How High-Net-Worth Families Can Protect Wealth for the Next Generation

What we've seen is we help families get to a point where they can retire. They are very comfortable in retirement. They have more than what they may actually need to live on, which is a great position to be in because that builds in flexibility. But then the question becomes, "Now what? What do I do with that excess?" And I always say, you know, there's only three things you can do, right? You can spend more on yourself. You can gift it to the next generation or kind of whoever you want. You can give it to charity. And number four is Uncle Sam can take it, but we're trying to reduce that. Welcome to "The Informed Investor," the podcast that brings you research and insights to help separate the news from the noise. Do you have a plan for your wealth? And if so, would you share that plan with your family? That is the topic today on "The Informed Investor." It is a show brought to you by Dimensional Fund Advisors, a $1 trillion global asset manager who is bringing financial science to investing. Now, you may have noticed that we are not coming from our Austin office today. We are in Chicago, where we are holding a couple of events for some financial advisors. And we are very fortunate to have one of those advisors join us today on the show. I'm Mark Gochnour, and our special guest today is Nirav Batavia. Nirav, welcome to the show. Thank you for having me. Great to have you here. You are a co-managing partner and CIO with Forum Financial based here in Chicago. So it's great to have you here. And just for the record, we have worked with Forum for, shoot, I'll bet almost 30 years now. So a long history between Dimensional and Forum, and it's been a great relationship over those years. And you stay busy. Yes. Mentioning that, running the business with Jonathan Rogers, who, just for the fun of it, I have to mention, I think Jonathan, who is your co-managing partner, was our first University of Texas hire when we started the office in Austin. Yes. So good history there as well. All right. Today's topic is this idea of a family wealth plan. And before we get into that, though, tell us a little bit just about your background, how you ended up joining Forum, and we'll go from there. Grew up in Houston, went to Penn, always thought I'd be an engineer and ended up graduating from undergrad in '03. Not a ton of engineering jobs coming out of the tech bust. So ended up on Wall Street and started out as a bond and derivative trader. Left after about five years with a colleague of mine to start a hedge fund down in Dallas. Then had a short excursion to build a social media company that we sold to Constant Contact, the email marketing firm. Realized I really loved finance and I really didn't like email marketing. So I had gotten into University of Chicago Booth and started there in 2010. And in 2012 launched my own RIA, which was online only, and grew it to working with about 80 families by the time 2014 rolled around. And I was doing everything. I was not only working with clients, but I was doing the compliance, the marketing, the trading, some of the coding, which I shouldn't have been anywhere near. And my wife turned to me and said, "Nirav, you're working seven days a week. I never see you. You're going to burn out." And so I called up my good friend, Jonathan Rogers, who I had gone to business school with and said, "Hey, I've got a problem." And we had lunch, and he said, "Hey, why don't you just join us? We'll take all of that other stuff off of your plate and you can focus on your clients." Sounded like a great idea. So that's how I joined Forum. In 2015, I revamped our bond approach and the firm said, "Hey, you should be co-CIO with Jonathan going forward. He comes from Dimensional. He can do the equity side. You come from the bond side. It's going to be a great match. Only problem is only partners can be chief investment officers. So you're a partner now." So that was a bit of serendipity. And then in 2017, one of the founding partners, Norm Mindel stepped back from day-to-day management. He's still a partner, still very active in the firm. And so I stepped in as co-managing partner with Jonathan. And here we are almost a decade later. And so I still work with clients. I still focus on the investment side and try to run the firm as well. So we can thank your wife for getting you where you are today. Of course, like for many of us. Yes. Yes. She has been critical in me making better decisions with my career path. Well, you know, we're going to get into that part of it, the family thing. And you have some great experiences to share, obviously, for you and your wife, some of the things that you've done. You've had a lot of client experiences you can share as well. And I think there's many of us sort of in that stage of how do we think about what's been accomplished over time when it comes to wealth? And then when do we talk to family about that? And what are some of the things you go into that? So one of the things we do like to do here, though, Nirav, is we'd like to read some headlines. So I've got a couple here I'm going to read, and then I will get your reaction to them, and then we'll get into this idea of a family wealth plan. All right. So I have three that I'm going to read here. Okay. First one, transmitting family values along with assets. Second one, governance is the glue that keeps families together. And then the last one here, the real risk in generational wealth transfer isn't tax, it's communication. I think those headlines are fantastic, and I'm assuming the stories align. But it's a lot of the way we think about family wealth and family governance. The reality is, a lot of us put a lot of effort into our business lives, into how we run our firms, how we build for the future, our career path. But a lot of times we don't put even five percent of that towards our family governance. And what we're going to talk about here today is how to build that framework. What are the things that are important? Because, yes, you can put in a lot of processes and a lot of frameworks, but it's not going to stick without the stories, the culture. How did that wealth get built? What happened to the great-grandparents, the grandparents, and so forth? How do you collect those stories and preserve them for future generations? And in the end, it comes down to communication. Are you sitting around the table and having those discussions once a year or more often? And I would say most families are not. And we're going to talk about building in that intentionality to get to where, yes, this is a process that is repeatable and scalable and can be passed down generations. I love the fact that you brought in this idea of stories to communicate some of these things that are important to families and the idea of communication. That's the one that jumped out to me is I've come to believe that pretty much everything is communication. You know, when things go well, it's probably well articulated. When things get a little bit bumpy, it's probably because there wasn't proper communication there and it applies just to family dynamics as well. Let's define this idea of governance. What do you mean by the term governance? What I really mean is laying down processes and frameworks of how families make decisions. And where I'll start with is just something that all families have to go through as families age, as parents age and so forth, is those conversations around what happens when a critical event happens. Somebody has somebody has a medical event, somebody passes away and where you're going is a lot of the documents, right? The wills, the powers of attorney, whether it's medical or durable, which is more on the financial side. And you can have all that documentation. But if the people who are named in that document don't know that they're in that document, things get very emotional and hectic at exactly the worst moment for most families. And so what we see is that the families who are best prepared are saying, hey, we're going to go through these documents once a year with the kids, the grown adult children and so forth. Yeah, it's an uncomfortable conversation at Thanksgiving or at Christmas or what have you. But we set aside two hours. We talk about it. We ask questions. We ask the what ifs, like what if this happens? What if this happens? So that everybody is on the same page. And so when you are in some of the hardest and most difficult moments of your life, that plan is there to support you and carry you through. And so part of it is, and I agree with you completely there, this idea of let's have a conversation before it gets very emotional and very challenging. But then the other half of that is, okay, so something has happened. There's this wealth that's been generated, assets, could be homes, money, investments, things like that. That's passed down. Okay, now what do you do with that? Correct. And what's the intentionality around that? And that's the stuff that you've really gotten into for your own situation as well as your clients. So walk us through then how that became, I guess, really a passion for you and something incredibly important for you. Well, it was a situation where as I spent more and more time in the advisory business, I guess, we're sitting here in 2026. So I've been doing this for 14 years. It feels like a long time, but it also, from a career point of view, it's a small part window of hopefully what I do. But as I've moved ahead, what we've seen is we help families get to a point where they can retire. They are very comfortable in retirement. They have more than what they may actually need to live on, which is a great position to be in because that builds in flexibility. But then the question becomes, now what? What do I do with that excess? And I always say, you know, there's only three things you can do, right? You can spend more on yourself. You can gift it to the next generation, kind of whoever you want. You can give it to charity. And number four is Uncle Sam can take it, but we're trying to reduce that. That's where you guys are so valuable. Exactly. And so that's really it. And the question is, how do you build the rules, the framework that align with the first generation's goals? And then once you lay that down, how do you communicate it effectively? Because when that happens, when one of that generation passes away and this wealth moves down a generation, there shouldn't be a question about now what? That plan should have been discussed five, 10, 15 years beforehand. And now it's just executing against the plan that we all know was in place. But there's a lot of work that has to go into that to get to that point. Well, it's important timing too, with trillions of dollars in the next couple of decades, right? Being passed down. So, something every family should be looking into it. And that's something you've done a lot of research on. You've read a lot of books around that. You've incorporated that into something you and your wife have done there too. So walk us through, I guess, in your research, some of the things that jumped out. And I think the process you guys went through would be great because then it's tangible, right? You know, what they did and how they approached it. And I'd love for you to show that too. So, you know, I'm going to mention two books here because in some ways they're diametrically opposite, but they go towards solving this problem. One is "Die with Zero" by Bill Perkins. And I know that that has gotten a lot of press, and it has what Dimensional likes to call a pointy point of view. And I would say, I do not agree with 100% of everything in that book. But the core premise of that book is a lot of us grew up with a savings mindset. "We need to save for retirement. We need to build this wealth for ourselves, for our future generations and so forth." And at its most extreme, it can even come with a negative connotation of a scarcity mindset, right? And then you go through life and you get to a point where not only do you have enough, you have excess. Now, how do you change that mindset to look at money as a utility to accomplish your goals with that excess? Whether those goals are, "Hey, we were able to retire pretty young, you know, in our early sixties or what have you. So we're healthy. And so we just want to travel more." That's fantastic. Do that. And then, or, "Here's money that we really want to leave to kids or we want to leave to these charitable organizations." Well, what the book is saying is, "Hey, if you're going to do that anyways, aren't you going to enjoy it more if you get to do some of that while you're still around versus if it happens after you pass away?" And so I think that has been very instrumental for myself, for my family and for a number of our clients in just reorienting their perspective towards what they've built over their lifetime. So that's what I would say is number one. And then there's a ton of fantastic books on family wealth, family governance, but one that resonated with me is called "Family Wealth: Keeping It in the Family" by James Hughes. And I will tell you that book is highly prescriptive in, "Here's what you do. Here's how often you meet. Here's kind of how you collect the stories and put it together." First time I read it, I kind of set it aside and I was like, "Nobody's going to do that. That's so much work." And it was. And then I went back a couple of years later and I reread it, and something had changed because when I read it the second time, I was, kind of what I walked away from it with was the author was asking me to just put in 5% of the effort I put into running the firm, Forum Financial, to running my family. And so we wanted to put this into action. If I'm asking a lot of clients to go through the same journey, I want to eat my own cooking. And so my wife and I have started taking it pretty seriously and started putting it in action. Well, a couple of things that jumped out to me there. One is you looked at it a couple of years later, then you were ready for it. That's probably true. I think for a lot of people, they may not be ready at the moment, but at least just planting some seeds, right? Until they were ready for that. The other thing that jumped out to me, and I think about that with my folks, as well as my wife's folks, is you mentioned kind of what they grew up with. And I think it was a function of the Great Depression where they had that scarcity mindset. Yep. You save. That's all you ever do. You never spend. And we try to encourage them to do some of the things you said, do some more traveling, some of the things you love to do. And they just, neither one of them could do it. And so I guess that's one thing where maybe some people just can't, but I think you've hopefully found some ways where people can find that trade-off. And the way you said that with the book and said, well, you can spend a bit more here, but also it's for your family. That's one that the book gets... There's, well, then obviously philanthropy too, which is meaningful for a lot of people there. So walk us through then sort of what you and your wife did and how you guys approached that. And I like the 5% part of... Sort of makes it not too overwhelming, but it's a commitment to that. So walk us through it and then I'll follow up on some more stuff. So, where we started was the second time I read through "Family Wealth," and where it resonated with me, I turned to my wife and I was like, "Hey, I want you to read this book because I don't think we're going to be able to work on this until we share a common language and at least have you understand where some of my thoughts are coming from, and you also are coming from an aligned place." And so, you know, we worked on that. One of the things that ended up happening is she ends up driving the kids around a lot. And so it made a lot of sense to put it on, get the audiobook and her work through it there. And then we had this plan of, "Okay, we want to start building out this governance plan. How often are we going to meet? How are we going to collect and retain the family stories? What ages are we going to introduce the kids to various concepts and, you know, where our family is and what decisions that eventually they'll need to make? And how are we going to do that in a way that we feel very comfortable with?" And so that ended up on the procrastination back burner for another couple of years. And then we realized, "No, we need to make this important. We need to set aside time outside of our normal family." And so what this book talks a lot about is, "Hey, you need to be very intentional in saying, 'We're going to take a trip and focus on family governance,' or, 'We're going to get ourselves out of our normal space.'" So what my wife and I did was we got somebody to watch our three kids. And at this point, how old were the kids? So, I have three girls, nine, seven, and four, and we did this about seven months ago. So, this is all very recent. So we found, we put together people to watch our kids for a couple of days. We went to a local hotel, and we literally set it up like a conference agenda. My wife comes from the consulting world. So she tends to be type A, like I am. And so we had an agenda of, "Okay, here's where we're going to go to nice dinners. Here's where we're going to have three hours of conference time," and so forth. And we set aside nine hours over a couple of days to work through a governance plan. And one thing we did was, we used AI to say, "Hey, referring to these books, how would you create a workbook and have us walk through this workbook over nine hours in filling it out?" So we start having the frameworks of a governance plan. So there are some powerful things you can do with AI where you don't have to recreate. Did that work pretty well? It was kind of like, yeah, a coach. Correct. In the room with us and basically saying, "Okay, this is what we got out of here. Where are the gaps? Where can we move forward to the next step?" All of those types of things. And one of the things we're effectively going to do is take that template and that workbook. And I'm basically, I don't know how else to say it, but white-labeling it for my clients and saying, "Okay, now we have how you work through this and get to the end goals we're looking to get to." And I would say, you know, if we're saying from having nothing to having a fully fledged operating governance plan, we probably got ourselves 40% of the way there. On that week. On that week. And so now we need to turn around and do some more work to continue to push that forward. But the goal is that we have those governance meetings once a year, that as the kids get older, and we want to start reading them into sections of it. I think if you look at a plan that we've laid out right now, they're not going to be fully read in until 35 or 40. But even at this age, there are parts of it. For example, for our nine- and seven-year-olds, one of the things that we're going to do is have them advocate for a charity that they care about because we've always had a level of charitable intent that's important to my wife and I, and we want to include them in it. They're not going to know amounts, but we want them to write up a page of "Here's why we really care about this," and advocate for it and advocate to us and maybe advocate to their grandparents. And then we will execute on that. And so that's a kind of baby step into getting into this family governance world. How about on the financial side? I mean, some families will say, "Okay, here's $100 or $1,000. Set up a little investment account." You know, you can match, like, say they put $50 and they get gifts from grandparents, and you can match that just to help them get this idea of savings. Is that in there? It is, but I would say a lot of it is driven by age appropriateness and not stealing, in some ways, unintentionally, their joy on certain accomplishments. Because I remember when I got my first job, right? When I was 16 or 17 and, you know, I was making minimum wage, $7 an hour, and that was so meaningful. But if they know that, hey, there's a trust set up with $500,000 in there that they are going to get, that $7 an hour, or today might be $15 to $20 an hour, it's not going to be meaningful. It's not going to give them that sense of joy. So one of the things that we really talked about in this is making sure that the introduction to some of these concepts happen at the right age. Is there guidance in the book about that? There is. And you see this not only in that book, but in a lot of other books. A lot of these books start with charitable giving. Especially giving time is a great way to get started in sharing values, sharing stories, all of those types of things. Another thing that we've talked about and I've shared with clients is, hey, a lot of our clients have set up 529 plans for their kids' college, right? And as they are hitting that freshman, sophomore age in high school, sitting down with them and showing them and saying, "Hey, this university here that you might want to go to, it costs $80,000 a year. And you happen to be in the lucky few percent if you get into that school where you're not going to have to worry about this because we started saving early for you, and we've set you up in a way that you're going to be lucky to not graduate with student loans, or you're going to graduate with a small amount of student loans," or whatever that situation might be. Because what you don't realize is a lot of times kids are thinking about it themselves. They are looking at universities, they're thinking about where they go and those types of things. And depending on if you've had that scarcity or savings mindset, one of the unintended consequences could be they write off a whole bunch of schools because it's too expensive, not knowing that you have this behind them. But on the flip side, there's also this: "Hey, you're lucky to be in this position. We want you to take as much advantage of that as possible and do the most with it because you're given tools that other people may not have." Well, I like the words you use there, "fortunate." Words like that, to where, "You are in a special place here." If you can graduate from college without debt, that's massive. And I think for a lot of those kids, because they probably have friends too that say, "Okay, well, I can't afford school like that, so I'll stay in state." So maybe it gives them a little bit of extra accountability. "Study harder." Because you know you have a good thing going there. What about some of your clients where maybe the kids are older than yours? Right. So they're out of school, early to mid-20s, starting their own careers, starting their savings plans. Like, when do you start introducing the monetary aspect to say, "Here's how much we have, or here's how much you may get someday"? And maybe you don't. Maybe they wait until you're gone and they forget the amounts. So I'm going to be a little bit prescriptive here and again, take this as one person's opinion. I think first and foremost, building their own plan, their own financial plan. How are they going to save? Where is that saving going to go into? Are they going to be able to max out their 401s and their HSA if they're on a high-deductible plan and their Roth IRAs and all of those types of things? I think it's so important when a child first enters the workforce to get that financial plan in place as soon as possible because it gets them operating into a builder and a growth mindset of, "How am I going to build my own financial situation to support me now and support me in retirement?" So I view that as kind of the first bridge to cross. Then usually the second bridge is, especially if you are very fortunate where parents have set up irrevocable trusts for you and so forth, I think the next step, usually it comes a couple years after the financial plan, is reading them into, "This is a trust. Here's what we want it to be used for. Here's what we don't want it to be used for. You are the beneficiary. And here are the roles and responsibilities and how you become a good beneficiary, an educated beneficiary. And then here's who's the trustee, and here's how you build a good beneficiary-trustee relationship." And by the way, the book talks a lot about this, and many other books do as well. But it's important to understand not only their wealth at this point, which you've done through the financial plan, but what they may be walking into. And a lot of those trusts have provisions where they may get access to some level of assets at 30 or 35 or 40. And you want them to be prepared well in advance to handle that in a responsible way where they can make the right decisions, not only for themselves, but also for long-term propagation for generations beyond them. All right. Let's go back to then the creation of, in your case, you and your wife, your document. Yep. And thinking through that, what happens if there's things you're not aligned on where you just have different views or desires with some of the money? And how does that come into the conversation and get built into a plan? And that, it should, if you're thinking deeply about it, that should always happen. And what ends up happening is, "Hey, is this a decision we have to make now?" And then we need to kind of find a resolution there. A lot of those decisions can wait if you start this early enough, but then if you're waiting, it's not about just postponing. It's finding, "Hey, what is a path forward that we all can agree on and find common ground on that?" And I think some of that is, for example, it took some level of iteration to come back to, "Hey, these are what we really want as our mission statement and our vision statement and our shared values." And I think where we walked away is we're very aligned on shared values, but I don't think either of us are thrilled with where the mission and vision ended up. Great. We'll do some work on it, but it's important that we go through those steps. The way my mind works, I get challenged on the mission, vision, and values and how do you segment each one of those. You know, but I think you probably do have to go through it, each one individually. And I just think that's from my mind. I would just get into the tactical stuff. And what I would say to that is, you have to think of it as living and breathing, not stuck in... Like, I have to get the perfect word. Exactly. The perfect sentence. Like we're in Roman times and we're going to hammer it into some kind of stone, and it's going to be posted there for all eternity. When you bring your kids in, if we're doing this right, right? They are going to want their own imprint on what that mission and vision and values are. And so this is something that should be living and breathing and ever-evolving as well. That's another question I had for you. How often do you revisit, I'll say, the family plan? So, in a proper governance approach, just like I say, you know, going back to that wills, powers of attorney conversation, do it every Thanksgiving or every Christmas. By the fifth one, you're going to be glazed over because you know what it has to say, but it gives you an opportunity to look at it and say, "Hey, has anything changed?" And so what I'd say from a governance standpoint is that annual meeting should start out every year with a review of that mission, vision, and values. "Are we still sure that this is where we want to be? Are there changes that we want to make, and what has changed that is driving that?" And then start out your meeting the first 30, 45 minutes, an hour with that. Yeah. It takes the pressure off of feeling like you have to get everything just perfect. Because you can adjust it and evolve it over time as well. Okay, Nirav. So I'm going to apply my own situation to this. It's probably similar to a lot of your clients and perhaps a lot of the listeners out there, but again, thinking about mine, my kids are in their mid-20s. And you talked about having these meetings around Thanksgiving or Christmas. Like, what does that look like? How do you actually have these conversations? What are the discussions? What are the questions that the kids may have? Walk us through that. So I usually break the discussions into two different parts at two different times of the year. One is the wills and power of attorney discussion. And the second is that family governance discussion. So I'll start with the wills and powers of attorney discussion. That is that Thanksgiving or Christmas and, what have you, a couple of hours. And it's going through and saying, "Okay, for the wills, who are the executors? Who is getting what? How does this all propagate?" That tends to be a relatively easy discussion. The powers of attorney, the financial and the medical, tend to be a lot more involved. And again, going through, okay, obviously, in most cases, the spouse is the primary power of attorney on both sides. But what you're really focused on is what happens after that. And saying, okay, if I'm going through my medical authorizations and, you know, do-not-resuscitate orders and all of those, really going through those what-if situations and saying, "Hey, I state in here that I don't want to be resuscitated. If this happens and the doctor says, 'Oh yeah, they'll be out of the coma in, like, three days,' then, yeah, that's fine. But if they say, 'Hey, it's more likely than not that they're gone,' then you're going to have to make a very hard decision to let me go. How do you feel about that? How are you ready for that? Are you comfortable with that? What questions do you have about that?" And so really having that uncomfortable, that vulnerable question. And a lot of times the first time you go through it, it will be emotional. It should be emotional. And then as you get to doing it the second or third time, we'll be like, "Okay, yes, we've gone through this. It's a little bit morbid, but I understand why we have to go through it." At least from the kid's perspective. You know, a quick story. Kind of funny. Our estate planning attorney, when we were updating our will, we did the exact same thing with our kids. We talked to her and said, "Here's what we're doing." Our estate planning attorney said, "Probably put the kids in there after the spouse." It depends on the families, but, like, mid-20s, it's a heavy burden. And most kids in their early 20s probably aren't ready. Maybe mid-20s and later. Yeah. And so we did that and had some other people take that on, and we're telling our kids that. And our son was like, "Yeah, it was probably a good idea." And my daughter, she's like, "I could take that. No problem." "I know exactly what your wishes are. Done." And that's fantastic. And it's a great opportunity to learn about your kids too, because I think a lot of times we underestimate our own children and their ability to navigate some of these difficult topics. And we make it harder in our heads than, you know, they may even feel about it. So, on that part of it, it's the, okay, you go through that, the powers of attorney. Here's why. Here's who it is. How to think about those kinds of things. Right. All right, now, then when it gets to the part about, hey, here is how we're going to dole the money out, not necessarily dollars, but in terms of, you know, a percentage. Every five years, you get something, something. Is that done in that one? Or is that done in the other one? I would say that's more in the governance. And again, "Family Wealth" talks a lot about how to run a proper governance meeting. The key is having the meeting structured in a way that you can pull in your kids for part of it, but not all of it. And as they're age-appropriate, you are going to pull them into more and more and more until they're just doing the whole meeting with you. And so again, talking to my kids, we may just pull them in for the philanthropic section and say, "Hey, here's who we're going to give to. By the way, the prework we wanted you to do was you to write up why we should give to X, Y, and Z causes," and we'll have a discussion about it. And they're just going to be pulled in for that section. And then they're out. And so that meeting, again, going into, spending into it, getting away from your normal day-to-day, for a lot of families, especially families with means, that is better done on, like, a vacation and saying, "Hey, we're going to do three or four days at this resort. We're going to run our family governance meeting over this day or this day. And on these days, the kids can go off and do their own thing or what have you, because a lot of it is just going to be your mom and I. But the parts that we can pull you into, this is when you have to be available. And we're just going to make it part of the agenda of this meeting at this really cool resort or on this really cool vacation." Are those a couple hours usually, the meeting time? Yeah, I would say, look, if you do everything that you want to do in that family governance, go over your mission, vision, and values, talk about changes in your family's intellectual capital, in your family's human capital, then talk about the philanthropic aspects, then talk about kind of individual financial planning and those goals. That's not a couple hours. That's like six hours, right? To give enough attention to every section. There's probably a section in there also that you're talking about family stories. Where are the gaps? What are the ones that we want to add to our stories? What are the stories that we want to introduce our kids to this year in an intentional way? What do the kids come back with? Questions they ask? Are there frictions that may arise? There's going to be a lot. And I think as you introduce them to more and more of it, the question is always, I almost take this to the family business world. And I have a lot of friends and colleagues of mine who happen to be third or fourth generation business that has been through their family. And the big questions are always like, well, when's the senior generation ready to hand over the responsibility, from a both operational standpoint, and then also from a financial standpoint? How is that going to happen? Am I going to have to buy out my parents? Is this gifting over time? All of those types of things. And the ones who talk about it and are transparent about it, it works better. This is the same thing. You're just doing it for your family. And so as you get into it, they should have questions about, "Well, why is that our family mission? Why is that? Why are these the values? Why not this word over here? Does this make more sense?" And so forth. The more that they engage, the more likely they are to propagate it. And then making those decisions on, when is the time for them to start taking over? Maybe they run the meeting and, you know, the senior generation just becomes the guardrails and not the centerpiece to the meetings. You mentioned the generations. That's a good point too about do you bring everyone together? Okay. You got grandparents now. And let's say they're doing these with their kids and then they have grandkids. Do you do an entire big-family one sometimes? And that has to be answered on a family-by-family basis. What I would say is a lot of times it's easier to break it out over time to the smaller units. So maybe you do have the grandparents, the current generation, and the kids in a single meeting, but then there's three kids. And once they have their own families, maybe they're running their own individual meetings and they've had separation of their financial situations and everything like that. But they're starting from those values and kind of building their own from there. Sometimes, going back to the family business, you know, you can read lots of examples of those. I think for a lot of people, Cargill, for example, comes to mind as a major family business, or the Hiltons, or what have you. And you can say, you know, in those cases where everybody has some level of ownership and it's kind of a single entity that's keeping everybody together, you got to run it like a big shareholder meeting, right? You have all these shareholders, and you got to run it almost like a public meeting. And you'll find that a lot of the families do it that way. But that's a lot harder and a lot more complex. So when you can cleanly split it, then it becomes easier to kind of propagate and run their own units. I won't get into if you have an outcast in the family. Professional help Right, to manage that one. Yes. I would probably say yes. And look, these are best-laid plans. What are you really trying to do if you go back to first principles? You're trying to avoid the proverb that exists in every language and every culture of "Shirtsleeves to shirtsleeves in three generations." And what you're trying to do is put in the values and the culture to propagate this longer. What I like to say to clients who are reticent, for example, about spending more, I'm like, "Look, you can't take it with you. It's going to go down a generation. And what family have you seen that has that family wealth that doesn't have that third- or fourth-generation kid that's buying a new Ferrari every month? I'm sure you have better ways to spend it now." Okay. You've done some of this with your clients. What have been some of the takeaways? Like, where have you seen some adjustments behaviorally, or perhaps relationships with the family, things like that? I think, again, this is early days of testing, right? We went through and started this process ourselves seven months ago. I have clients who are on the same journey, maybe started a little bit earlier, but now I have more resources to kind of give them and help them walk through that journey. I think the biggest issue is, again, life gets in the way. And if you're not intentional about carving out that time. And frankly, the book suggests, and what we did, is spending a little bit on it. If you go somewhere nice, right, and you kind of hear the dollar bills clicking away, and so you're like, oh, I have to make some progress. I have to make this worth it. Whereas sitting on your couch after the kids are asleep, you may not have that pressure. And so in some ways, it's what incentive system do you have to design for yourself? This is going to a different book, James Clear's "Atomic Habits," and so forth. What habits do you have to create so that you actually intentionally set aside time and spend some effort on this on a regular basis? You know, one of the things I think would be challenging for this, and I'm going to go back to your buckets, right? Okay, well, let's assume you're in a situation where you do have extra assets. You can spend more, you can give to your kids, right, or you can, philanthropy. Let's go back to spending more. I think it'd be hard for a lot of investors to say, "Okay, I hear you. But you go back to the uncertainty of markets and investment returns. We just don't know exactly what that's going to be. And so to say, I have the confidence to spend more or to give more away today, without really knowing exactly what this is going to look like 20, 30, 40 years from now." How do people handle that one? So we start with a margin-of-safety conversation. And what that really means is, we're running their picture through a 10,000-path Monte Carlo simulation, and we're telling them, "This number is what you can spend annually. Let's call it $180,000 a year, for example purposes, $15,000 a month on an after-tax basis, and still have the portfolio grow at least at the rate of inflation. So the principal will maintain purchasing power." So this is basically telling them, "Hey, you're never going to touch the principal. This is a very conservative spending number. The principal is actually going to grow over time, at least at the rate of inflation. And this is what's left over. This is what's excess," right? So now you've put a number in front of them. Guess what? They're not going to believe you until you tell them again, and you tell them again. And over... Not believing you on the sense of... Hey, I have $15,000 in excess over what per month, over what I save or what I spend, that I can do these three things: spend more, give to charity, or give to the next generation, what have you? Nobody believes you the first time around. You can show them all the charts in the world. They have to live it. And as you are meeting with them on a regular basis and so forth, and that $15,000 a month creeps up to $16,000, and then it creeps up to $17,000, assuming, you know, normal-ish markets and so forth, if they're not spending anything, it's getting reinvested. And so their principal is growing faster. And so it's going to start creeping up. And a couple years in, they start believing you. And then they're like, okay, I'm going to start spending some of this, but they're not going to spend all of it to start with. They're not going to carve it out into those three buckets. So you're slowly reducing that reinvestment bucket as they inch more and more into this. Then a lot of the questions become, okay, we're spending to our capacity that we feel comfortable with. We're not NetJets people. We're not going to go crazy here, right? Maybe first class, something. Exactly. I have a lot of clients, especially, you know, as you get into your 60s, 70s, and 80s. When you're traveling internationally, it's really hard to sit in economy class. Well, splurge on the first-class tickets. That's fine. You can afford it, right? And so that tends to be part of that inching-up process. And then you're saying, "Hey, look, you've kind of hit the limits of what you're going to spend on yourself. I've pushed you as hard as I can. I've given you the book 'Die With Zero.' I've told you to throw big parties, do whatever. We're good there, right?" Now all the rest of this is either going to go primarily to kids and some potentially to charity. Now the question is timescale. Do you want to wait until you're gone for these charities or your kids to get these assets? By the way, your kids are going to be in their 60s, and they're probably going to be fine at that point. They don't really need your money. Or do you start pulling some of those levers earlier so that you experience the joy of giving and you're hitting them at a critical point in time in their 30s and 40s when they're having kids, they have all these additional expenses in life that they're really trying to balance, and that money could be more meaningful for them? Helping with the down payment on a house, things like that. Exactly. There's been quite a bit of research too that says, you know, the joy and satisfaction and happiness isn't from buying stuff. Correct. It's experiences. It's experiences. With family or the impact of giving money and the joy you get from that too. So there's a lot of other benefits, I guess, you get from that. If you go back to the philanthropy side of that, then, and let's talk about the governance. So a couple, husband and wife might say, all right, as part of the governance, it sounds like we're prescribed to write something up to say, here's what's important to us and why we support X, Y, and Z. Correct. And then is there an expectation that the kids will continue some of that, but they probably want to bring their own in? That they're passionate about and have meaning for. And if you're meeting with your kids, so, for example, on the charitable side, my kids are not going to be read in on dollar amounts, but they're going to be read in on which charities we go through from ages nine and seven. We're not going to do the four-year-old right now. That's a little much. But if they are read in on that annually for the next 30 years, obviously they're going to bring some thoughts into that. But they're going to see the evolution of that over time because there may be some philanthropies we care about a lot right now that might not be quite as important down the road. There may be others that come into play that are more important to us. And so as long as they see that evolution, they're going to be able to take it from there and say, "Hey, yeah, these are some of these things that we want to continue to do because it honors some of our values." A perfect example is my grandmother on my mom's side back in India strongly believed in education. And so every year she would take another child from that area who couldn't afford education and pay for it all. And she started, especially for widows, women's cooperatives where they made craft goods and sold them and all of those types of things. And so this is tying back to stories. That we want to carry on that idea of education and women's empowerment and so forth. And we're going to have some of our charitable endeavors go in that direction just to honor my grandmother. And those are the things... The stories are the glue that make that possible. So expand on the stories. I think that's a wonderful example of what's important from a charitable standpoint. Probably similar to savings. Here's how we think about savings. Here's some examples where we made trade-offs to delay the joy or something of purchasing something for the value of savings. Are there certain buckets you want to create these stories around like that? Absolutely. I mean, I'll go back to what we were just talking about in terms of the timescale of gifting to children. You know, one of the objections that comes up often is, "Well, I don't want to gift them all this money because then they're not going to save well themselves." I'm like, well, you can turn that with communication," because you've put yourself in a position by your savings, by your discipline over your working lifetime, you've put yourself in a position that you have the option to do this now for your children. And if you deliver the gift with that messaging and that communication that, hey, this is only because I was disciplined throughout my life that I have this financial flexibility to do this for you. And we want you to do the same thing. Be disciplined in your life so you can pay it forward, you know, a generation from now. Yep. I love that. It's a great one. Kind of to give it back in a sense, too. And then you're going to give it equally to your kids or other charities as you grow as well. I like that. I'm thinking about taking that to my kids too, on this stuff. Because mine are in that, again. They're 26 and 24, right? So in that sweet spot of having these conversations. Correct. You know, and getting them building their own little plan, you know, as they are now both married and establishing their own family dynamics around that stuff. And that's where I kind of talk about, "Look, you know, you are going to work with your own advisor and build this all out and figure out what's right for your family." What I would say is, yeah, there's an order of operations that makes a lot of sense. They should have their own plan first. Then they should start having an idea of what's coming to them in the near term, or if there are trusts, if there are not, what have you. Then they should get comfortable with the nonfinancial side of your plan, the wills, the powers of attorney, who makes those decisions. And sometimes you'll go through it, and the kids will have input for the parents. A perfect example of that is my own parents. We sit down and we go through that plan with myself and my sister, and we try to do it on an annual basis and so forth. Well, my wife and I and our three kids, we're the one outpost of our family in Chicago. The rest of our family, our parents, our siblings, their kids, all of that, they're down in Houston. And so one of the things we talked about doing and executing was, "Hey, yeah, I do this for a living. And so being the durable or financial power of attorney makes a lot of sense, to name me. But as far as anything medical, my sister's down in Houston where my parents are. I'm up here. If something were to happen, she's in a situation to make a decision much more efficiently than I am." And I think, A, even though it's the right and logical choice, I don't think anybody had said it out loud until we were sitting around the table. And then it took a year for my sister to get comfortable with that because that's a lot of responsibility to take on. And that's a lot of those wishes to know and everything like that. And so it was a process to get that changed over. But I think we're all in a better place for that communication. We did the exact same thing. I've taken on the financial stuff, trustee part for my mom. My sister's done all the medical stuff for my mom. And it's worked out really well. And it's sharing the duties too because it does take a lot of time, both of those as well. The other thing I was going to mention too, you talked about getting with the family on the will, the medical powers of attorney, and some of those decisions. And I've seen it firsthand where it has to go beyond just saying, "Well, you're going to make your call." Right. I won't say role-play, but you almost have to role-play it emotionally because you have to make a call. And some people think, oh yeah, I'll do it. But then when the emotions are high, it can be incredibly difficult to do that. You want to talk about what happens in a coma situation and DNR orders, do-not-resuscitate orders. And that is incredibly morbid and difficult to talk about. But guess what? The families who have actually talked about it and game-planned it and know what is going to happen, when emotions are high, when that moment comes, they know the decisions that need to be made. And honoring those wishes. Correct. And it happens. It happens. I've definitely seen it more often than I probably expected to getting into this profession 14 years ago. And I'm going to see it a lot going forward. You know, we haven't really talked so much about just general advice like that, but that's a great one in your experience. That stuff happens. You got to get prepared for that. Does anything else that doesn't come up often come to mind on some of those things? I mean, a lot of what we've talked about, I think people don't realize that we spend so much time talking about how to save, how to build toward retirement, how to make sure you're set for retirement. You have enough. But how to spend is a muscle you have to tune as well. Going back to "Die With Zero." And once you have kind of hit your goals and reached that point that you have excess, how do you do it in a way that aligns with who you are, your culture, your family values? How do you create the most joy? Going to a very quantitative kind of Booth School of Business take, how do you get the most utility for that money? And I measure it in delight and joy. What I've heard, for a lot of people, they retire, and then it's really difficult emotionally to start spending, right? Because they've lived their whole life saving, saving, saving. Now you can spend, and they struggle with that. And I think that's the stuff you just walked us through. It makes it easier and more permission to do that. And that's one of the things for recent retirees, we kind of look at, okay, what is your income coming in from various sources? What do we expect your expenses to be? What is the gap that the portfolio has to cover? And then let's send it to you monthly. You're getting it the first of the month or the 15th of the month. And you're just getting it like clockwork. It feels like a paycheck because if it doesn't feel like that, if it feels one-off, then it feels like you're making a decision starting from zero every time. Whereas if it's just automatic, it feels less jarring because it feels like, oh, I just went from one type of paycheck to another type of paycheck. And now we'll tune it up or down depending on what happens to our spending. We're making our best guess, and then we'll adjust from there. That's a great mindset. Think about it as a paycheck. All right. A couple of things that jumped out to me. I'm going to summarize some stuff and then you kind of redirect. But I think a couple of things here. This idea of governance, putting some of these words on paper, getting with your partner, sorting that out. Just start. Just start with something. And I'll come back to you in a moment, and we'll get these books again. Start with something. Put the wills in motion. I guess don't feel like you have to have the pressure that you've got to solve it all in two days. But just keep building on it and building on it. You go back to bring the family in early. Not necessarily the dollar amounts, but at least intent. Things are important to you. And get them thinking about it for their own situation there. And I just, I'm going to stick with that last one you said there. Sort of this idea of the joy that comes with these things that are important to you can be incredibly rewarding for the family, and that cascades down, you know, for generations. So that's my big summary here. Anything you'd add to that? Yeah. I think there's one concept from "Family Wealth" that we didn't talk much about, but I think it's really important to all of this. Financial wealth, financial capital, is important. But one of the things the book really talks about is that it is always in service of your intellectual and human capital. And so when you are running family governance meetings, really start there. You know, we talked about revisiting mission, vision, values, but then starting on where does our family's intellectual capital and our human capital sit? What has changed over time? Where do we want it to go? And then thinking about the financial aspect as being in support of that vision, not the core part of that vision. And I think that helps guide families and takes it kind of up Maslow's hierarchy of needs from thinking about dollars and cents to thinking about what is the impact that we want to have on the family and on the greater world? Love it. That is a great addition. Remind us of the books. So the first one that I brought up was "Die With Zero" by Bill Perkins, who's actually a Houstonian as well. And then the second is "Family Wealth: Keeping It in the Family" by James Hughes. All right. Fantastic. "Die With Zero." I have a family member who's really run with that concept. Probably a little too far. You still got to be careful. You still got to be careful. You don't want to plan for running out of money at the age of 90 and then end up living to 105. So yeah. Nirav, this has been fantastic. Thank you for sharing all that, your own experience, being vulnerable, sharing that some of your clients there, and really appreciate it. It's going to make a huge impact for a lot of families. So thanks so much for that. Well, thanks for having me. Hey, and thanks to all of you for joining "The Informed Investor." We appreciate your time here today and be sure to check out the book "Stay Calm." It is from our founder here at Dimensional and chairman David Booth. Great insights there, continuing the conversation we had here about life as well as finances. So thanks, everybody. Have a fantastic rest of the day.