Class Dismissed: Kedge Martin

Where do you see mentorship making the greatest difference for individuals and families dealing with wealth. 

Where wealth intersects with identity/purpose; responsibility and family dynamics is where we are generally asked to assist.   Primarily when someone is trying to work out who they are in relation to wealth, what the wealth is for, and how to live well with the choices and responsibilities wealth creates.  In my world, that may mean working with a young person deciding on whether to join the family business or not; helping a founder think about life after exit; working with siblings who have different personalities, ambitions and financial needs, or helping a family have conversations they have avoided for years.

What distinguishes a good mentor in this space from a conventional adviser?

The alchemy in the mentor/mentee relationship is trust and chemistry; we all resonate with some people better than others.  Taking the time to find the right mentor is key; someone who creates a safe independent space where the mentee can be totally honest, openly share their fears, resentments, confusion and more without any risk of being judged.  A good mentor provides unconditional positive regard.   The right mentor should also have relevant skills and experience – they may not have walked the path exactly you’re on but they have enough life experience to see things from a different perspective, can see both the bumps in the road and the opportunities ahead and be able to ask challenging questions – not from an ego perspective but simply to help the mentee work out questions which are not addressed until issues arise.

A conventional adviser is traditionally an expert in a particular field – be it lawyer, wealth adviser and other professionals.  Their role (and expertise) is to advise specifically on what’s best for the client in a particular area/sector  but often without the full picture of all the different demands, needs and emotions.  There are also potential conflicts – many advisors are target led and motivated (by their employers) to make product sales or billing hours; as one lawyer once commented to me ‘I don’t mind being a nanny (ie listening to someone discuss their problems which were not relevant to the project/structure) – the clock is on’.

How early should education around wealth begin within a family and what should it consist of?

It’s never too early!  And education around wealth does not need to begin with spreadsheets and complex trust structures.  The education should be ongoing around values, behaviour, gratitude, communication, responsibilities and opportunities.  I often think of wealth as an energy flow. It is not static, it can be created, preserved, wasted, shared, invested or transformed. In families, the challenge is to make that flow conscious — to understand where the wealth came from, what responsibilities come with it, where it should be directed, and how it can serve not only the present generation but those that follow.

One client we worked with was consistently late in paying invoices. Her assistant would prepare everything but the payments were never released on time.  The client had no intention to cause harm but simply did not have the understanding and knowledge that her actions had impacts; late payments from her led to late mortgage payments for some of her suppliers which in turn created a snowball of (negative) consequences.

The formal and practical education can come when the family member is mature enough to understand (and needs to be ongoing). This should include budgeting, money management, financial literacy, investment language, risk, philanthropy, entrepreneurship; governance, communication and decision making.    Many next gen clients we work with are highly educated and accomplished but still feel inadequate when sitting in meetings with family advisers because they do not understand the language or the context.  Par of our work is to help build confidence, and the ability to participate meaningfully in discussions and decisions.

Do you find younger generations are better or worse prepared to inherit than their parents were to create?

I think the two cannot be compared – the creation of wealth and the preparation to inherit wealth.  Entrepreneurs  are generally builders, used to risk, uncertainty, set backs and momentum; they have resilience.  Many continue creating long after they have any financial need to do so because it gives them purpose, identify and energy.

The next generation can face the opposite problem.  They may inherit opportunity but also comparison.  They may feel inadequate in the shadow of their founder; judged against someone else’s achievement.  A young man we worked with was a brilliant event rider but he never felt his position was earned; he had been given the very best ponies and horses – literally a leg up from an early life.  Never being good enough (a feeling not restricted to those making or inheriting wealth) can create paralysis, guilt and disengagement – sometimes all at once.

The right preparation and education Is not simply about a financial event or events, it’s an emotional and developmental one.  The question Is not just ‘can they manage the money?’ rather ‘can they build a life of meaning, contribution and confidence both regardless of and within the context of significant wealth?’

How do you help younger family members engage with wealth in a way that builds responsibility rather than entitlement?

As above, responsibility is interlinked with values, consequences and real world experience/impact.  Entitlement grows when wealth is abstract and unlimited.  One of the most powerful tools is exposure.  A client travelled with us to see community projects in Africa – it was a transformational visit.  Firstly, he was overwhelmed with the warmth he was received – simply and openly – by children who had no idea who he was nor what his surname was.  It was the first time he felt genuinely liked for who he was, not his father.  On his first class flight home, he was dismayed by the waste (and plastic) on the flight – particularly in contrast to the poverty and openness he had just seen.  The experience didn’t distract him from his chosen professional path but it influenced so much more.  Our ‘Encounter Journeys’ for families are life changing – not only for philanthropy but in business and broader behaviours too.

Practically, some of our clients give children a small fund to invest, give away or manage – it’s not only the cash but it’s allowing children to fail too and make mistakes at a level where the consequences are real but not catastrophic.  Then discuss these decisions – why that charity, why that business, where were the mistakes.  Read Matthew Syed’s book ‘Black Box Thinking’ a great read on how success is built on failure.

You have spoken about the loss of purpose that can follow a liquidity event.  What does that look like in practice when you first meet a client?

It can be surprisingly quiet.  From the outside a sale/retirement may look like a triumph the deal is done, the family is secure, no money worries exist, you can have and do whatever you like – what’s not to like?!   But so often the experience can be destabilising and a sense of disappointment, the routine and responsibilities have gone.  Although a different context (aristocratic, multi generation, land based inheritance rather than a business exit), the late Duke of Westminster commented ‘Free time is the devil’s playground.  If you don’t have to go out and earn your money and if you don’t have a passion what the hell do you do with your life… you’re different from your friends; everyone else has to work to earn their rent. You’re left thinking ‘well, what’s the point of me then?’

The most memorable call I’ve ever had was from the US: ‘hello, I’ve been given your contact and told you may be able to help.  I’m 82, just sold my business and wondering what to do with the rest of my life’. This was not a financial planning request but a human question – he is the most inspirational person who continues to squeeze the most he can out of the toothpaste tube of his life.

When someone has just sold a business what are the first mistakes you see them make in the weeks that follow?

Many of the mistakes happen before the sale not after it.  The temptation to make decisions and choices without having invested proper time before or to stop post sale.   The world looks very different Day 1, Day 2 and beyond – after the routines and decision making have gone.  Take time, go steady!

Another mistake is lack of preparation for those around you.  One teenage daughter learned about the sale of her father’s business at school.  She had no idea of the wealth involved until it was reported publicly (incorrectly!).  Overnight the social dynamics with her friends changed, she had not been prepared with the language, confidence or support to navigate these new waters.

In another case, an adult son who has pursued a career in social work and struggled financially was deeply hurt to discover his parents could have, but chose not to help him at his most difficult time – they had the wealth before but had chosen not to support him.

You warn about the pull of advisers at that stage.  How does someone distinguish between necessary advice and noise.

Necessary advice helps you make better decision; noise creates chaos and confusion.  An experienced mentor will be able to help you clarify exactly what you need from advisors and signpost (with no agenda) to a selection of those best suited to help you.

Peer networks can be extremely useful.  Groups such as Tiger 21, Nexus or philanthropic networks provide the space to learn from others who have been through similar journeys. Whilst no two families are the same, real life and questions are so often the same.

How do family dynamics typically shift once a large sum of money enters the picture?

Money changes the assumptions people make about one another. Friends may expect generosity, siblings may compare, children and family members may wonder what they are entitled to.  Parents may feel pressure, guilt and fear.  As the old saying goes, ‘where there’s a will there’s a relation.’  To put it simply, who picks up the bar bill?

Once money enters the picture, old resentments reappear.  The difficult questions need to be addressed before they become disputes.  Which sibling needs more support?  Which are financially settled?  What is fairness or favoritism or simply responding to different circumstances, what are the consequences of saying yes or saying no?  The key is transparency, communication and clarity.

We recently worked with a family who wanted to encourage their (seven) next gen’s spouses to join the family.  We designed a structured onboarding process covering the business, intended legacy, roles, responsibilities, expectations and boundaries to ensure the foundations were clearly set at the outset.

What does a well handled transition look like in contrast to a poorly handled one?

In a well handled transition, the family has a shared language.  People understand the purpose of wealth and the broad principles governing it.  The next generation has been prepared not ambushed.  Advisers are chosen against clear roles and responsibilities.  Difficult conversations happen early enough to be useful. A well handled transition is not one without emotion, emotion is inevitable.  The key is to acknowledge, discuss and plan for it.

In a poorly handled transition, everyone is guessing.  With poor or no communications there is a void which fills quickly with assumptions, anxiety, resentments and competing narratives.

Ultimately, the question is not simply what makes a good transition versus a bad one.  The question is what a does a happy, purposeful life look like compared with an unhappy and confused one.  Wealth can create extraordinary freedom, opportunity and impact.  But it can also create drift, dependency and division.

The role of a mentor is to help make the most of this one precious life, wherever you are on the conveyor belt!