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Goering Center Newsletter
January 15, 2015
by: Mackey McNeill

He is 62, the first generation. She is 40, the second generation. They are ready to make the transition from Gen 1 to Gen 2. While the challenges are many, varied and complex, the financial issues that arise in this transfer of wealth provide an underpinning of success or a foundation for failure.

The 62 year old has focused all his time, attention and talent on growing one asset, the family business. There may be some life insurance, a bit of an IRA, or money added to a 401k somewhere in the distant past. But the bulk of his assets reside in the family business, and growing a business is hard work. By far, most of his efforts have been a heads down, nose to grindstone focus on his passion, his business. Things like building a loyal customer base, developing a high quality team, finding a unique sales proposition, achieving operational excellence and the many other areas demanded his constant attention. Financial planning was always something he intended to do, but never quite found the time or saw it as a pressing need. After all, there was a business to run.

In walks the 40 year old. She is faced with managing an asset that has a sizable unfunded liability on its balance sheet. The eventual retirement of the 62 year old owner and the money needed to support his future life in retirement.

She is excited. She sees the untapped potential of the company and has a vision for future growth and long-term success. However, in the back of her mind is a nagging concern… How is she going to meet the expectations of the 62 year old?

She knows all businesses have ups and downs, but she also knows that when the 62 year old retires he will require an income stream. He will require an income stream that may need to last 35 or more years under a variety of economic situations. How does the business meet this challenge? What does that really mean to her future? What is really expected of her? Will she ever be able to retire?

If financial planning hasn’t quite made it to the top of the to-do list, it is now, for both generations.

Besides being busy, many business owners avoid planning because they really don’t understand how it works and why it benefits them.

Financial planning, done well, is an interactive and engaging process. Throughout the process you and the planner co-create a plan that provides a solid vision of what your future could be and a feasible action plan for the how to make that future a reality.

There are four key steps.

  1. It begins with intention and purpose. What is my personal intention? What motivates me? What are my passions? How do I define prosperity? 
  2. Next, you define your personal goals. What is important? What do I want, and how am I going to make it happen? How do I start the journey? What are the steps I need to take and how do I avoid the potholes that are guaranteed to be on the path to success? 
  3. Once the plan is in place, you’re still not done. You must execute the plan.
  4. Lastly, there is periodic monitoring of the plan. Are you on track to achieve your future goals? Do changes need to be made?


Failure to thoroughly embrace any of these steps creates a break in the system and more likely than not, a failed plan. Like anything, unless it is done well, it isn’t worth doing.

Nothing gives a person more confidence about their financial future than a solid plan. With financial confidence handled, she can move onto putting her vision into reality and he can retire worry free.

Regardless of where you are on your journey to building your family business, now is a great time to give yourself and Gen 2 the best present ever, financial confidence, made possible with a well-executed financial plan.