jump into the program. So this program is based on my nearly 2 decades of experience working with wealthy investors.
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Jonathan Shenkman: And it's quite possible that other advisors on this webinar today have had other experiences. These are just my own takeaways, which may be instructive when working with high net worth families. The points I make are gonna cover a variety of different areas, including investing tax estate, planning, risk, investor psychology, lifestyle and just general life perspective. So regardless of your background.
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Jonathan Shenkman: there should hopefully be something for everyone here. And, most importantly, my goal is always to leave attendees with at least 2 or 3 nuggets of knowledge to apply to their own life or practice. Okay, so let's jump into it.
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Jonathan Shenkman: So an individual's approach to managing their personal finances is shaped by a myriad of influences. These may include their upbringing community social circle and religious beliefs, a lifetime of experiences and the manifestation of all these influences impacts one's relationship with an attitude towards money, another often overlooked factor that impacts the way individuals handle their finances is their level of wealth.
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Jonathan Shenkman: Financial planning techniques necessarily differ, based on how much money one has.
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Jonathan Shenkman: Interestingly, the financial misconceptions held and the missteps made by individuals can also vary based on wealth levels, high net worth individuals. Money mistakes are typically the result of an overconfidence through years of success in their professional life, while a healthy dose of self-assurance is undoubtedly could help achieve initial financial success. It can also be a hindrance to effectively preserving and managing that wealth.
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Jonathan Shenkman: The ability to understand and avoid the pitfalls I'll mention shortly is crucial in ensuring high net worth. Investors achieve their financial, philanthropic and legacy objectives. Okay, the 1st mistake I'd like to highlight. And one I already alluded to
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Jonathan Shenkman: is achieving success in one area of life does not necessarily translate to success in personal finance, if you're financially successful, may seem like a foregone conclusion that you will also be proficient at managing your personal finances. Unfortunately, this couldn't be further from the truth. Building and running a successful company involves many skills, including industry, knowledge, understanding your market and perfecting your craft. However.
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Jonathan Shenkman: none of those areas of expertise automatically translate into success with one's personal finances. This is particularly clear when it comes to investing in the market. The daily gyrations of stocks can seem like a mystery to many outside the investment world. There are not always simple explanations for market swings, or why, over a short time period some industries, sectors, or companies thrive, while others remain stagnant.
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Jonathan Shenkman: Stock prices may be equally driven by investor emotions as they are by company fundamentals. For example, if the CEO of a particular company is a savvy marketer, their company's stock price may keep rising despite poor sales. This is counter to the way many businessmen and professionals view the world
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Jonathan Shenkman: accepting these realities may be demoralizing to many successful people who can't understand why markets are so irrational, however embracing the uncertainty and incorporating it into your planning, is imperative.
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Jonathan Shenkman: hiring someone to help you navigate the strange world of investing may save you a lot of time and stress and money over the long run. As a general rule, I've noticed that the single characteristic that's common to the wealthy people who succeed in business and also at managing their wealth, is the ability to acknowledge what they don't know.
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Jonathan Shenkman: Taking the time to evaluate one's limitations and then surround oneself with the right team of tax. Legal and financial professionals can help avoid many of the mistakes that I will mention throughout this program, and this approach will help position affluent investors to better preserve the wealth that they spent their lifetime creating.
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Jonathan Shenkman: The next mistake is that concentrated investments can make you rich, but may not keep you rich. Many high net worth individuals. Wealth is locked up in their business, a concentrated capital investment, and a simultaneous dedication of reinvesting cash flow back into the company is how many affluent folks accumulated their fortune. However, the approach that made them wealthy is not the optimal approach to keep them wealthy.
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Jonathan Shenkman: A high profile example of this is Patricia Kluge, the ex-wife of the late billionaire Media Mogul, John Kluge, while her ex-husband created his fortune with concentrated investments in media companies. Patricia invested most of her divorce settlement money into her own vineyard
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Jonathan Shenkman: when the housing market crashed. He lost everything and had to sell jewelry at auction just to make ends meet. Unfortunately, there's no shortage of similar stories of wealthy people who blew their fortune up on a few bad investments in order to maintain one affluence, one should focus on preservation of capital.
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Jonathan Shenkman: and that's accomplished through prudent diversification, a strategy that most people don't get excited about. It is admittedly quite boring and sometimes frustrating, since there will always be a underperforming asset within your portfolio and overall returns will lag at least some areas of the market.
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Jonathan Shenkman: That being said, this strategy also helps minimize the likelihood that your portfolio will implode in retirement. The name of the game is to live off the fruit of your labor, searching for the next hot investment idea to triple the value of your assets can and likely will lead to financial ruin.
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Jonathan Shenkman: The next one is having more control does not necessarily lead to better performance based on years of experience. I've noticed that my least successful clients are generally the ones that are always adjusting their strategy. This can be frequently modifying their allocation, tactically rebalancing, actively, trading, and more just leaving things alone is not in everyone's DNA, especially for investors who implemented a hands-on approach
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Jonathan Shenkman: in their professional life. Unfortunately constantly tweaking one's investment. Portfolio is almost always the wrong decision. A far better approach is to clearly define your financial goals. Outline the parameters for how you want your assets managed, and then let professionals handle the day-to-day management. This will help minimize the urge to tinker with your investments and action that may derail you from achieving your financial objectives.
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Jonathan Shenkman: A somewhat related point that comes up frequently when working with high net worth folks is the illusion of how control should lead to increased returns in private equity for those who are not familiar. Private equity is an alternative investment class that invests in or acquires private companies that are not listed on the Public Stock Exchange, and is one of the vehicles of choice for higher net worth families. Although
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Jonathan Shenkman: PE firms now for the past few years have been aggressively trying to push this asset class into everyone's 401 k. Anyway, there is this illusion in PE of having more control. In reality, private equity is just like public equity. The difference is, you borrow 2 thirds of the money. So it's a highly leveraged equity investment, and it's also illiquid. Both of these items make private equity more risky than investing in public security. So
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Jonathan Shenkman: also don't have you also don't have more control over the returns. Sure, the PE firm you're investing with may sit on the board and can shake things up, but just because they could shake things up doesn't mean they have more control over the return. The private equity firms, portfolio companies can all still have the same risks as publicly traded companies. These include operational issues, industry, competition, lack of financing
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Jonathan Shenkman: economic pressures and so forth. The same risks are all there, and the belief that one can control more npe and beef up their returns because of that perceived control is an illusion.
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Jonathan Shenkman: The next point is underestimating the required annual income to maintain your lifestyle. It always impresses me how quickly people can spend their money. This is true regardless of asset levels. While this may be a compliment to the marketing skills of our nation's retailers.
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Jonathan Shenkman: it's also an insight into human nature. People tend to spend the money that they have, especially if they're accustomed to maintaining a certain lifestyle in order to maintain one lifestyle after a major liquidity, event or in retirement. It's important to properly evaluate income needs and modify plans as necessary
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Jonathan Shenkman: during one's working years. There's always the potential of making more money to replenish one's spending. However, in retirement, the ability to earn more income increase decreases.
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Jonathan Shenkman: It's therefore imperative to define one's cash flow numbers from the onset of retirement. This cash flow analysis should serve as the cornerstone of one's financial plan to increase the probability of achieving financial objectives. Again, at all levels of wealth. You need to know the dollar amount that is prudent to spend.
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Jonathan Shenkman: even if you're a hedge fund manager making 50 million dollars a year. The upkeep of your 5 homes, 6 exotic cars, 4 kids in private school, family yacht, flying, private millions of dollars of philanthropic obligations, club memberships, and so forth, can very quickly add up.
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Jonathan Shenkman: No one is above the investment axiom, spend within your means.
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Jonathan Shenkman: The next one is not factoring in tax planning. It's surprising how many wealthy families completely neglect tax planning within their financial strategy. If you've been fortunate to have accumulated a large sum of assets, ensuring that you can pass that money to tax efficiently to your beneficiary should be a top consideration. There's really no reason for Uncle Sam to take more than necessary upon your passing.
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Jonathan Shenkman: That is why it's important to explore various estate planning techniques, including gifting, utilizing trust and proper structuring of assets with your advisors.
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Jonathan Shenkman: Additionally, many high net worth clients don't consider taxes when it comes to day-to-day investing. They seem to be more focused on hot investment ideas or gaining access to boutique alternative investment strategies that they can discuss with their friends on the golf course, while none of those strategies are guaranteed to live up to their potential one sure way to provide value for them is proper asset location.
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Jonathan Shenkman: asset location is the process of allocating tax inefficient investments to tax deferred accounts like Iras or 401 Ks. And tax efficient investments to taxable accounts.
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Jonathan Shenkman: Investors should carefully examine their investment vehicles. If a particular strategy involves a high level of trading generates non-qualified dividends or income payments. It may be taxed inefficient, and should be held in the appropriate account.
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Jonathan Shenkman: There are no free lunches in the markets, but proper tax planning is as close as you could get.
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Jonathan Shenkman: The next mistake is getting too caught up on taxes. Like most areas of life, there is a happy middle ground on tax planning, too. I've had many experiences with wealthy clients where every investment decision is driven solely by taxes. Remember when it comes to sensible investing. Don't let the tax tail wag the investment dog. As I mentioned in the previous point, wealthy families should take the proper steps to minimize their tax bill.
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Jonathan Shenkman: This is true of ongoing tax liability, like ordinary income and capital, gains tax as well as estate tax. However.
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Jonathan Shenkman: at the end of the day, if you make money. You will need to pay taxes. If you don't.
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Jonathan Shenkman: you're probably breaking the law or dancing very close to that line. This is a rule of life, and there's no getting around it. Don't let taxes paralyze you into not making sensible investment decisions, make a concerted effort on the tax front and then invest your funds so you could continue to grow your wealth to reach your other goals.
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Jonathan Shenkman: Next point is getting caught up in relative performance, which is so important. Relative performance is the measurement of one's investment performance against a suitable benchmark.
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Jonathan Shenkman: The problem is agreeing on what is suitable. Theoretically, the optimal comparison would be to a blend of indices that correspond to your portfolio's holdings. However, investors like to use a familiar standard index, such as the S. And p. 500. The issue is that if your portfolio is not exclusively made up of the largest Us companies and includes international equities, small companies, and fixed income.
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Jonathan Shenkman: then it really doesn't make for an apt comparison. There's also what I like to call the keeping up with the Joneses benchmark. If friends from your social circles mention their stellar investment returns.
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Jonathan Shenkman: it often leads to jealousy and frustration as to why your portfolio's performance doesn't measure up. Unfortunately, people often cherry pick information to create an appealing narrative to impress their friends. They boast about the returns of their big winners, and neglect to mention all their losers.
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Jonathan Shenkman: hearing about others success, whether accurate or inflated can cause emotional distress and make investors question their overall strategy. Frankly, the only performance metric that should matter is whether you're on track to achieve your personal financial goals.
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Jonathan Shenkman: seeing your investment performance
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Jonathan Shenkman: through that lens is much more relevant than the performance of an arbitrary index or the unverified claims of your friends.
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Jonathan Shenkman: And to this point Jason Zwei, who's a a personal finance writer for the Wall Street Journal. He once told a story of how he interviewed dozens of residents in Boca Raton, one of Florida's richest retirement communities. He had asked these folks mostly in their seventies
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Jonathan Shenkman: if they've beaten the market over the course of their investing lifetime. Some said Yes, some said no. Then one man said, and this is the key point. Who cares? All I know is my investments earned enough for me to end up in Boca. I can't imagine a better answer. After all, the whole point of investing is not to earn more money than average, or more than your friends, rather, it's to earn enough money to reach your own goals.
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Jonathan Shenkman: The next mistake is failure to teach our kids about money. Unfortunately, money doesn't come with an instruction manual. If it did, there'd be far fewer stories of families with generational levels of wealth who squander it all. One prominent example is the Vanderbilts, who are at one time the wealthiest family in America.
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Jonathan Shenkman: Their fortune was gone within a few generations, as the family spent all their money on expensive luxuries.
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Jonathan Shenkman: and I'm Gonna come back to the Vanderbilts a bit later. Ideally, money should empower future generations
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Jonathan Shenkman: to create, build and pursue their own goals. Achieving that result requires that children receive a solid fiscal education.
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Jonathan Shenkman: Parents can teach their children, starting from a young age through demonstration, and being cognizant of how they speak about their finance in front of their children. Kids are very perceptive observing the way these conversations are handled at home will serve as the foundation for how they handle money in the future. As children enter adulthood, the focus should shift.
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Jonathan Shenkman: and they should be actively included in discussions related to finances, investments, and philanthropy, imparting the values, knowledge, and expectations of how your children should handle money or their future inheritance is essential in cementing one's own legacy over time, they will form their own opinions and thoughts
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Jonathan Shenkman: about how to handle their wealth responsibly. And, by the way, it may be different than what you have done. That's also fine. As long as you did your part to impart the right values, they're going to have the tools to make the prudent and sensible financial decisions themselves.
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Jonathan Shenkman: The next point is understanding that invest the investment landscape has become democratized.
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Jonathan Shenkman: Wealthy people don't always like to hear this, but keep in mind that just because you have money doesn't give you access to better investments. Sadly, there's an entire industry. The one I work in whose goal it is is to convince you, otherwise they will pitch these, quote unquote better opportunities in a series of different ways, including marketing them as better diversifiers, offering more consistency, uncorrelated asset classes, ways to avoid taxes, and so forth.
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Jonathan Shenkman: I won't poo poo every single exotic investment out there, because in some situations they may make sense for a select group of people on some occasions. However, if your baseline assumption is that you have access to better investments because you're richer, you're wrong.
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Jonathan Shenkman: Always remember the key to successfully growing. Your wealth is in implementing a process. There's a tried and true process to build wealth. This is something that I've written about extensively in articles and share regularly on my podcast and webinars. So I won't go into too much detail here. But here's a brief overview and at a high level. A proper wealth building process involves the following one, spend less than you make
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Jonathan Shenkman: 2. Invest the difference prudently, using plain vanilla investments. 3 use tax advantage accounts when available. 4. Ignore the noise.
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Jonathan Shenkman: 5 is to stick with your strategy, and 6 is trust the process. It's that last point that separates the most successful investors from ordinary ones. It's also what separates the elite performers in any discipline
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Jonathan Shenkman: from everyone else. If you want to achieve the highest standard in any field, or a meaningful increase in your net worth. It's imperative to have a well-defined process, and the faith that it will lead you in the right direction. Oftentimes I speak with folks who believe that the way to build wealth is to test a few strategies and see what works this usually involves giving money to a college roommate to invest in a real estate project that likely won't work out
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Jonathan Shenkman: buying stocks on your own owning etfs and mutual funds through a financial advisor, keeping a large amount of money in Cds. Because that's what your broke brother-in-law said to do, and various other ideas you pick up on the golf course. This is not a process, this is a mess, and it won't lead to financial success.
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Jonathan Shenkman: Dabbling in a variety of different investments, while remaining uncommitted to any of them, is a path to mediocrity
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Jonathan Shenkman: at the end of the day. Believing in your plan, can keep you committed to it, and will allow you to grow your wealth while minimizing risks. You don't need exotic investments to achieve your goals. As Leonardo da Vinci once said, success lies in the relentless execution of the basics. If you stick to the basics that I just outlined, you'll be on solid financial footing.
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Jonathan Shenkman: The next point is not getting the goalpost to stop moving.
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Jonathan Shenkman: This is often referred to as lifestyle creep. One of the factors that drive successful people is setting lofty goals and working to achieve them. The problem is, the endless pursuit of bigger and bigger goals causes a lack of contentment and satisfaction with their lives always wanting more ultimately leaves folks with less from a lifestyle perspective. It will lead to spending more money to increase your lifestyle, to have nicer things and going on nicer trips which will lead to spending yourself into oblivion
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Jonathan Shenkman: financially, it will lead to reaching for higher returns, which will lead to taking on more risk that may blow up your nest egg.
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Jonathan Shenkman: The trick is to maintain your lifestyle and sense of purpose as you continue to achieve more financial success for some people, this comes naturally to them where they stay grounded and down to earth. Despite their vast wealth, however, for most of us it is a challenge
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Jonathan Shenkman: at the end of the program. I'm going to offer a possible solution to this predicament.
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Jonathan Shenkman: This brings to mind the following story shared by Vanguard founder, Jack Bogle. And I'm just going to read this short story. So just bear with me for one second at a party given by a billionaire on Shelter Island. The late Kurt Vonnegut informs his PAL, the author, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller, had earned from his wildly popular novel catch 22 over its whole history.
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Jonathan Shenkman: Heller responds. Yes, but I have something he will never have enough
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Jonathan Shenkman: gives you something to think about
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Jonathan Shenkman: the next point is not understanding the limitations and real impact of money.
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Jonathan Shenkman: So, as I've mentioned a few times throughout this presentation that I work with wealthy, the children of the wealthy, and the soon to be wealthy. What I've noticed is that many people think that if they can just make enough money their problems will go away, and there will be harmony in their household, and your relationships will be better. Unfortunately, that's not how it works.
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Jonathan Shenkman: What actually happens when you come into a large sum of wealth is the following, minor problems become magnified until they're major problems, small things that you wouldn't ordinarily worry about because you are stressed about money now become the big things. Once the money stress goes away. Having lots of money doesn't change you. In fact, it reveals what you really are. If you're an anxious person by nature, just wait until you have 10 million dollars sitting in cash, and what that's going to do to you. If you're a jerk, the money is going to make you unbearable, and if you're generous the money's going to help you change people's lives.
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Jonathan Shenkman: Some people will feel forced to make new friends, because it becomes harder to relate to the people who have been in your life for a long time. They may not be able to do the things that you want to do. You may begin to think that you are somehow better.
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Jonathan Shenkman: People are in your innermost circle may begin to despise you, even if they don't show it, even if you don't provoke it, even if you help them out. The bottom line here is this, once you succeed financially, you've only just begun to succeed. Personally, the ultimate wealth is contentment which can be achieved without any money at all.
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Jonathan Shenkman: The next one is family infighting over inheritance. I want to say first, st that this is not always preventable. Obviously, sometimes a family member does something so egregious that it requires a response.
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Jonathan Shenkman: and possibly even legal action. However, keep in mind that sometimes it's worth swallowing, your pride, getting screwed, taking less money and just moving on with your life. I don't say this slightly.
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Jonathan Shenkman: On numerous occasions I have seen families ripped apart over inheritance disputes beyond your family getting torn apart. Think about yourself and the other family members like your spouse, your young children or grandchildren getting mired in a multi-year legal battle, will cost you a tremendous amount of money which will seriously erode your family's wealth, and, more importantly, it will take years off your life
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Jonathan Shenkman: literally years. You don't want this type of family litigation. To occupy your headspace for years will have an adverse ripple effect on all other aspects of your life. Sometimes the best decision is to quickly work out a resolution where you are seemingly sacrificing more for the ability to move on with your life.
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Jonathan Shenkman: Yes, it's frustrating, but your life will usually be better because of it. Trust me, the only winner in these family financial disputes are the attorneys who will collect 6 and sometimes 7 figures in legal fees.
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Jonathan Shenkman: Planning ahead may help avoid these issues. That's why the patriarch and matriarch of the family should consult a competent estate planning attorney who also understands the human elements of planning, and the family dynamics at play also, being vocal and communicative of your desires to your children is helpful. Nothing will minimize this risk completely. We live in America, the land of litigation and the endless appeal system, however planning and vocalizing your desires, can be very helpful.
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Jonathan Shenkman: The next is a failure to establish a framework for giving charity one of the challenges wealthy people face is being hit up for money from all directions. This is why establishing a framework for giving away your money can make these constant solicitations
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Jonathan Shenkman: much more manageable. I always advise my clients that it is important to have a framework for giving, while it's common to discuss strategies for the accumulation of wealth, it's not as common to discuss a system for the distribution of one's money for many investors, philanthropic giving discussions tend to focus purely on tax financial or estate planning.
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Jonathan Shenkman: This may include discussing strategies like utilizing donor advised funds, private foundations, charitable annuities or creative trust. Planning. Those conversations are important to ensure your hard earned money is distributed effectively, and your legacy lives on. However.
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Jonathan Shenkman: it should only be the 1st part of your philanthropic discussion. The second and equally important part should focus on laying out a hierarchy of where to allocate your charitable funds. For example, you may choose to 1st support family members who may be struggling, followed by your local community, then any specific causes that your family feels passionate about.
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Jonathan Shenkman: and finally, any other solicit solicitations that pique your interest. Having a system helps segment your charitable funds from your non-charitable dollars.
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Jonathan Shenkman: It also helps make your dollars more meaningful next time a wealthy family is solicited for funds they can quickly discern. If this request fits within their framework, which aligns with their values. They could get, then respond to the request more confidently and say yes or no to the request based on their own predetermined criteria.
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Jonathan Shenkman: The last mistake I'm going to talk about today is not appreciating what it means. To leave a legacy
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Jonathan Shenkman: for families with generational levels of wealth. A common goal is to leave a legacy that will live on for many generations to come. In order to accomplish this goal, it requires more than just writing a big check. It requires defining your values, which I just mentioned in the previous topic defining your values will help pinpoint causes that reflect those principles, while also having the enduring qualities that will be around for many years in the future. And I'm going to make this point by telling a story that happened to me which I've written about before
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Jonathan Shenkman: so a few years ago my wife had a business meeting in Newport, Rhode Island, and since the hotel and rental car were paid for by her company, I obviously decided to tag along. The hotel was near 2 tourist attractions that I wanted to visit the breakers and the Toro synagogue. So while my wife was in meetings all day, I took the opportunity to explore for those who are not familiar. The breakers is a Gilded Age mansion that was built in the late 18 hundreds
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Jonathan Shenkman: as a summer residence for Cornelius Vanderbilt, the second a member of the wealthy Vanderbilt family. Anyway, this house was a 5 floor like 70 room monstrosity, and has a gross area of something like 138,000 square feet.
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Jonathan Shenkman: The edge of the estate is on cliffs overlooking Eastern Bay of the Atlantic Ocean, and walking through that house, the word that often came to my mind was extravagance. Unfortunately, the Vanderbilt family's immense fortune was depleted within a few generations due to their excessive lifestyle and poor management of their funds.
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Jonathan Shenkman: On the other hand, the Toro synagogue, while still beautiful, is a much more modest structure. It was built in 1763 by wealthy Jewish businessmen who decided to donate money to establish a place for Jewish worship in the New World. It is the oldest surviving synagogue building in the United States, and it's still in use today for orthodox services with approximately 1 75 member families.
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Jonathan Shenkman: The breakers represents what happens when you're engulfed by materialism, while the turtle synagogue represents what happens when timeless and virtuous values influence the way you use your money.
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Jonathan Shenkman: The Vanderbilts spent their wealth on all the most lavish forms of luxury, but now their home is a relic of the past. It's nothing more than a 2 h sightseeing tour on your way to your next destination.
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Jonathan Shenkman: In contrast to the Turo synagogue, which is still in use more than 260 years later Jews are thriving professionally and religiously all across the United States today. Thanks in no small part to this little synagogue in Newport, where the 1st seeds of Judaism in the Us. Were planted as wealthy families take stock of their financial situation. It's important for them to assess their own values when it comes to leaving their legacy?
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Jonathan Shenkman: Do they want to worship their money and possessions, or do they want their values to influence how they use their money. Keep in mind that establishing a lasting legacy is only possible if you embrace the latter.
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Jonathan Shenkman: So where do we go from here? And what is the solution to many of the mistakes that I've mentioned today.
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Jonathan Shenkman: I did allude to some answers through the course of this presentation. There obviously isn't 1 answer of avoiding all these money mistakes. However, I think having proper perspective, can cure many of these issues. You're probably wondering how does one develop proper perspective around money?
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Jonathan Shenkman: One approach I use with some clients is the use of a reverse obituary? A regular investment policy statement, or Ips may be sufficient, but some folks need to go a step further, and would benefit from drafting a reverse obituary.
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Jonathan Shenkman: So reverse obituary is how we want to be remembered. It helps separate our resume virtues from our obituary virtues resume. Virtues are short-term material goals. They may seem important today, but are meaningless when considering the bigger picture. This may include how much money. We make our net worth the car, we drive, the boards, we sit on, the honors we receive.
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Jonathan Shenkman: the house we live in, and the type of vacations that we go on. On the other hand, obituary virtues are character traits that we want others to remember us, for when we're gone, in other words. These are characteristics that are actually important. This may include being supportive of your family and friends.
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Jonathan Shenkman: charitably inclined and contributing positively to society at large. It's not uncommon for folks to have little to, no overlap between resume virtues and obituary virtues. This, the reverse obituary exercise facilitates a focus on your core values which helps us align those values with your money and daily routine.
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Jonathan Shenkman: The way this exercise helps rich people avoid the mistakes I mentioned is it makes folks focus on what really motivates them in life makes it easier to ignore the noise and concentrate on what is actually important. Defining one's obituary virtues
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Jonathan Shenkman: makes us less eager to take excessive risk within our portfolios makes us less concerned about keeping up with the Joneses or relative performance. It helps us not obsess over things that won't make a material difference in our quality of life, like achieving the lowest possible tax bill, access to the most exotic investments and so forth.
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Jonathan Shenkman: It crystallizes what is actually important in life, and motivates us to spend more time and money on those things like properly educating our children, giving back to the community and lifting up others who are less fortunate.
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Jonathan Shenkman: Obituary virtues drive us to want to work on the non-financial aspects of our lives, which ultimately is more important when it comes to feeling a sense of contentment in life, and finally allows us to be more thoughtful on how we want to be remembered, leaving a meaningful legacy that inspires generations to come, is the ultimate objective. For most wealthy families.
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Jonathan Shenkman: Writing out your own reverse obituary may be a helpful exercise for you and your clients. I know it's been helpful for me personally, and has helped keep me on the right path.
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Jonathan Shenkman: And with that this concludes today's program. Hopefully, you were able to take away a nugget or 2 to apply to your life and your or your practice. Should you have any follow-up questions you should reach, feel free to reach out to me at Jonathan, at parkbridgewealth.com email is generally the best way to get a hold of me. Feel free to reach out if I could be a resource in any way.
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Jonathan Shenkman: 3 more quick items before I let you go first.st This concludes my Winter Webinar series. I think today's the 1st day spring. So that's perfect timing. But have no fear. The invitation to my spring webinars will be sent out in the coming weeks. In the meantime, I'd love to continue to grow this webinar community. So if you have a friend, colleague, or client who like to be notified of my upcoming webinars. They can email me with the word webinar in the subject line, and I'll add them to my webinar distribution list.
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Jonathan Shenkman: Second, you could follow all my work on X and Instagram at Jonathan money, and by connecting with me on linkedin, you could also listen to my weekly podcast called Jonathan money which is available on apple spotify or wherever you get your podcasts. And you can watch my practical planning tip videos, which I post several times a week by following me on Youtube at Jonathan, on money as well. And 3, rd please take 30 seconds to fill out my survey at the end of this program.
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Jonathan Shenkman: It helps me improve my webinars and provide timely and interesting content to attendees. I thank you in advance for that. And with that this concludes today's session. Please stay safe and healthy and have a wonderful day. Everybody