First Generation Wealth Sample Chapter

First Generation

WEALTH

Enduring Strategies for Meaningful and Lasting Wealth

Robert Balentine & Adrian J. Cronje, Ph.D.

Introduction Countless authors and experts have tackled the subject of wealth and legacy, and we tip our hats to them. We’ve learned from many of them along the way, and some of their knowledge is even referenced within these pages. Adding to this body of writing, First Generation Wealth offers our perspective on not only the financial—but also the emotional and psychological—challenges that entrepreneurs commonly face.

The fact is, successful entrepreneurs are often so immersed in their day-to-day business affairs that they don’t take time to think about the deep connections between their personal and — 1 —

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professional lives, the totality of the risks they face, or who they are beyond their business and other assets. What we have seen time and again is how this unbalanced approach puts entrepreneurs at risk of losing the very wealth they’ve built—on their own watch or at the hands of their successors. In the literature on wealth, this idea is referred to as the Shirtsleeves to Shirtsleeves phenomenon, the reality that most fortunes are made and lost within three generations. In this book, we shed light on what we believe are the greatest safeguards against such a needless outcome.

We have met so many entrepreneurs who feel like few people understand them. They are uncertain of whom to trust for honest, sound advice, or they may seek advice and ignore it, often to the detriment of their business and most important personal relationships. To make matters worse, wealthy entrepreneurs may be surrounded by well-intended or fawning advisors who’ve never founded or run a business, or who may be afraid to give honest feedback for fear of offending them or losing a lucrative relationship.

First Generation Wealth isn’t meant to be a selfhelp book, nor is it a book on the mechanics of investing or estate planning. Rather, it is a guide to help you think through in a very personal way the greatest questions wealth creators grapple — 2 —

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with, in terms of what it means to live a fulfilling life. Our hope is to get you to the bottom of what wealth and legacy mean to you—and what it takes to protect both during the most trying professional and personal times.

First, we take a deep dive into the inner workings of the entrepreneur—the traits that drive great success but that can also create dangerous blind spots that threaten that success. We also examine the Shirtsleeves to Shirtsleeves phenomenon and share our first-hand perspective on the priceless opportunity first-generation wealth creators have to lay the groundwork for enduring family wealth.

Next, we move into the heart of the book: The Three Enduring Principles for a Meaningful and Lasting Legacy. We share stories that illuminate these guiding principles and also provide tactical steps you can take to incorporate them into your long-term strategy.

Principle 1: Don’t Mistake Wealth for Legacy More than assets are required to shape and sustain a legacy across multiple generations.

We take a look at the relationships, mindsets, and actions related to (and unrelated to) financial wealth that create true wealth and an enduring legacy.

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Principle 2: Distinguish Between Your Business and the Business of Your Family Entrepreneurs must perform a delicate balancing act between leading and managing a business and leading and managing a family—especially when the two are inextricably intertwined.

We explore the aspects of mixing family and business that are the greatest source of tension and dissent.

Principle 3: See the World Through the Next Generation’s Eyes It takes foresight, clear communication, and—most of all—empathy to prepare the next generation for carrying on the family legacy. We highlight common ways in which different generations’ views of money, business, and legacy often conflict and offer concrete ways to bridge the gaps.

As you read, you may notice the topic of communication surfacing over and over. That’s because effective communication is the key that holds families and fortunes together across generations. We are far from the first in the industry to recognize this. In his book, The 100 Year Family, Dr. Dennis Jaffe, a leading architect in the field of family enterprise consulting, wrote — 4 —

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that his research kept bringing him back to one central point: 100-year families (those that create businesses and sustain them for more than a single generation) are better at communicating than other families. We wholeheartedly agree.

You will also find that we ask many deeply personal and often tough questions—some that you may have been putting off or ignoring altogether. Yet these are some of the most important questions we believe wealth creators should ask themselves to ensure they can enjoy, grow, and pass on the fruits of their work as well as the values that underpin their legacy. Now is as good a time as any to answer these questions that get to the root of what wealth, legacy, and fulfillment mean to you.

Why listen to us?

We are successful entrepreneurs and wealth management professionals with over sixty years’ combined experience. From the founding of Balentine & Company in 1987 through its sale to Wilmington Trust company in 2002, and its resurgence seven years later, the entrepreneurial gene is well embedded within our DNA. In 2009, we chose to leave our comfortable positions at one of the nation’s largest wealth management firms, put our futures on the line, — 5 —

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and join forces with a private equity firm to step out on our own as Balentine LLC. We worked relentlessly to buy out the private equity firm, and five years later we celebrated becoming a 100 percent employee-owned company once again.

That’s the short story of Balentine. Here’s a bit more about us individually.

Robert is the Chairman of Balentine and a three-time entrepreneur. His own entrepreneurial journey began in 1987, when he and his father each borrowed $100,000 to start Balentine & Company, which grew to become the largest independently owned wealth management firm in the South. Barron’s and Forbes have named Robert among the nation’s leading wealth management advisors thirteen times, most recently in 2020. In 2013, the Metro Atlanta Chamber presented Robert with their inaugural Business Person of the Year Lifetime Achievement award, and in 2018 the Atlanta Business Chronicle named him one of Atlanta’s Most-Admired CEOs. Adrian is Balentine’s Chief Executive Officer and Chief Investment Officer and a founding partner. Originally from South Africa, he holds a Ph.D. in macroeconomics and econometrics from Cambridge University and is also a CFA Charterholder. Prior to — 6 —

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founding Balentine with Robert, Adrian was the Senior Vice President and Chief Investment Strategist at Wilmington Trust, and the Director and Deputy Head of Quantitative Equity Products at Schroeders.

In 2010, Adrian was named to the Atlanta Business Chronicle’s 40 Under 40. In 2018, Adrian was recognized as a Top Entrepreneur Honoree by TiE, an organization dedicated to fostering entrepreneurship and giving back to the community.

Individually and as a team, we have lost, we have won, we have rejoiced, and we have learned. We’ve experienced countless personal and professional highs and lows, and along the way were afforded a front-row seat counseling hundreds of clients in circumstances similar to your own. We’ve developed a deep, intuitive understanding of wealth creators and the struggles they may face—and of the principles that can help them navigate those struggles.

No two entrepreneurs are alike Although no two entrepreneurs are alike, we firmly believe that every wealth creator can benefit from applying our three principles to their longterm strategy—even those whose circumstances don’t map precisely to the scenarios and struggles highlighted in this book.

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Say you’re single or never planning to have children. Or perhaps your idea of success is to transfer zero wealth to future generations and instead give away everything while you’re alive.

We are still betting you have some deep desire to protect and grow what you’ve built and create a legacy that reflects your values. Taking these principles and the important questions they raise about your relationships with yourself, your business, your loved ones, and your community will undoubtedly get you to greater clarity on how you can make that happen.

We wrote this book to help entrepreneurs like yourself ask the right questions and find the deeply personal answers that lie within. Our hope is that this book will serve as a resource you turn to time and again to check in with yourself and with those around you about the actions you can take to secure and expand your wealth and shape your own legacy. However you define “enough” in terms of wealth and however you define “legacy,” we encourage you to use these principles to continually fine-tune your approach, gain even greater control over your future, and craft a more fulfilling life for yourself and your loved ones.

Something in your life brought you to these pages. We’re honored you’re here. We hope that our experiences inspire you to see your situation — 8 —

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with fresh eyes and to take added steps to protect the wealth you’ve worked so hard to build and create a more fulfilling, more resilient life and future legacy.

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