Getting It Right

As Dr. David Singleton* entered Donovan's Restaurant, just as he had done many times before over the last twenty‐seven years, he was overcome with a wave of emotion. He realized this was among many traditions that were about to change. After almost every board meeting for the last ten years, he, the Biocellular Health Sciences* board, and his senior leadership team met to share dinner. Tonight, this meal would be different because the purpose was to celebrate his retirement, although it was strange for him to think of this evening as a celebration.

Walking through the restaurant, he soaked in the smells, the sounds, and the décor to imprint them in his memory like a permanent photograph. His mind drifted back to the day he interviewed for his first research position with Doring Pharmaceuticals* after finishing his fellowship at Stanford. That day was the first time he had lunch at Donovan's. It felt like a lifetime ago and, in many ways, it was.

David had served as CEO of Biocellular for the last decade, overseeing its becoming one of the dominant biomedical firms in the world. He led the company's development of industry‐leading therapies and medications that were helping to provide cures for several forms of cancer, and the company now was venturing into ground‐breaking research on dementia. His industry reputation as an innovator, collaborator, and leader distinguished him as an industry icon. Throughout his tenure, Biocellular had grown to be one of the most valuable life science companies in the world, with the stock price increasing by 260 percent over the last seven years.

In addition, although he never thought of himself in this way, he had become a very wealthy man, accumulating in excess of $300 million in Biocellular stock. He did not feel particularly “rich,” because in the previous twenty‐seven years he had never sold a share of his stock in the company.

In fact, he, his wife, Elaine,* and their four children lived a very modest lifestyle given the extent of their wealth. David and Elaine still lived in the same four‐bedroom house they scraped the funds together to purchase nineteen years ago after their youngest child, Gretchen,* was born. Now, with Gretchen off to college, all four kids—Tom,* Stacy,* Trevor,* and Gretchen—were effectively living independently, forging their paths and building their own futures. The two oldest, Tom and Stacy, were married and each had two children of their own.

For this last official dinner with his team and the board, Elaine, all four kids, and Tom's and Stacy's spouses, Wendy* and Peter,* were joining the group to share in the recognition of David's contributions during his tenure at Biocellular. During and after dinner, there was a lot of laughter, a few tears, and tremendous feelings of warmth and some degree of melancholy from everyone in the room. David was overwhelmed and overcome with sentiment from the tremendous love emanating from all the tables that night.

The next day was David's last official day on the job. Dr. Stuart Cooper* would be taking over as the new CEO and chair of the board. David felt strongly that he wanted to make a clean break and let Stuart, his mentee and friend, start down the path of building his vision for next stage of the company. Now the big question on David's mind, and, in fact, on everyone else's, including his family's, was what he would do next.

That day, as he sat for the last time in the corner office on the seventeenth floor of Biocellular's headquarters, he knew that transitioning to the next stage of life was not going to be easy for him. There were a host of things to consider and decisions to be made. His life was about to change in ways he could not even imagine. He decided to put those considerations out of his mind so he could be present for his last day as the company leader.

Facing the Future: Transition from a Business Executive to Running a Financial Enterprise

Two weeks after his last day at work and after spending time with Elaine, the kids, and the grandchildren on Martha's Vineyard, David came home to an empty house. The first morning after breakfast, Elaine went off to her yoga class and then to a charity luncheon for a local art museum. As he made his way into the office they had converted from Stacy's room when she went to college, David had his first time truly alone to consider the future.

He sat down at his desk with a blank pad of paper and the beautiful fountain pen he received as one of his gifts from the Biocellular board. He looked at the paper and the paper looked at him. Neither one spoke to the other. After a few minutes, he wrote down four words:

  • Family
  • Passion
  • Impact
  • Legacy

He didn't really know why those words ended up on paper. After a bit more thought, however, he realized they had come to him as he was thinking about what was most important to him in life. He had so many things to consider, decisions to make, and opportunities to contemplate. He wondered what he should do first, so he put on his CEO hat and began to prioritize.

Now that he was no longer employed by the company, he recognized that he needed to make some important immediate financial decisions:

  • What should he do about the company pension plan?
  • How should he handle his stock options and restricted stock?
  • Would he need to review all of his insurance to make sure he has the proper coverage as a retiree?
  • How should he pay his bills and cover his expenses now that he would no longer receive a regular paycheck?

He decided that the next step to get the process moving was to assemble a team of his key advisors and bring them together for a meeting. He started by calling his attorney, Stan White.* Stan had been his attorney and friend for twenty years. Along with Stan, he called his accountant, Randall Turnberry,* and his investment advisor, Jeffrey Renwick.* He asked them to join him and Elaine for a meeting on Thursday of the following week at Stan's office.

David and Elaine arrived at Stan's at 9:45 A.M. The meeting was scheduled for 10 A.M. Elaine told David she was a bit nervous and uncomfortable. She did not particularly like dealing with financial and legal issues, and she was a little tense that she would be the only woman in the room. She told David that Jeffrey, in particular, sometimes talked down to her and seemed somewhat condescending and patronizing. David was surprised to hear that, and he told her that he would observe Jeffrey during the meeting.

As they walked into the plush conference room in Stan's office, all of the invited participants were already there. David and Elaine greeted the team warmly and after a few pleasantries, everyone sat down at the large mahogany conference table. David stated that he would like to address the group. He said, “As you all know, I just retired from Biocellular after twenty‐seven years. Spending the majority of my professional life at such a wonderful company was an immense pleasure and an honor. I loved it up to my very last day, but it is now time for me and Elaine to build the next chapter in our lives. I am not exactly sure yet what it will look like. However, I'm excited to enter the future.

“As you are all aware, we have been very fortunate due to Biocellular's success and generosity. We've been able to accumulate a substantial level of financial resources. In fact, it is more than I could ever have imagined we would have and far more than we will ever need.

“The first purpose of our meeting today is to make some necessary, important, and timely financial, legal, and tax decisions. Elaine and I will need all of your help to address these issues. However, over the last few days and weeks, I have begun to feel the immense opportunity and responsibility that our wealth carries. We will never spend what we have.

“We need to consider the bigger picture of what this wealth means to us and how we want to deploy it most effectively. This part of the process will take time and effort, and I will be looking to all of you, my family, and others to participate in helping us build a plan for the future.”

He then asked Elaine if she would like to say anything. She said, “I am so very proud of David and all he has accomplished. I know that leaving Biocellular and retiring was one of the most profound and difficult decisions he has ever made—and he has made a lot of tough decisions. The most important thing to me is that the next stage of our lives has as much meaning and fulfillment as the last one.”

After David and Elaine were finished, all of the advisors in the room were a bit stunned and speechless. It was rare to hear clients have such a thoughtful approach to how they viewed their wealth. After a good thirty seconds of silence, which felt like a long time, someone finally spoke. Stan jumped in and said, “David and Elaine, you have been my clients and my friends for a long time. I am extremely touched and proud, as we all are, to have been selected to help you and your family with this journey.

“You have my commitment that we will work diligently and collaboratively to help you build a plan that will achieve the results you are looking for.” Jeffrey and Randall chimed in and stated they were similarly committed to being part of the team to build the right plan for the Singleton family.

For the rest of the meeting, the group discussed the immediate short‐term steps David needed to take with regard to some of the pertinent time‐sensitive financial issues. After leaving the meeting, Elaine told David she liked Stan and Randall, but was not sure that Jeffrey was the right person to help them with their investments and other financial affairs. David agreed and told Elaine he would meet with Stan and ask for some referrals to other advisors.

The following week, David had the private meeting with Stan. He told Stan that he and Elaine were excited to have Stan and Randall on their advisory team. However, he did not feel that Jeffrey had the comprehensive wealth management knowledge or investment expertise to support the family's needs as they enter this next stage.

“Jeffery is a really nice guy,” David said, “and he's been helpful and effective in managing a few million dollars we've entrusted to him over the last several years, but we feel we need a much different level of wealth management capabilities than what he and his firm can offer. Both Elaine and I take very seriously the responsibility of managing and stewarding our assets as effectively as we possibly can. We want them to make a meaningful impact on the people and things we care about. We need advisors who can help us achieve this outcome.”

“I understand your perspective about Jeffrey,” Stan replied, “and I tend to agree with it. He is a quality advisor and an ethical professional, but I don't believe he's the right person or represents the best firm to meet your new requirements. I'm actually glad you brought it up because I have been thinking about your goals, and I do have a recommendation for you.

“I recently worked with another family that was going through a similar wealth transition,” Stan went on. “They had many of the same objectives and concerns you do. I introduced them to Rebecca George* at Legacy Wealth Collaborators.* Her firm takes a qualitative and quantitative approach to helping families manage wealth. They're familiar with the issues and opportunities facing wealthy families like yours. Rebecca has been working with the family I referred to her for over a year, and they have made tremendous progress in their wealth management. They're delighted with her. I suggest we arrange a meeting with her so you can learn more about how they can support your family.”

Two weeks later, David and Elaine meet with Stan and Rebecca George. As David and Elaine became acquainted with Rebecca, they both found her warm and approachable, with a healthy degree of natural curiosity. She asked insightful questions that demonstrated her experience in working with several families in similar circumstances to the Singletons. That experience gave her credibility with the couple.

After learning more about them, Rebecca explained how her firm worked with families like theirs. She told them that LWC focused on what she referred to as both the strategic and tactical aspects of wealth management, so that families of significant resources could be successful in working with the assets they controlled and the impact those assets might have on the things that mattered to the Singletons. She went on to explain that long‐term, effective wealth management is difficult and fails more often than it succeeds for most families. She detailed the fact that the high percentage of failures came from a lack of focus on the strategic issues such as family harmony, communication, role clarity, family education, and preparation of the succeeding generations. She said the key to successful, sustainable wealth management was the integration of both strategic and tactical planning and explained that LWC delivered its services through the efforts of a multidisciplinary team who designed a planning process that treated the business of family as a family enterprise.

David and Elaine were both impressed. What they were hearing was very different from what they had experienced before, and it was perfectly aligned with what they were looking for. They asked several questions about fees, specific services, and how the process would work for their family. Rebecca said that if they were interested in moving forward, the first step would be a meeting to understand their specific priorities and their goals. After that meeting, she would develop a scope of engagement document that would define the services, timeline, and outcomes for their review and consideration.

A couple weeks later, David and Elaine met with Rebecca and a few of her partners at the LWC offices. Their current advisors, Stan and Randall, participated as well. During the meeting, Rebecca and Stan asked David and Elaine a great deal more about their current situation and their quantitative and qualitative planning requirements and objectives.

Some of the key quantitative issues included:

  • The couple's current balance sheet, their income requirements, and their current and future anticipated income estimates
  • The anticipated income requirements of any other family members or dependents they supported
  • Their current investment portfolio, including holdings, asset allocation, risk tolerance, and investment objectives
  • David's employee benefits and company retirement plan
  • The status of their holdings in Biocellular stock
  • Their current and future income, gift, and estate tax scenario
  • Their current estate plan and estate planning objectives

The qualitative areas covered topics such as:

  • Their thoughts about how they wanted to spend their time currently and in the future
  • Their current values and passions
  • How much communication they had done with their children about their wealth
  • The level of wealth they wanted their family members to receive
  • What other issues were important to them in regard to impact with their resources
  • The children and grandchildren's level of preparation to receive and manage a significant amount of wealth
  • The roles they wanted family members and others to play in the management of their resources

The session went on for more than two hours, and by the end, David and Elaine were tired but also highly stimulated and engaged. For the first time, David began to connect directly with the opportunity and the magnitude of the impact that their resources could provide. He was in the beginning of transitioning his mindset from CEO of a business enterprise to CEO of a family enterprise.

Although they made significant progress in defining their priorities, goals, and objectives, many unresolved issues were still on the table. David and Elaine needed time to process some of the important questions that they had never contemplated before.

Rebecca suggested that they get together again in a couple weeks to further define their goals and requirements. She offered to summarize the areas they needed to deliberate in a memo for them.

A few weeks later, the group met again for another session. Prior to the meeting, David and Elaine spent several hours connecting and getting on the same page about some of the key questions and unresolved issues. Their preparation helped focus and streamline the discussion. At the end of the second session, Rebecca said that she would take what she had learned and develop an engagement proposal that would summarize the couple's current situation, their goals and objectives, and how LWC would suggest working with them and their other advisors.

The following week, Rebecca sent an engagement proposal to Stan and Randall to review before it went to the Singletons. The document outlined the primary goals and requirements the group had discussed during their prior meetings. In addition, she put the action items into three areas: short‐term tactical requirements; long‐term strategy development and implementation; and long‐term tactical requirements and implementation.

Short‐Term Tactical Requirements: Singleton Family

  • Develop an income and expense budget and forecast for Elaine and David.
  • Review the Biocellular pension plan options and employee benefits to determine what elections need to be made and identify any gaps in coverage.
  • Develop a plan for starting to diversify out of Biocellular stock, including the structuring of a noncorrelated investment portfolio to Biocellular stock.
  • Create a current and future income tax forecast for David and Elaine.
  • Review the Singletons' current estate plan to determine if it is adequate as a short‐term, gap strategy.

Long‐Term Strategy Development and Implementation: Singleton Family

  • Create a family vision and mission statement for the management of the wealth as an enterprise.
  • Develop a family communication plan to share the appropriate details that David and Elaine want their family members to know.
  • Determine how David and Elaine want to allocate their wealth over the long term between their family members and the private foundation they plan to create.
  • Define and develop the focus of the foundation around the areas of impact that matter to David, Elaine, and the rest of the Singleton family.
  • Determine what roles and responsibilities are required to run the family enterprise and define the participation of family members.
  • Develop and implement an ongoing family wealth educational program.

Long‐Term Tactical Requirements and Implementation: Singleton Family

  • Implement and provide for an annual family retreat focused on stewardship and education.
  • Complete the process for distributing assets to each of the children and grandchildren so that each child has $10 million and each grandchild receives $1 million.
  • Develop and implement the Singleton Family Investment Partnership focused on direct and venture investments. Determine the roles of each family member.
  • Develop and implement the Singleton Family Foundation in regard to the mission, management, and administration. Determine the roles of each family member.
  • Complete David and Elaine's long‐term estate plan and communicate it to the children.
  • Set up additional support for managing the wealth and the foundation on behalf of the family.

The New World: The Singleton Family Enterprise Two Years Later

It is 8:30 Tuesday morning, and David and Elaine's oldest son, Tom, is making his way up the stairs of the three‐floor townhouse David purchased six months ago. This area of town is still going through some gentrification, but David loved the building and wanted to be “where the action is.” Renovation of the third floor recently was completed, and Singleton Ventures, LLC, and the Singleton Family Foundation now occupy five offices, a conference room, and a multiuse common area where David added a pool table because he thought it would make his grandchildren see that he really was cool.

Today is an important day because the family is meeting with Dr. Tony Delmetro,* head of research at University Hospital, to finalize a grant for establishing the Singleton Center for Pediatric Cancer Research. The hospital already has raised more than $30 million, and David and his family have committed to an initial funding of $11.5 million through the Singleton Foundation. Given his career in cancer research and Elaine's interest in bettering children's lives, they are very excited about this project.

Tom knows that David has been in the office since 7:00 A.M. per his normal routine. As Tom makes his way to the top of stairs, he is reminded how much his dad has changed since his retirement from Biocellular. He cannot even remember what David looked like in a suit, since his dad has not worn one in almost two years; the last time was to a wedding, and he complained about it. His daily wardrobe is usually a pair of denim jeans and a golf shirt.

It is clear to all the members of his family and his friends that David is completely engaged in working with his family in running their new financial enterprise. He has redirected his energy, passion, talent, and intellect into managing the assets, building the future for his family, and having a major impact on the causes that matter to him and other family members.

Over the last two years, in collaboration with their family, Stan, Randall, and Rebecca George and her team at LWC, David and Elaine have created, implemented, and now oversee a financial family enterprise. As a result of this process, they have put the following into operation:

  • They implemented an aggressive diversification program so that they now hold approximately $50 million in Biocellular stock that represents 20 percent of the overall assets they control.
  • They segregated their assets into several investment pools, including their revocable trust, the Singleton Family Investment Partnership, trusts for their grandchildren, and the Singleton Private Foundation.
  • The family hired a three‐person team to help them manage the operations of their wealth. The team includes chief investment officer Kevin Nolan,* accountant Karen Daniels,* and administrative assistant Cheryl Weaver.*
  • They created the Singleton Family board that includes David, Elaine, Kevin Nolan, and two outside board members. The family board oversees management of the entire family enterprise and provides for a governance process to ensure succession to future generations.
  • They have funded the Single Family Investment Partnership with $50 million, and through effective leveraged gifting strategies have transferred a $7.5 million ownership interest to each of their four children.
  • David, Elaine, and all four children sit on the operating committee of the Singleton Investment Partnership that meets once per month.
  • David, his eldest son, Tom, and their chief investment officer, Kevin Nolan, run day‐to‐day operations of the business.
  • Peter, their son‐in‐law, who has ten years of experience in commercial real estate development, manages the daily operations of the family's real estate portfolio.
  • They have set up a family decision‐making process and family employment policy.
  • They have made over $42 million in direct investments, including co‐investment with several private equity firms, venture startups in the biomedical space, social impact investments, and real estate.
  • They have created, implemented, and funded the Singleton Family Foundation with approximately $110 million of assets.
  • They developed the mission statement for the foundation based an integrated process that included all family members. The foundation focuses on children, healthcare, and the environment.
  • David, Elaine, all four children, and their spouses serve on the board of the foundation.
  • David, Elaine, and Stacy manage the foundation operations, including screening potential grants and distributing funds to approved organizations and causes.
  • They have already made grants to over thirty organizations in excess of $15 million.
  • They have set up the structure for a junior board for the grandchildren to participate in grant making when they reach age sixteen and before they are eligible for the foundation board.
  • They have conducted two full family retreats focused on education and stewardship. Both events were built around fun with a purpose and engaged all of the generations. Elaine, Gretchen, and their second‐oldest son, Trevor, lead the family education and stewardship committees.
  • They developed a family website and reporting protocol to keep all family members informed on the current activities of the family enterprise and to plan for future events.

David, Elaine, and Tom left the hospital at 5:30 P.M. All three were feeling sad, excited, and encouraged, all at the same time. Along with meeting with Dr. Delmetro and the hospital board, they had a chance to tour the pediatric cancer ward and connect with some of the kids being treated there. Although it was difficult to see the children facing such challenging and unfair circumstances, they were uplifted by their incredible positivity and perseverance.

As they got into Tom's car, Elaine said, “It's so hard for me to see those kids and know that some of them won't survive to become adults. I know the grant we're making to the hospital might not change things for the children there now, but if we can help save future kids, then we are making a better world.”

As they drove out of the hospital through downtown on their way to connect with the rest of the family at Stacy's house for a barbeque, they were eager to share the news of the new cancer center with the rest of the family. Tonight would be a celebration. It would be quite different from David's retirement dinner two years ago at Donovan's. There would be no ties and no speeches, but in many ways it would have more meaning, at least for David.




*The examples with an asterisk mentioned in this chapter are composites of cases the author has encountered in his wealth management career. Names and all identifying details have been changed to protect privacy.

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