Why Many Business Owners Don’t Want Their Kids to Inherit the Company


(StatePoint) Being a business owner is considered an “American Dream” by many, yet when it comes to succession planning, a recent survey reveals that not everyone feels the same way about passing the torch onto their children.

The survey was conducted by Versta Research on behalf of Wells Fargo in January and February 2023, and studied the attitudes of 1,008 “wealth creators,” which were defined as U.S. adults aged 50 or over who have at least $1 million in investable assets and earned (not inherited) most of those assets. Thirty-nine percent of business owners say their business has been an important source of meaning and purpose in their lives, yet half (52%) don’t want their children to inherit and succeed them in running the company. And among parents, nearly all (93%) want their children to forge their own path, rather than follow in their footsteps.

“It may sound very much like the plot of a television drama, but many investors lack confidence in their children’s ability to step into their shoes. Others believe handing over the keys to the castle will be a disincentive to earning their own financial success,” says Michael Liersch, head of Advice & Planning for Wells Fargo.

But as Liersch points out, some wealth creators feel they are doing their child a favor. “Many parents are simply recognizing that their children’s strengths and interests are not aligned with the family business. Having those insights can be key to effective succession planning.”

All this is not to say that parents don’t want their children to succeed. The large majority (67%) want their children to live up to their family’s standards of wealth and success, and many go so far as to assist them financially with education, car purchases, healthcare expenses and even travel and vacations.

Nine out of 10 business owners attribute their own financial success specifically to hard work and determination. Two-thirds (67%) cite the advantages of a good education, and over one-third (37%) acknowledge the importance of living in the land of opportunity, while a quarter (23%) acknowledge the role of luck.

Helping to move this success down through family lines tends to get trickier for some, though. While 73% believe they have succeeded in passing down their financial values, 45% worry about their children not knowing how to build wealth of their own, and a third (35%) report it has been hard to transmit their work ethic to their children.

So how can one plan for the future in a way that may help protect the business while promoting family harmony? Leaning on a wealth and investment management firm that has expertise in succession planning, estate planning strategies and family dynamics can help families forge a clear path ahead.

“What’s most important is that everyone is aligned and there are no surprises,” added Liersch. “Without a thoughtful conversation and formal plan, assumptions can be made and disruption to family dynamics are highly likely.”

*****

This advertisement was written for Wells Fargo Wealth & Investment Management (WIM).

WIM is a division within Wells Fargo & Co. WIM provides financial products and services through various bank and brokerage affiliates of Wells Fargo & Co.

Wells Fargo & Co and its affiliates do not provide legal or tax advice.

Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.

Investment and Insurance Products are:

• Not Insured by the FDIC or Any Federal Government Agency

• Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or Any Bank Affiliate

• Subject to Investment Risks, Including Possible Loss of the Principal Amount Invested

©2023 Wells Fargo Wealth & Investment Management. All rights reserved.

PHOTO SOURCE: © vadimguzhva / iStock via Getty Images Plus


More Resources

Its Good to Know Your Banker
Recently my bank opened a new branch that is a few miles away from my house. I used to visit the local branch that was located in the grocery store and enjoyed seeing the ladies on a weekly basis who were the tellers.
Should You Write Your Own Business Plan?
If you are just starting a company and looking for funding, or looking for additional funding for growth, you will need to develop a traditional business plan. Creating a business plan is a business hurdle that entrepreneurs seem to dread.
Creativity & Entrepreneurship - Key Questions From My Students
Hello Creative Entrepreneurs!Thought for the day:"It is not easy being an entrepreneur, but it is always rewarding. It takes great discipline, self-motivation, hard work and perseverance to achieve your dream.
Health Insurance for Solo Entrepreneurs
One of the most important benefits employed people enjoy is health insurance coverage. It is also the single most costly expense for self-employed entrepreneurs.
Empathy - Not Business Plans - Key to Your Home Based Business Success - Do You Have Empathy?
EMPATHY is a Natural Talent, you were born with it and you will never loose it. It can be a blessing or a curse in a home based business.
Venture Capital Negotiating Issues
When companies enter into negotiations with venture capital firms, there are several issues which need to be defined and agreed upon. This article describes the key issues.
PTO; Justification of the Means and the Ends
Some would say about certain issues that the means do not justify the ends. Well more often the ends do not justify the means.
Good Questions, good Answers; Bad Questions, Bad Replies
I'm convinced that asking the right questions is one of the most important skills you need to become a successful business person. Questions have the power to direct you or to distort you.
Rambling Confessions of a Recovering Entrepreneur
I told my family that I finally accepted that my passion had become an ob- session, and you could even call it an addiction. They all laughed.
Online Women Entrepreneurs Need To Pace Themselves
Saving time means pacing yourself, being organized, and always prioritizing your duties, responsibilities and efforts.Pacing yourself means allowing time for unexpected situations, such as having enough time to check the ever-growing inbox, setting-up special autoresponders for automatic responses (a miraculous tool?really), and other technical issues of running an interactive website and blog.
Realism vs. Optimism in the Business Plan
The most important function of a business plan is to create interest among investors so that they write a check. In achieving this goal, business plan writers are often challenged by determining the proper level of optimism in their plan.
7 Lean Marketing Laws For The Inspired Entrepreneur
The following laws will provide guidance on how to act,think and work in a lean way. You can apply these laws toall areas of your life, work and business to get biggerresults from the time you invest.
How To Start a New Business
While it is tempting to just leap into a new business because of it's exciting possibilities, a few key planning points will vastly increase your chances of success. These steps aren't difficult, but they're easy to skip.
Evaluating an Opportunity
Business opportunities are often based on broad trends, such as:? demographic, such as the "graying" of America (creating opportunities in health services, for example);? sociological developments, like the "green" movement, with its emphasis on recycling and environmental sensitivity, and;? cultural changes caused by changing economic conditions and technological developments.Opportunities can also frequently be found in current and developing business trends such as:? the globalization of business,? the need for outsourcing created by downsizing, and? the burgeoning service economy.
Interview with Best-selling Entrepreneurial Authors Barbara Winters and Nick Williams
Ray Bradbury's quote, "You've got to jump off cliffs all the time and build your wings on the way down" may sound extreme but, as anyone building a business knows, it has a lot of truth in it.As a newly self-employed journalist / writer and life coach, I found Barbara Winter's book, "Making a Living Without a Job" invaluable so when I got a chance to interview her and Nick Williams in London, I was delighted.
Starting a Company on a Shoe-String Budget
A lot of people never start businesses because they believe they don't have enough money to do so. Unfortunately, these same people don't realize that many of the world's most successful companies were started on a shoe-string budget by an entrepreneur with limited resources.
Questions For The Entrepreneur To Be
Entrepreneurial e-gnorancePart 1: Questions for the entrepreneur to beIf you are an entrepreneur starting out, or have been around the block for some time but are yet to hit on the jackpot, you might be missing out some of the cornerstones of doing busingg through the new age media, the internet. Ask yourself the following questions and in seeking out answers to the, you may find the magic touch that could propel you to the success that drives you everyday.
Entrepreneurial Business Plan The Down And Dirty Way
Does the idea of running your own business sound exciting? Do you have a business up and running and want to take it to the next level?After coaching hundreds of entrepreneurs at various stages of their evolution, I've found that the answers to these 5 questions can make or break any endeavor. Of course there are lots of other areas that must be addressed, however these will get you moving in the right direction quickly.
Increasing Business BIGTIME with a Successful Referral System
What I've discovered from most of my small business clients is that most would prefer to build their business through referrals rather than through direct mail, advertising in newspapers, radio, TV. However, most leave the referrals to a somewhat chaotic, unplanned approach.
Drive Website Traffic Unconventionally, Force Your Children To Do It
If you believe that every little bit helps then keepreading..

More Entrepreneurialism Information:

Related Articles

Business Is No Guarantee of Riches
Q: I'm thinking about starting a business since that seems to be how most rich people get rich. I don't have any business experience or much money, but I'm a fast learner and have lots of energy.
Key to Starting Your Own Clothing Company
Starting your own private label clothing company is not as difficult as you may think. I assure you that the founding members of Volcom, Paul Frank, Hurley and Von Dutch, are not mad geniuses of fashion.
How to Start a Franchise
Franchising InformationFranchise oppotunities are all around us today. You may pop into Starbucksfor coffee and then head for lunch at MacDonalds before returning home andordering your dinner from another local franchise, Pizza Hut.
Realism vs. Optimism in the Business Plan
The most important function of a business plan is to create interest among investors so that they write a check. In achieving this goal, business plan writers are often challenged by determining the proper level of optimism in their plan.
Time Management Tips for Solo Entrepreneurs
Does it seem like everyone and everything is vying for yourattention all at once? It can be hard for solo entrepreneursto know what to do first, let alone try to find the time to get caught up. Here are some time management tips that will help youto stay on top of it all:1.
Developing A Contract
As a service provider, the most important type of "boundary" you can set as a business owner involves those policies and procedures that govern how you interact with your clients. The more precise you can be about the services you provide, your fee structure, and what you expect from your clients, the smoother your work relationships will be.
7 Small Business and Self Employed Law of Attraction Principles For Success
It is widely held that one of the most important ingredients in small business success is perseverance. Deciding on a strategy and sticking with it.
Franchise Business and Franchise Businesses
Franchise business is being part of a successfully proven business that has a name or trademark that is well known and profitable. Franchise businesses are strategically tried and marketable with options to expand by offering products and services that appeal to the consumer.
What Part of Handwriting on the Wall Dont You Understand - They Dont Hire People Over 50
In a recent talk to the Detroit Economic Club, President Bush told of a powerful statement made to John Bailey by his wife, "Just what part of the writing on the wall don't your understand - companies don't want people over 50!" The White House staff had become aware of an amazing story of entrepreneurial success stemming from John's wife's words.John's wife was very quick to read the writing on the wall, rationalizing that it would be virtually impossible for John to find a new job.
Dream It, Create It, Become It! Design a Dream Board
Have you ever heard of "Dream Boards" or "Treasure Maps"? A Dream Board is a visual picture of the dreams you have for your life. Some of my clients also use this concept to visualize their businesses! It's their first business plan.
The Use of Common Stock in Venture Capital Transactions
When raising capital for a business venture, a company can either raise debt capital, equity capital or a combination of the two. Debt capital is money loaned to the company at an agreed interest rate for a fixed time period.
Entrepreneurial Business Plan The Down And Dirty Way
Does the idea of running your own business sound exciting? Do you have a business up and running and want to take it to the next level?After coaching hundreds of entrepreneurs at various stages of their evolution, I've found that the answers to these 5 questions can make or break any endeavor. Of course there are lots of other areas that must be addressed, however these will get you moving in the right direction quickly.
How To Find Focus And Turn Your Talent Into A Thriving Professional Business
There are tons of books and articles available to help professionals start up their business, but few that give practical insights on how to nurture your business once it's out of its infancy. At some point, every self-employed professional reaches the same dilemma: how to build a strong brand and grow their business without taking on too many clients, undervaluing their expertise, or sacrificing their lifestyle.
Youth Entrepreneurship, A Disappointing Truth
The psychology of entrepreneurship can be very rewarding to one who dreams of starting their own business. The freedom of being your own boss has billions of people seeking financial independence and other entrepreneurial expectations.
Oil Change Guys History; Part II
Franchise companies are not born they are made and when studying the history of franchise companies, it is amazing how similar they really are. To continue this story we are in the height of the Dot Com Bubble with money flowing in Silicon Valley and personal services and labor is at a premium indeed;Before Oil Maxx's downfall, Oil Maxx with the foresight of Mr.
The Entrepreneurs Dilemma
In business, you plan to protect your inventory, your unique ideas and approach, and your money. It's easy to replenish inventory, come up with new ideas and make more money.
Is Running a Business for You?
Not everyone is cut out to run a business. Not everyone is cut out to be an entrepreneur.
How to Become a Successful Entrepreneur on the Web
Becoming a successful entrepreneur in the online world is no different than becoming a successful entrepreneur in the brick-and-mortar world. Both tasks require vision, determination, and hard work.
Six Degrees of Separation
Through just five or six intermediaries, you could be linked to millions of others. It is the notion behind what has been dubbed the small world effect.
PR That Entrepreneurs Often Overlook
If that sounds like you, here's what you may be missing once the new enterprise is launchedPublic relations that really does something about the behaviors of those key outside audiences that most affect your new enterprise.PR that uses a fundamental blueprint to deliver external stakeholder behavior change - the kind that leads directly to achieving your venture's objectives.