Power Up Wealth podcast – Episode 110 – Unlocking Generational Wealth Beyond Money
James Derrick 0:00
Creating a legacy is more than just money, it’s nurturing generations. I’m James Derrick, President of Smedley Financial and today we’ll be talking with expert and guest Mikal Aune about redefining family wealth.
Shane Thomas 0:16
Welcome to the SFS Power Up Wealth podcast, where we provide impactful insight and expert opinions on timeless financial principles and timely investment topics, preparing you to make smarter decisions with your money.
James Derrick 0:33
Thank you for joining me today, Mikal.
Mikal Aune 0:34
Glad to be here, James.
James Derrick 0:36
Mikal is the Executive Vice President of Smedley Financial Services. He’s a certified financial planner, and has done an incredible amount of work on researching generational wealth, creating a legacy and nurturing generations. First of all, let’s dive into this idea that 90% of families are losing their wealth over three generations, is it?
Mikal Aune 0:55
Yeah, and a lot of times it’s gone by the second, but 90% of it’s gone by the third. So that’s the proverb of shirt sleeves to shirt sleeves in three generations, where the first generation rolls up their shirt sleeves, goes to work. They build wealth. The second generation learns from them some, and they maintain it, and the third generation squanders it and is gone. And so that’s what 90% of families follow that trajectory, which is alarming, because that just means that there’s a lot of wealth that is created and a lot of wealth that is destroyed.
James Derrick 1:21
It sounds terrible. Presumably the second generation could do a little bit better with the third generation. So what do you recommend, whether it’s first generation or second generation or third generation? What can they do better to teach?
Mikal Aune 1:32
There’s a lot of steps, and so as you go through the whole process, there’s seven different things that families do to maintain their wealth over generations, and keep it going for more than one or two or three or four, right? They keep it going for much longer. This is kind of the end step as we’re looking at this, as we’re focusing now we’ve gone through some of the other steps in other podcasts, and so this is kind of the capstone as we look at to say, hey, what are the things that people can do? And a lot of it is redefining how you define wealth. That wealth is not just money, it’s not just financial capital, but it’s human capital and intellectual capital, and those are the three pillars that wealth sits on. And if you don’t have those three pillars, then it’s gone. And I think that’s kind of what I think about or focus on today, is that if you focus too much on the financial capital, you’re going to be one of those families where the wealth is destroyed. It’s consumed because it becomes all about the money and not about improving your human or intellectual capital.
James Derrick 2:28
You talk about the difference between inheritance and stewardship, and I have to say that a lot of the smartest people I know keep using this word stewardship. So talk a little bit about the difference between inheritance and stewardship.
Mikal Aune 2:42
Inheritance is I got money, I can go spend it. And so one of the statistics that I keep coming back to is that a new car is purchased within 72 hours of receiving inheritance. People as they receive inheritance, it’s like usually when you get the actual money, you’ve been thinking about it for several months, because it usually takes several a little while to get everything processed, and for the money to reach your hands, and so you’ve had time to think about it, and you know what you want, and you go out and get it. But that is an inward focus. Like, I get money, I get to do something with it because I inherited it. Stewardship is more of an outward focus. Of, hey, I’m receiving this money, but I have a seventh generation mentality, which is, I need to pass on as much or more to the next generation than what I have received. And it’s not just about money, but it’s also the human capital and the intellectual capital. And so there has to be a shift from focusing on the quantitative or money side of things to the qualitative, which is the human and intellectual capital.
James Derrick 3:37
It’s like in Spider Man when they say with great power comes great responsibility.
Mikal Aune 3:41
That’s exactly what it is. So stewardship is basically looking at that saying, hey, I have been blessed. How do I make sure that the next generations that come after me are as blessed? And not just financially, right? But are there things that you know, like education? Education is important to us, and we want to make sure that each generation receives the education that they need to be successful in their lives.
James Derrick 4:03
Now, you’ve got a great quote about inner wealth and character and purpose and meaning. Do you want to share that with us?
Mikal Aune 4:10
Yeah, I love this from Emma Seppala. I heard her speak, and I have her book too. But she said, “If you don’t have inner wealth, the outer wealth doesn’t matter.” It’s just the whole concept of, if I just have money and I just spend it on whatever, and I’m not really focused on a purpose, and I’m not improving myself or improving others, then the money is just corrosive. You know? It’s a cankering. And it’s interesting as you get into people that have had real wealth, like Abigail Disney, and she talked about how almost cancerous it was and how it would destroy families, and we’ve seen it where families are destroyed because they’re focused on the money and they’re not focused on improving their families.
James Derrick 4:50
I’m sure there are plenty of examples of people who’ve done it right as well. Some may stumble upon that, and maybe they’re just natural at doing it. Others might have to be very deliberate. And I think that’s what you’re trying to say here, is, how can we be intentional?
Mikal Aune 5:04
Yes, so one of the things that, like Warren Buffett would say is, you look for people with high character, and so there’s a lot of people that have done it right, and not because they have a manual and they’re following these steps to do, but it’s just because it’s kind of innate, and they’re just like, I want to make sure that my kids are better than I am, and so I’m going to do what I can to make them better and to teach them as they go along. And sometimes it’s helpful to have a little bit of a blueprint and a game plan to be like, okay, these are some of the things that we can do to help make sure that our children are grounded and not spoiled. Because if they’re spoiled and again, becoming spoiled is more focusing on the money and the financial and not focusing on the human or intellectual capital. So there’s little things that you can do, and it’s helpful to have kind of a game plan to be like, okay, when they’re younger, here’s some tools and tips that you can help them so that they’re not so materialistic. You know, they’re not focused on all the me, me, me, give me, give me, give me. But like they start to see the impact that money can have on others and the good that it can do. And there’s different things that you can do at different ages to help them to focus on the right things.
James Derrick 6:12
I like how you’re talking about doing it as a process over time too, because it’s the kind of thing that you if you hold one family meeting and you tell them what to do or how to think you’re not going to have the impact that you’re hoping for. But if you make it a process over time, share a story here, share a value there, you’re going to be able to accomplish a lot.
Mikal Aune 6:29
And we have different family meetings that we’d like to have, right? One is a wealth and values meeting, and that’s a great one to start out with, because you get to open the door to starting to talk about wealth and like, this is a journey that we’re going to take. This isn’t just, hey, we have a meeting. We talk about it once, and it’s done, but the wealth and values meeting, you can start talking about, okay, what are the things important to us as a family? Now, everybody’s going to have their own values, and there’s things that you can use to figure out what values people have. And so there’s a lot of different tools out there to figure that out. The biggest thing that comes out of it though is communication. If people are like, okay, here’s things where our values don’t line up, but look at this one where it does line up, and when our values line up, then we can start to work together. And you see it in some families that have fractured a little bit, that if people are willing to work together and find those common values, that it actually can help heal the family.
James Derrick 7:22
Fascinating. Mikal what other tips could you give to us about creating generational wealth?
Mikal Aune 7:27
So biggest thing today is focusing on the qualitative or the humanness, and some of it a good tip or a good thing that people do is they will sit down each year and talk about their family and how they’ve done and are there things that need to be changed or improved? And how can we do that? Because a lot of times people sit down and they’ll review the finances for the year, and they’ll say, hey, we’ve done this, this and this, and our portfolio has grown this much, and it’s all about the finances. And there’s very little discussion on okay, how is Johnny doing? Did his human capital or intellectual capital improve this year, or did it recede? And is he going in the right direction? And are there things that we concrete steps, that we can do to help him along his path? And then it can be a good interactive conversation with Johnny. Right to say, hey Johnny, you know we love what you’re doing. We see this. We see this and we see the progress. Tell us where you’ve seen progress. What are the things that you’ve done that you’ve really learned or grown this year? And give them some time to think about it, and they can put that into words. It shouldn’t be as parents, that you’re coming down and saying, this is where you’re going to go. It should be more of an interactive process. And that’s going to change a little bit over the ages too. When they’re younger, it’s going to be a little more of like, okay, let’s we need to get them reading better, or something simple like that, where you do have more control over it. But as they become teenagers and adults, like, it’s much more going to be working with them. It can get complicated especially, I have people all the time that come back and they’re like, okay, I’m afraid that I haven’t done good my whole life. I haven’t really taught my kids. Maybe there’s some things that they’ve picked up on that are good, but I haven’t been intentional about teaching them. So what do I need to do? And how do I open that conversation? And so I’ll teach them. And there’s a good phrase that you can use that just says, hey, I never want to be something, but I worry about this, therefore, can we talk about it? So it’d be something like this that says I’m afraid that I haven’t ever communicated with you well about finances, and I’m afraid that you don’t know what’s happening in my financial life, and I don’t know what’s happening yours, and I’m afraid that I just haven’t we haven’t talked about it enough. So because of that, would you be open to us talking about it? You’re treating them as an adult. You’re giving them the opportunity to say, no, they can walk away. But you are also opening the opportunity where you can have a really good conversation about it, and you can talk about what is happening in their life, you can still have that same conversation. How are you doing? How was this last year? What things went well? What things didn’t go good? Where do you want to go? How can I help you and facilitate it so that you can get to where you need to go? And that’s focusing on stewardship, because I’m taking what I have, I’m helping to pass it on to the next generation, teaching them that to then pass it on to the generation after them.
James Derrick 10:17
I mean, I think that’s a beautiful question, like, how do we support you?
Mikal Aune 10:21
Yes.
James Derrick 10:22
Now one final question, what about boundaries? Because if I come forward with some of these questions, like, how can I help you, you also are going to have to set some boundaries.
Mikal Aune 10:31
Yeah. And I think boundaries are healthy and good. And if they come back and they said, well, yeah, help me on this, but I want to know about all your finances, and you can say, I’m going to share those with you, but not today. We’ll find a good time, and we’ll have different meetings and just like we said, there’s the wealth and values meeting, there’s a financial education meeting, there’s more of an ownership and inheritance meeting, and then there’s a conflict resolution meeting. So there’s different types of meetings, and you could say we’re going to have that, we’re going to discuss it, we’re going to have a meeting, but that’s down the road. We’ll get there, and so I want to be open and honest about it, but I can still set a boundary. Right now I’m not ready to share all my finances, but let’s just make sure that we’re open, we’re communicating, and make sure that, yes, if there are things that I can help you, great. If there’s things that you want to know that we didn’t teach you, you know, let me know that. That’s one thing that I always find interesting, is like, a lot of parents are worried about telling their kids about finances, because they’re worried that the kids are going to be like, Mom and Dad have buku bucks and and they’re worth tons of money and great, I don’t have to do anything. That’s the parents worry. You know what the kids are thinking on the other side? I want to learn how mom and dad did it. How did they build the money? Teach me those skills so that I can go out and do it too. And that’s what a lot of people are missing out on, if they don’t have the conversation with the kids.
James Derrick 11:48
That’s really beautiful, Mikal. Thank you for coming in today.
Mikal Aune 11:51
Glad to be here.
Shane Thomas 11:57
Thank you for joining the Power Up Wealth podcast. Smedley Financial is located at 102 S 200 E Ste 100 in Salt Lake City, UT 84111. Call us today at 800-748-4788. You can also find us on the web at Smedleyfinancial.com, Facebook, Instagram, Twitter, and LinkedIn. The views expressed are Smedley Financials and should not be construed directly or indirectly as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks, including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice. Securities offered through Osaic Wealth, Inc., member FINRA/SIPC. Investment advisory services offered through Smedley Financial Services, Inc.® Osaic Wealth is separately owned, and other entities and/or marketing names, products, or services referenced here are independent of Osaic Wealth.
From Inheritance to Stewardship: Redefining Family Wealth — Mikal Aune
