The Ritz-Carlton is legendary for its training program. And the year I was on that speaking tour I was grateful for how well legend and reality matched up to improve my quality of life. The staff at the Ritz somehow manages not just to live up to the rules they’ve been trained to, but to embody the SPIRIT of the rules. They ARE the culture of the hotel. In Naples, Florida, I had just checked in and was just entering my room for the first time when one of the housekeeping staff greeted me by name—I had not been in the hotel for 30 minutes yet. I was impressed. The Ritz-Carlton is intentional about providing a consistently high level of service. They train to it. There is a connection between their intention and their aspirations.

I was reminded of the Ritz experience recently when, in the course of a few days I went from a very “cool hotel” in Houston (no names here, I’m not Yelp) to another Ritz-Carlton, this one in Cleveland. The Houston hotel was indeed very cool. The design was whimsical, the vibe was fun, and I walked into the hotel expecting a great stay. But that hotel turned out to be all cover and no book.

Many hotels aspire to the kind of rep the Ritz enjoys. They invest real money in cool design, a name chef, hip art, and edgy marketing. But if the check-in experience is dispirited, service desultory, and the coffee is bad, what the lobby looks like and the marketing folks SAY about the hotel is of little relevance. It is only the authentic experience we take away that matters. In other words, the difference between the intention of the Ritz-Carlton to deliver legendary service and the good intentions of other hotels to do the same plays itself out in how those companies manage intention and execution of plans.

Thus, the lesson for families. We get a lot of calls from families who have good instincts about using education as a strategy for taking their family to the next level, but I can tell if the caller is a Ritz-Carlton or an “other” hotel in a minute. Ritz-Carlton Families never ask if we can provide an education program in a day: they know it’s a life long process. Ritz-Carlton Families know they can’t delegate learning; they have to be involved. And Ritz-Carlton Families are not just going through the paces—they actually see learning with other family members as a joyful, satisfying part of life, a reward for being in a family—not an obligation.

So if you are considering ways to take your family to the next level, I recommend a weekend at the Ritz (and no they are not a sponsor of this blog or IMI:). Pay attention to your experience and think about how investing in human capital has made the Ritz a legendary company. Then think about what investing in your human capital can do to help you take your family to legendary levels!

In his New York Times Op-Ed, Smith describes a culture in which the self-interest of management trumps the interests of all other stakeholders. I’m a capitalist. I understand well that making money is a company’s responsibility; profit is good.

But, like all businesses, Goldman has multiple stakeholders—its investors, customers, employees, community, venders, etc—and a responsibility to manage the competing claims of those stakeholders with integrity. When the culture of a company is so impoverished that management derides all other interests but their own, it’s just a matter of time before that company loses the respect and confidence of the larger community in which it operates. And without respect, it is almost impossible to sustain a profitable business. This is not in the best interest of investors or any other stakeholder.

But until financial institutions (and it’s naive to think Goldman is alone in its folly) aspire to a higher purpose than lining the pockets of top management with as much gold as possible, families will do well to remember an old chestnut of capitalism: buyer beware.

There was, some of us like to think, a time when integrity mattered, when trusted advisers could be counted on to manage client affairs with good faith and integrity. But the very concept of trusted adviser is in jeopardy of becoming a quaint memory of another age. The movement towards performance-based expertise is driven, in large part, by the descent of company cultures in which customers become muppets.

Assessing expertise requires a new level of financial fluency in families. Over the last few years we’ve observed families becoming deeply intentional about building capacity among the next generation for economic self-defense. Indeed, it has fueled some of the most creative and interesting efforts in financial education I’ve seen in over twenty years in the field.

I feel sad about the demise of the trusted adviser culture—it was comforting to believe there was someone in a firm functioning as your advocate, someone you could count on. But such complacency helped lead to some of the most outrageous frauds of the early 21st century—from Madoff to Corzine. And families are waking up.

I’m inspired by the investment in human capital we are seeing in families who, rather than depend on the so-called wisdom of their experts, are developing their own knowledge and judgment. Such family development will have the long term effect of making the next generation safer, companies better, and advisers mindful of their fiduciary responsibilities.

The jasmine outside our office cottage yesterday.

If you just stumbled across this or are a subscriber to my blog, let me add some detail: On April 24, 2012, we’re co-hosting a Pop Up Think Tank on Families, Innovation and Storytelling with Pitcairn.

We’ve designed a small, highly participative conversation, enhanced by two thought catalysts, Greg Brandeau, Chief Technology Officer of Pixar/Disney, and Frank Rose, author of The Art of Immersion. Watch the clip below to see Rose talking about the changing face of storytelling and memory at the TED Conference.

Rose turns storytelling on its head when he says:

“The role of the broadcaster is not just to speak, but to listen. The role of the audience is not just to listen, but to speak.”

This interactive invitation process is taking Frank’s observation to heart. Instead of just telling you what we plan to do, we’re involving you by asking you to solve little riddles and share your information and ideas. The most recent riddle was a rebus—a pictographic puzzle that spells out a phrase. The one above spells “You’re clever.”

If you haven’t been involved up to this point, join in the fun by backtracking and completing the three preceding challenges here.

The rebus was just the first part of this week’s challenge. The second part is this: Please tell me:
- three of your best qualities (e.g. funny, warm, great cook)
- one of the best qualities of your family (e.g. down to earth)

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It’s okay. Just click on the word “Comment” at the top right of this post. Below the words “Leave Comment” fill in your name (just your first name and first initial will do, if you prefer privacy), email address (no one but me will see it), and the two things I asked for.

To thank you, I’ll send you an email with something special.

P.S. The Think Tank is invitation only, but if you’d like to attend and have not received an invitation, please email me.

P.P.S. If you haven’t already, sign up for my blog at the top right of this page under “Subscribe via email.”

The night before the actual birth day, take the child out to dinner—just the birthday child and mom and dad—or mom or dad, depending on family circumstances. This is not a time to divert attention to other kids. Focus. This should be a formal, fancy place: white table cloths and the whole deal—no Chucky Cheese on this night—that’s fine for the next day. We’re going for gravitas the night before. And yes—with 6 and 7 years olds. They get it. While you’re waiting for the appetizer to arrive you need to deliver a short speech that goes something like, “Darling, tomorrow is your birthday. And it’s going to be LOTS of fun—cool presents, a great party, a huge celebration of how happy we are you are alive and part of this family!  But TONIGHT, we’re going to talk about the responsibilities that go with being another year older.”

With this simple declaration you balance privilege with responsibility; fun and games with gratitude. What “another year older” actually means will be different in every family. In some it may be as simple as being kinder to a sibling; for others, setting the table or feeding the dog as a means of contributing to the family; or adding a little more to the piggy bank; or volunteering in the community. It is different by age and family. But it is a powerful message, telling your kids that growing up brings both new privileges (staying up or out later, acquiring greater independence) and new responsibilities.

Full disclosure and acknowledgment: the first year you institute this new rite of passage your kids may blow you off (just another dumb idea from parents); the second year you do the dinner they may roll their eyes (here they go again!); but by the 4th and 5th years, if you are consistent and hang in there, the pre-birthday dinner will be the new normal in your family—a tradition your kids may pass along to their kids. And it will make the expectations of balancing privilege with responsibility a lot easier to communicate for the rest of the year.

I love hearing stories, so let me know how your dinners go.

Leave your comment below and let me know. The first 10 helpful suggestions will get a free copy of the book when it comes out.

P.S. If you missed it the first time, you can download the original paper (in English) here.

Of course, there is of no silver bullet to guarantee inclusion in the 11%, but research bears out the fact that education of the next generation is a critical variable. This isn’t rocket science, it’s just common sense. You may have good intentions to take your family past the “shirtsleeves to shirtsleeves” phenomenon, but unless you’re intentional and actually do something  about sustaining wealth past a third generation, winding up in the 89%  is a likely outcome. As we launch another Great Families Training Program today, I’m seeing families who choose to invest time and money to become part of the 11%.

Sustaining wealth is not the work of family magicians. Hiring the smartest advisers in the world helps, but isn’t enough—even if you’re lucky enough to identify them. And there’s the rub. If you haven’t had some education, practice, and experience, how can you even recognize good advice or advisers when they appear? Or as challenging, when presented with abundant good (or bad)  advice, how do you discern the best course of action?

As author/sage Jay Hughes points out in the classic book, Family Wealth: Keeping it in the Family, you can have the best advisers in the world, but if you don’t understand what they are telling you, or do not have the knowledge/wisdom to take advantage of their advice, it’s of little value. Financial education of the next generation is like an intellectual insurance policy—without it, the next generation is vulnerable to charlatans and snake oil salesmen and the countdown clock on family legacy starts ticking.

I was reminded of this this while reading Bill Vlasic’s new book Once Upon a Car. The book is a page turner, chronicling the demise and rise of the big three car companies. Whether you followed the debacle of auto executives appearing clueless before Congress or not, you will be captivated by the drama of the story. And the book is also, not incidentally, a riveting tale of how the Ford family managed to sustain it’s legacy and wealth in the face of extraordinary financial challenge and temptation. According to Vlasic’s account, the Ford family could have sold controlling interest in the company at considerable personal gain, but instead, at great risk, chose to hold on to their position. As reported on the CBS Sunday Morning News recently, taking that risk paid off. But this was not luck, this is a family that invests in human capital.  And Bill Ford IV, a lifelong learner, is a role model for how next gen members use personal values, appreciation for family history, and hard won knowledge to  successfully steward family assets—human and financial—keeping their family in the 11%.

¹ JP Morgan Private Bank. “Beating the Odds: Improving the 15% probability of staying wealthy.” Challenges of Wealth (2004)

The excerpt I’m sharing here includes a perspective on failure I like a lot and thought you might enjoy, whether you’re a golfer or not. If you want to follow the full odyssey, send Don an email and ask him to add you to the list (hancockpt@aol.com).

January 13, Houston, TX

5m. Cold again this morning but the wind has fallen off. It will be much warmer by the time we tee off at ten. We finished yesterday at seven strokes behind the leader heading into round two. If Jack plays well today he can move up and maybe win some money for the first time. I know that matters to him, but honestly, some things happened yesterday that mean a great deal more to me. I saw that Jack is winning back some belief in himself here. By fighting hard in difficult conditions to make the cut and to finish high on the leader board, he earned back some of that belief. I could see it in the way he was carrying himself out on the course yesterday. Of course I could ask for more. God, yes, it would be terrific to see him gain the consistency in his play that would take him onto another tour so I could caddy for him until the day when I can no longer walk. Let this run on for fifteen more years so I can die with my boots on! Let them come and drag me off the course when I’m so senile I’m trying to persuade the beverage cart girl to marry me. Or worse. I would love that as any father would. But just to see Jack believing in himself again yesterday, is worth more than gold to me. And there was something else. Before we left the course Jack spoke with one of the players he has come to know here, a young man who has fought bravely to overcome drug addiction. He had not played well and he had missed the cut by one stroke. Jack was really sad about this. Then late last night on the Adams website he discovered that because of the brutal weather conditions, the cut line had moved and the young man had made it to today’s round. I heard the excitement in Jack’s voice when he told me and I could tell that he wouldn’t have been happier if it had happened to him. To be sure, this kind of generosity of heart is not what made Tiger Woods such a winner in this game. But I think it has made Jack a good fellow. And I’ll take a good fellow for a son over a winner any day.

I had a friend write to me yesterday and ask how come the players on the tour were not all shooting par or better. I wrote him back: “The reason you are asking me how come these guys don’t all go out and shoot par is because all you know about golf is what you have seen on TV, and TV is never real.  TV won’t show you the guys out there who make triple bogeys and fail to make the cut.  Each week on the PGA Tour, there is a lot of failure you never see because it doesn’t look pretty on TV.  I walked almost two thousand miles as a caddy in Scotland and most of what I saw each day was failure. Watching all that failure taught me something about the game. It taught me that today Jack may lose some of what he earned yesterday, and then he’ll have to fight to earn it back the next time out. As Charlie Woodworth says, ‘Golf is almost never a straight line’  But as for Jack’s generosity of heart, he got that from his mother, and it runs deep in him, and I think it will stick.”