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Shirtsleeves to Shirtsleeves in Three Generations or Fleeing Heirs: The Financial Future of Your FarmLast month we talked about the transfer of wealth on the farm and the tension that goes with it. Well, there is more. Financial planner Anthony Williams describes a study by Investment News suggesting that 66% of children ultimately fire their parent’s financial advisor once they receive their inheritance. These folks are called fleeing heirs.

I would like to know the statistic for farm families, as many don’t even have a financial planner!

What You Want in a Financial Advisor

Financial advisors for farmers should be set up to work remotely. Communicating while not in person has become much easier, especially with video conferencing tools like zoom.us or skype. We also ask our advisor to visit our farm on occasion.

You also need great chemistry with your financial planners and any accountants for your family. I suggest farm children develop a relationship with their parent’s advisor well before any major changes on the farm, like farm transition or death. This is a great way to create trust and empathy.

Lastly, you want to find an advisor that will take a holistic approach to manage your money and wealth.

Fleeing heirs - financial management

Fleeing Heirs and Financial Advisors

Perhaps fleeing heirs have their own issues. They are DIY folks who like to invest their own way with fewer fees. Maybe the heir never had any intention of working with mom’s advisor. Perhaps the heir has been living as though he/she already had a windfall and while he/she may like dad’s advisor, is not interested in having anyone keep tabs on her finances. And rather unfortunately, to prove dominion and control over the assets, the heir must move the assets to someone else. They flee.

Shirtsleeves to Shirtsleeves in Three Generations

If you haven’t heard the expression, shirtsleeves to shirtsleeves in three generations is about losing wealth in the succeeding generations. A study by Williams Group revealed 70% of families will lose their fortune during the lives of the second generation, in other words, 70% of more than 3200 families had succession plans fail. On top of that, ninety percent will lose their wealth during the lives of the third generation.

Why? Many reasons: taxes, inflation, poor investment decisions, adverse market conditions, and the natural dilution of assets as they are shared among generations of heirs. But there is another reason that I think resonates for farmers:

The most compelling reason fortunes are frittered away is because younger family members are ill-prepared or unwilling to shoulder the responsibility of wealth stewardship. They have grown up with plenty of money and are a step or two removed from the work ethic or drive of the people who made it for them.

Read that last paragraph again, out loud.

Fleeing heirs - shirtsleeves to shirtsleeves in three generations

Does your successor have great financial management skills? If you died tomorrow would the farm start a downward spiral spin into financial loss? Can you picture some young farmer in your community who was given much and lost a lot?

Wes and I are a second generation who has watched our farming parents struggle, live frugally, and we have been able to acquire greater wealth through hard work, and the blessing of God. Our successors are the third generation who don’t have personal experience of want or struggle.

How do we prevent the loss of wealth? We communicate.

[Tweet “Don’t let fleeing #heirs cause your #farm to lose its wealth from succeeding #generations.”]

Communicating to Prevent the Loss of Wealth

This means family discussions and meetings, using a farm family coach, and having an accountant who is willing to work with all generations. Most young farmers don’t want to hear any more about the high-interest rates of the 1980’s but your stories of trials will help keep wealth decisions in perspective. Share your values, your money scripts. What do debt and risk management mean to you?

Many wealthy farmers that I coach have no intention of selling the entire farm to their heirs. The next generation can only afford to buy shares or some assets but not the whole piece. The parents engage the younger generation by asking about their dreams and farm vision, getting them excited about their own future.

The founders can help fund that future, but in a responsible, business-like way with well-written agreements and professional input from coaches, accountants, financial planners, and lawyers. This takes intentional, regular communication.

The other option of not communicating or preparing the next generation to manage wealth will be going from shirtsleeves to shirtsleeves in three generations, and having the family destroyed or ripped apart over money.

Find a financial planner that can serve your farm family for more than one generation. Fleeing heirs may not be receiving sound advice or if they are receiving financial wisdom they are choosing not to act upon it.

Helping the Next Generation

I suspect that many successors in their early 30’s need a professional accountability partner in the form of a financial planner to help them navigate keeping their wealth and growing it for their aging years. David Chilton, author of The Wealthy Barber says that “wait” and “save” are not part of the next generation’s vocabulary.

The parents or founders also need to take responsibility for their avoidance behaviour. They know that fairness issues or inheritance talks cause conflict, so rather than embracing it as a risk management strategy for the secure legacy of the farm business, they are silent. You need to face your mortality. You need to get comfortable with discussing your estate plan with your children and hire someone to keep the conversations safe and respectful.

fleeing heirs - helping the next generation

One farm family in Alberta found it very helpful to watch my video on “Finding Fairness in Farm Transition”.

Again, you have the right to distribute your wealth as you chose, but if you highly value richness in relationships, I suggest you use all the tools you can to have courageous conversations that preserve understanding and relationship.

If your financial advisor is nearing retirement, are you grooming his or her successor to be part of your family’s planning process? This is where I rely on my CAFA colleagues to provide great referrals for farm families across the country. Click here to find one near you!

The next generation is not used to waiting. They want respect and have a more collaborative planning style. Young farmers on twitter share heaps of information, quickly. Our successors want goal-based solutions, so it is time for each generation to get clear about what they want, and when they want it to happen.

Money is a form of energy to create growth and good. What does wealth management mean to you?

Write to tell me you have had a financial planning conversation with the next generation on your farm and I’ll send you my “What do I really want” worksheet.

Fixing Your Time Stress Mess

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Workaholics will discover helpful strategies for managing their time stress. Gain understanding for the tensions of your age and stage on the farm. Learn why some problems are not solvable, but just need to be managed as polarities. Self-renewing people are joyful and productive producers.

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Rave reviews

“A joy to work with, heard loud and clear. When the farmers laughed or asked a great question, I knew they were listening and really wanted to learn from her. Her tips were easy to understand. It was just about understanding that conflict happens, and to have the confidence in yourself to ask for what you want. In the glowing review from farmers after her presentation, I knew they had heard that loud and clear.”
Maddy Berner, Event Planner & Communications Coordinator, National Milk Producers Federation National Milk Producers Federation
“I wanted to say a HUGE thank you for your virtual kitchen table chat with Arlan Academy. My wife and I signed up as it was exceptionally relevant to our current journey with potentially transitioning to her parents’ farm. The session was able to cover so many aspects of these crucial conversations and hearing you speak to both sides of the conversation was eye opening for my own perspective on this topic. It seemed to be very well attended and sounded like there were many other people who would echo my thoughts and feelings on it.”
N. Oakley, Farmer, Ontario
“Elaine helped me allocate $1 Million of assets the night I listened to her. Elaine’s presentation brings value to the use of my services in my office.”
Don Forbes, Forbes Wealth Management
“I recently joined in and listened to your Healthy Farmer Agriwebinar for FMC. I truly enjoyed hearing your perspective and even went and grabbed my Mom, away from her work, to come and listen in on some of your main points as well! One area that really stood out for me, both personally with our own succession plans and with our clients, was your discussion involving "Instant Influence" and how ready are you to change? I loved this concept!”
Annessa Good, FCC Transition Specialist, Alberta
“Elaine Froese truly is the Farm Whisperer. With her big heart and stern resolve, she guides families through uncharted waters and helps them arrive safely at their desired destination. She has been there, done that, and has helped hundreds of families come out on the other side. With your family and your farm legacy on the line, you owe it to yourself to start this conversation. You do not need to do it alone. Let Elaine Froese guide you through. Your legacy is being written day by day. How will you be remembered?”
Tracy Brunet, Host of The Impact Farming Show & CEO of Farm Marketer
“You speak like you’ve been sitting at our kitchen table! You know our family issues well. I am feeling more comfortable understanding what we now need to do. Elaine Froese is real.”
Audience Member,
“I attended the meeting you spoke at in Stratford Ontario recently. We held an emergency family/farm meeting today because of issues that I had enough of. We used a 'talking stick' like you recommended and wrote a chart of rules. The rest of the family thought the idea that we needed a meeting was worth rolling their eyes over, until we got started. The younger ones were quick to clue in that they now have an opportunity to be bluntly honest. The older ones took a bit longer to believe they could truly say what they think. In the end, the meeting needed two sessions because there was so much to talk about… and so many things people didn't realize were a big deal to the others. Your lessons and encouragement have given us the tools we need to get to a better place in our relationships and our business. Truly thankful.”
Kim Martin, Dairy Farmer, Ontario
“Helped me develop my framework to start having constructive and meaningful conversations around the farm.”
Tennille Wakefield, Farm Partner
“Some great lessons, Elaine! You continue to do some remarkable and potentially life-changing work.”
James Mitchell, Principal, Conversations Consulting
“Our family had a good farm meeting yesterday afternoon. Your Fairness video was a great topic of discussion. One of the action items after the meeting was to have my two non-farming siblings watch the video before the next big meeting they are involved with on the farm. It will be a great conversation starter as we catch them up on our current plan. As they are younger, we also hope it will help them to ask new questions that may not have been on their mind.”
G.G., Farm Family Legacy Coach, Alberta
“Elaine gives me excellent tools that help me work with my clients!”
Laurianne Osmack, Financial Planner / Partner, Doell Osmak Wealth Management
“She has a sense of “knowing” quickly what is happening in the family dynamic. Her messages to her audiences drive home what needs to be done next to solve the complex issues of farm transition and conflict resolution.”
Audience Member,
“Eye-opening. Excited to open the door of communication with my spouse and farm family.”
Ashley Hoppe, Farm Partner
“The Strong Farms, Strong Families session gave farm families an opportunity to meet face to face with Elaine Froese... hear her own story, experiences and skill set. From this information packed session and related materials, families could identify areas of success in their journey and other places they need assistance. The greatest take away was that participants could see that Elaine Froese is someone they can trust with the things that they hold most precious.... their family and their farm.”
Nancy Atkinson, Nobleford Ag Society, Alberta
“Elaine’s real-life scenarios help her audiences know they are not alone, knowing there are creative solutions to help them get the life on the farm they have always wanted.”
Audience Member,
“A long time female client who had refined the art of procrastination was so moved by the end of your presentation that she accepted your permission to “drop the bananas.” She contacted me soon after for an appointment to do some planning which included the selling of the family “Century Farm.” A very, very emotional decision on her part that was not likely to have occurred without your presentation.”
Don Forbes, Forbes Wealthy Management
“I just have to say… that your work is amazing and I have never forgotten your teachings from our session in Williams Lake at TRU. It is super important work. I know so many people going through the trauma of succession. I hate to use that word, but I was an “out-law” and know it can get terrible. I continue to forward your emails on to others. Keep doing what you do! You are amazing. You kind of walk into the fire regularly… and with a smile. Proud to have met you.”
Megan, BC Rancher
“As my husband and I eagerly started the course we were optimistic and excited to be taking this next step in our Farm Transition. We were starting to question ourselves and whether or not we were just being selfish and greedy, and if this Farm Transition was still an option for us. We barely got through the first Module and were already having such a huge relief. As we moved through the modulus there were so many times that we just sat back with our hands in the air and thought YES. My husband and I would smile with relief because all of the concerns that we have been struggling with were relevant and came up in the modules. We really enjoyed the course and are excited to move on to the next stages to find our farm resolution.”
Shannon Gilchrist, “Get Farm Transition Unstuck” online course participant
“My hubby farms with 2 brothers and parents, and it’s become a really toxic place. No communication, no respect, etc. Twelve months ago, my husband’s brothers told him they don’t want to work with him anymore and offered him a pay out. His parents did nothing to stop it! He had no choice but to leave. Three months later, we moved off the farm and into town. He has been offered heaps of jobs and is now truck driving and carting hay and grain. We have tried communicating with his parents about what happened but they are not interested. So basically my hubby has lost his family. Very sad but we as husband and wife are overall in a good place and moving on to create our own life. Please continue on with all your wonderful work in helping families on the farm. I continue to tell any farmers I know about you, that they must ‘google’ you, and read your books.”
Donna, Farmer, Australia

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