Too often we think about wealth only in terms of how much money we have. In today’s episode we’re going to learn that wealth is much more than the size of our bank account.
We’ll be talking about the following and more:
- What is shirtsleeves to shirtsleeves in three generations and why should care.
- Where gratitude is and how it should play a role in your life. (And it’s not a religious answer.)
- How do you optimize the wealth that you have and what tools can you use?
- Why your values will determine the level of wealth that you and your family enjoy.
Narrator: Welcome to the Sustainable Business Radio Show on podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. The Sustainable Business is all about creating great outcomes.
Here’s your host, certified financial planner, student, entrepreneur and private business expert, Josh Patrick.
Josh: Today’s podcast features Ron Nakamoto, CEO of the Empowered Wealth Organization. I’ve known Ron for years. He’s one of those people you want to pay close attention to when he talks. Every conversation I’ve had with him has always left me with something new to think about. Today, Ron is going to talk with us about empowered wealth process and how you can apply it to your life. Let’s get right to it and talk with Ron about why you need to know about empowered wealth and how it can make your life better and business more sustainable.
Hey Ron, how are you today?
Ron: I’m good, Josh.
Josh: Thanks for joining us. Why don’t we start off and ask what is empowered wealth?
Ron: Well, empowered wealth is an organization that was originally started by a friend and colleague of mine, Lee Brower. It’s an organization that evolved from his financial services business. Interestingly enough he was a very successful financial advisor focusing in on estate planning but he was struck by a statistic that over 90% of family wealth is gone by the fourth generation despite all the efforts of all the best financial advisors, attorneys, accountants, trust officers et cetera. So, he set out on a quest to find out why that happens and developed a business around doing his best to change that trend so that’s what Empowered Wealth has been for the last 15 years. And that’s really a strong reason why I got involved.
Josh: Why does wealth dissipate from the fourth generation?
Ron: Well, there’s a number of theories but Lee developed a theory and has proven it empirically over time that what happens is that there’s a breakdown in family culture and along with that, later generations – second, third and fourth generation family members develop a feeling of entitlement or can anyway and that stems from a loss of/or lack of gratitude. And then they lose the entrepreneurial spirit that created the wealth in the first place instead of protecting it and they stopped growing. Often times, that comes with a lack of focus on core values, things that are most important – typically, health, family, relationships and spiritual beliefs things like that. Those start eroding over time. So, those three general areas – gratitude, entrepreneurial spirit or experience the growing attitude and then focus on core values, those are the three areas that we’ve focused on with Empowered Wealth.
Josh: When I read the book, I was kind of struck by a story of the woman on the airplane story. Can you kind of tell us about that because that seems to be the Aha! moment that Lee had when he developed the program?
Ron: Yeah. That really will corroborate what I just explained as far as the theory is concerned. But Lee, again, had this professional crisis back in the ‘90s that despite the best efforts of all the best professionals in estate and financial planning, 97% of all family wealth was lost by the fourth generation. He actually considered changing careers as a result of it because if you take your career seriously and measure the terms of the impact that you have on your clients, that would be a bit of a frustration and he felt that.
But, he also was a thoughtful professional and wanted to find the answers. And so, he had been mulling this over and he had an idea that he wanted to test out. Coincidentally that day, when he really had the strong feeling of wanting to test it out, he was on a flight to Atlanta. He sat next to a woman who was from the Jackson Hole, Wyoming area which if you’ve ever been there is a pretty affluent area, a lot of people retire there having made their fortunes in other endeavors. And so, this woman was no exception. She was on this flight and as people do in these situations, they introduce each other and ask “Well, what do you do?” It turns out that this woman ran an art studio and jewelry store in Jackson Hole catering to affluent tourists. She was married to a very successful property manager in the region. So, it was clear to Lee that she was the kind of person and she had the kind of family situation that represented the kind of wealth challenge that he had been studying.
So, when it came her turn to ask Lee what did he do, instead of saying, “Well, I’m a financial advisor. I’m an estate planner et cetera.” His response was, “I optimize wealth” And that triggered the question “Well, how do you do that? Or What does that mean?” Then he launched into a series of questions. Those questions are what revealed a lot of the answers that we’ve explored with Empowered Wealth and kind of led to the development of the curriculum that we now educate and train and coach on.
Those questions started with “Well, when you think of wealth, what do you think of?” And she answered with the response that most of us would – money, real estate, businesses, jewelry – things. And Lee, in that situation, answered, “Well, those are what we call financial assets.” Then one of the key questions that he asked “Well, what do you value more than financial assets?” And her response, and the response of most of the people that we’ve worked with, is family. And then she followed that quickly with “All my beliefs and my health, my closest relationships.” And we’ve found over the years that that’s pretty common with most of the people that we work with. That went further and she started talking about her education and especially her husband’s business acumen and the wisdom that they had acquired over the years. I think that’s something that we’ve grown to appreciate over time, is how much kind of unique wisdom that’s captured in our lives experiences. And so, the chances with that.
And then there was a little twist in the conversation where Lee talked about how when all is said and done, most people are looking to live happy, fulfilled and meaningful lives. And so, we’ve come to look at the assets that we have as resources. And so, one of the resources that we have is that ability to achieve a certain level of happiness and fulfillment. We’ve discovered over time our ability to make contributions to others, to contribute to the well-being of others, that’s really one of our greatest sources of happiness. He just went ahead and stated that. But in so doing, what he did was, he laid out what he called the four quadrant—or four category-system of looking at wealth. And he called that true wealth. So, it was financial – what he called core, which is our health, family, relationships and things like that. Experience which is primarily our wisdom captured over time and then our contributions. So, those four categories were the categories that he defined as wealth in this conversation with this woman.
And then he asked for a very telling series of questions. The first one was, “Which of these categories of wealth would you like to pass on to your children?” Her immediate response was “Well, all of them.” And she went on to elaborate that she wanted her children and her heirs to benefit from their financial success, that financial success affords people when they do achieve it. She wanted them to maintain strong core values, to maintain health and respect their faith and to value family. She wanted them to value experiences, to benefit not only from their own experiences but to develop their own wisdom over time. And she wanted them to be contributors not takers in society and within their circle of friends and influence. So, she said all of them. That was telling because that really became the mission and the purpose of Empowered Wealth which is to help individuals, families become what she called rich in those four areas.
Then Lee asked – posted an interesting question which led to not only the answer to the crisis that he experienced at that time but also kind of pointed the direction of what we needed to do as Empowered Wealth. And the question that he asked her was, “If you could only pass along three of those categories, that he had defined, and had to leave one of those categories of wealth behind, which one would you leave behind?” Her immediate answer was, “The financial.” She, in fact, crossed it out on the napkin where they had been writing these things out on.
Lee went on and asked her, “Well, why did you say that?” Her answer, which has been replicated in most of the situations where we’ve worked with families on these matters subsequently, her answer was very similar and as had been the answers for most of the families and that is that “If my children and my heirs are rich in contribution, in experience, and in core, then the financial will take care of itself. But if they’re bankrupt –she used the word bankrupt which is telling, if they’re bankrupt in contribution meaning they stopped giving, they stopped being contributors to society, to their families, to those closest to them, or experience – they stopped learning, they stopped growing, they stopping having that entrepreneurial spirit, or core – they lose their way in terms of their values, their health, their family et cetera then the money will eventually go away. And so, in answering the question that way, Lee had his answer, “Well why does wealth dissipate over three generations? Why is it gone with the fourth generation?” It also pointed the way to what we have endeavored to do subsequently as Empowered Wealth. So that’s the woman on the airplane story.
Josh: So, I come to you with my family, what’s the process that we go through?
Ron: There’s a discovery process. It’s really a classic financial planning with a twist. Josh, you’ve been at this for a while and you go through a discovery process. I think all competent advisors do. And then from that, that’s mashed up with our model which, again, is the four quadrants of wealth – financial, core, experience and contribution. And we have a series of exercises, a series of tools that we use to strengthen those areas that need to be strengthened, a need may be too strong but where there’s work that can be done that would be a benefit to a client family or even a group. We do work with some organizations as well. So, it’s your classic triage where you diagnose, find the issues, apply the tools and techniques that we’ve developed over time.
And then one of our other mantras really is that “It’s a practice, it’s a discipline.” In a lot of ways, it’s analogous to martial arts where you’re always practicing in order to maintain, to elevate your skills, to elevate your capabilities and to maintain them over time. We’ve discovered that’s true in our work because it’s a matter of building the muscles, if you will, the gratitude muscles. The routines and habits that build character and the mindset that maintains learning and values growth and continues to remind us of what’s most important that it’s the discipline that requires that occasion. So, we’re there to help people sustain that.
Josh: I’m really curious about how advisors can be more effective when they work with their families and businesses, and if an advisor got trained using Empowered Wealth – and I know you do have a training program, how would this make them more effective, more efficient, have a higher level of implementation, that sort of stuff?
Ron: Well, I suppose, the answer to that, Josh, is that it depends. But I would say that a lot of what advisors do is to try to be all things to all people. At least, that’s my experience or to try to delve into areas that they’re not necessarily experienced or expert in. I think that what we offer is attractive to somebody who’s, number 1, I think, takes a fiduciary perspective even if they’re not literally a fiduciary but puts their client’s best interest ahead of their own. And I say that with all sincerity because I believe that there’s a philosophical divide between those advisors who say that they do that or even don’t even try to and those who actually do it. I believe that there are those who kind of make that leap of faith and put their client’s interest ahead of their own, I think will be rewarded in the long run. But that’s the sort of person who would benefit from this.
The second thing is, an advisor would need to view working with clients as a collaborative effort which they know themselves and their expertise, and their skills and are clear about what they do well and then work to collaborate with us on the other areas because we don’t compete with financial advisors. So, our area of expertise is in the coordination and integration of core, experience, and contribution in conjunction with building financial wealth.
Josh: That’s a pretty good answer actually. I mean, it really comes down to, when you’re working with private businesses and wealthy families, how do you get them to have the real conversations about what are important and your program seems to hit that right on the head.
Ron: Well, thank you. I look at it as—well, let me take a step backwards, I think that for example your program where you’re working specifically with business owners and helping them to work on the business and not necessarily in it. In fact, you’re one of the people that helps them kind of take a step back and start working on it where they may in fact have spent years and years and years just working in it. I think that our program is a nice fit in conjunction with yours because ours helps a business owner who is also a undoubtedly a family leader to step back and re-evaluate what matters most and what’s essential, and then provides a framework – a way of structuring it so that eventually a strategy can emerge. And that personal strategy, I think, is never separate from their business strategy and vice-versa. I think that one affects the other and I wouldn’t pretend to have your level of expertise from a business standpoint but I think having an openness to collaborate with someone like yourself and your program, I think, is what would be ideal. That’s what we’re striving for on our end.
Josh: Well, we’re just about out of time and before we go today, can you tell our listeners how they can contact you for more information?
Ron: It’s pretty straightforward. The name of our company is Empowered Wealth, so as you might imagine, our website is www.empoweredwealth.com. My first name is Ron, so as you might imagine my e-mail address is firstname.lastname@example.org. I’m trying to make it pretty simple and hopefully that succeeds at doing that.
Josh: Well Ron, we’re out of time. This has been really interesting.
For people who are interested in becoming more effective with wealthy families using a high-end process, I would encourage you to check these folks out.
Thanks a lot.
Ron: Oh, thanks a lot, Josh. I appreciate it very much.
Josh: You’ve been listening to the Sustainable Business Podcast where we talk about what you need to do with your business if it was to be here 100 years from now. If you like what you heard and want more information, please contact me at 802‑846‑1264 ext 2 or visit us on our website at www.stage2solution.com or you can send me an e-mail at email@example.com.