Succession Planing: Family Wealth Creation mishaps, The Good, The Bad & The Ugly

A friend of mine who worked at the old Nairobi Stock Exchange in the late '80s, shared with me about an experience that made it to his list of wonders of money.

At the old Exchange, a man that we name Martin for a better flowing story frequented the public gallery and often left without talking to anyone. Martin owned a taxi before the advent of both the yellow-lined type and the present-day App hailing taxis. He operated off Kimathi Street and easily mingled with other taxi drivers around his base. At one of his frequent visits to the Exchange, he mustered the courage to approach a dealer who was exiting the floor at the end of the trading day. He enquired from him about the best buys at that moment. Without much hesitation, Peter, the experienced dealer pointed him away to a novice trying his hand in the intricate game. Peter had no time for Martin obviously because Martin dressed like a pauper. Patched up Safari boots and wrinkled old clothes made many dealers wonder if at all Martin could afford to buy any shares worth their time. The new dealer, John, out of courtesy walked Martin through the hot stocks, the long term best buys and the counters to avoid. The conversation was a brief one. The next day, Martin was back at the Stock Exchange. He patiently waited for the end of trading, then reach out to John. Peter dissuaded John from wasting time with a wretched who could not afford to buy a single share, but John's friendly nature carried the day. Martin then revealed to John that he had considered his advice from the previous day and decided to purchase shares worth one hundred million shillings. This came as a shock and John was not sure what to make of it.

Some quick questions for Martin included. Did you rob a bank? Did you kill someone and walk away with the loot? How can a taxi driver have such an amount of money? In the ensuing conversation, Martin revealed his true net worth. He held an impressive real estate portfolio in downtown Nairobi and in the leafy suburbs but lived in a modest house in Eastlands.

At the time, his four children were all pursuing university level education in the United States of America and all fully sponsored by Martin. Martin preferred keeping busy with a taxi because rent was only collected over three days every month, and one of his childhood friends operated a taxi too. He found good company in his old friend as they could chat between taxi rides. He built his empire from scratch stringing together odd jobs and saving every penny for any fixed asset in his sights. His secret lay in how he lived below his means so that he could save up for a brighter future.

Before long, Martin's portfolio was worth four hundred million shillings in additional stock purchases and appreciations in shares held at the Exchange. Naive John was now a rising star earning himself and his employer some decent income in commissions. For Peter, the old dealer, plenty of experience spiked with negative energy bore no fruit and regret followed him to his last trading day as he became the laughing stock. Closely following this Stock Exchange story, is a personal experience at my second job in the Office Automation Industry. We had a showroom in the CBD and customers would walk in to buy photocopiers. I was the salesman on duty when a shuka clad man and his club flaunting ilk walked into the showroom. We smelled them before they stepped in. It was a hot day and the sweaty chap stopped at the first machine on display and enquired about its price. He progressed with his pricing inquiries through to the bigger machines and settled for one worth four hundred thousand shillings in the year 1996. It was a massive machine.

We were not so keen to serve him but it never bothered him. He then sat at the chair across the desk from the man whom he figured out was the manager and proceeded to produce a chunk of money from a traditionally made bull-scrotum-skin wallet hanging from under his arm. As it was when alive, this time, it surely carried seeds of gold but in the financial sense. He asked that we count the money and if not enough, there was more in another wallet under the other arm. This second wallet evidently, was made from a much larger bull as it held a bigger chunk of money. Whatever was left, we gave back to him. He demanded that we pack the machine once he knew that it was working well. Finally, we had it delivered to Ngong town. The man had sold a cowherd at the slaughterhouse and made a good amount of money.

This shuka dresser had reckoned that the dust blown at him by cars or the dangers paused by reckless drivers as he tended his herd, and the droughts that repeatedly consumed part of it, were no longer tenable. It was time to find a safer source of income.

That wisdom made him a wealthy man and afforded him a change in lifestyle. Obviously, in both stories, we had judged the books by their covers and not by their contents for their demeanours were a total contradiction to their true net worth. Thankfully, in both instances, no money was squandered. The patriarchs had done their bit in creating wealth.

But it is the tragedy within families that make us wonder at how a successful empire gets destroyed in the wake of the patriarch’s passing away. Not too long ago, we heard of heirs to a business empire sending hike notices to tenants before the departed patriarch's body went cold, let alone buried. So eager were the offspring to dime up things that they left funeral arrangements with close relatives.

The ubiquity of empty houses in the eye of the property bubble never registered in their minds and today, empty apartments are what is left of once much sought after residences.

Potential tenants heard the story and kept away, and the young chaps are nothing more than wealthy beggars. Something was amiss from the get-go.

What about the guy who invited friends from richer backgrounds to help him demolish hard-earned family wealth with lavish parties and trips to exotic destinations? When it was all gone, the friends too were gone in a huff. The foolish chap had imagined that his friends too would return the favour but alas! The father, just like in the first story, dedicated selfless amounts of time to build wealth for his brood. Something was amiss here too. Another episode continues at a family with huge tracts of arable land measuring thousands of acres. In this instance, Mzee did well to acquire the massive property and also did well to fill it with crops and livestock. He did exceptionally well to educate his lot but did everything to discourage them from helping out on the farm. Initially, it was thought that he kept them away from the farm so that they could do well academically, but over time, it became clear that he never wanted any of the acquired education applied on his farm. So dejected were the children that they left home one by one in their stride and ventured out on equal footing with the world. They are now independently successful thanks to Dad, but an old ailing father is now seeking out the sons to manage the farm. This is a bitter-sweet story. They are so engrossed in their pursuits that none is available for Mzee's latter-day wish to have heirs managing the farm while he is still alive. We can only hope that they will not sell it off, and especially now that it no longer matters as much to them. Such land is harder to come by now. Another common phenomenon is where the man or woman keeps the knowledge of acquired assets away from the spouse and shares such information with trusted outsiders. Most of these assets eventually end up in the wrong hands as your loved ones wallow in pain. Family feuds continue to make headlines. Concubines, step-siblings, and those of the same parenting pair are up in arms at each other, all for a stake of the wealth left behind.

This state of affairs points to one thing, that wealth in itself and respect for it thereof, are oftentimes the strangers in the homestead when acquisition efforts never give way to structured preservation efforts.

When a parent sets out to succeed in his endeavours, many times, the thought of passing down the full appreciation of what it takes to make and keep wealth is a seldom occurrence in the same mind.

This, in turn, sets up the kids to take everything for granted and then when expected to rise to the occasion, naivety laces the excitement of financial independence with flushes of foolishness, and exposes the untrained mind for just what it is, an efficient consumer or destroyer of what it cannot produce or care for. Wealth is a friend in some homes and especially those that incorporate the young stars into the game. Take the case of our Asian compatriots. If it is a duka, the kids help out when on holiday and they learn the ropes in the real environment and get to ask the questions that make for good business knowledge. If it is a confectionery shop, the kids quickly pass the stage of temptations to eat because it is available, and learn to see the products as a source of money and not personal nutrition. Their counterparts from blindly firm handed families only get to this stage when it is too late to learn anything useful. So what must you do to avoid the pitfalls that can bring the curse of misery to your loved ones when you blink your last? 1. Even if you are not a parent of faith, give your children the compass of faith in God. Let them anchor their grounding in a morally rich tradition. Growing up knowing right from wrong, helps with taking the right steps on wealth matters. Children learn to appreciate that it is wrong to have money without sweating for it. They become better managers with this compass. They must learn that the quickest money available now, came slowly and the slowest money now, can only come quicker if we work harder. 2. Answer all questions however foolish they may be or sound. Along the way, they will gradually become more intelligent and useful to both you and the young stars. When you don't answer their questions, you will not have done away with their curiosity and they will simply ask someone else. Over time, the outsider influence overtakes your own and you may lose your kids to bad advisers. 3. Expose the kids to as much of your business as possible. Let them accompany you to your business premises and some trips too. This becomes part of their heritage and over time the full appreciation will ensure that they identify well enough with the cost of building a business. 4. Teach the kids both young and grown-up, the importance of doing everything in moderation. Moderation tames wasteful excitement and keeps one balanced in the face of juicy temptations.

5. Develop a time for frank discussions so that young stars can have a solid foundation to make concrete decisions that benefit them now and in the future. 6. Do not kill your children's dreams just because you do not like their choice of careers. If you dissuade them, you will be forced to carry them into their mature ages as you will have handicapped them with your own dreams. This is the reason that many kids in their 30s and 40s are still living with their folks instead of blessing them with grandchildren.

7. Teach your children that being friendly and making friends are two different things. Show them what to do to make friendly advances for business purposes and how to make friends for a better living. This aspect has a profound effect and greatly impacts your child's experiences through life's journey. 8. Make time for the kids. Both grown-ups and young ones need parental attention. This gives or sustains confidence in them. Confidence moves mountains.

9. Demystify any assets that you have and if it is not prudently practical to do so at a certain time, then draw up your will and make it known to them whom to go to for the said will when the time comes. 10. Teach your kids to be self-reliant so that inheritance fights are minimized as everyone has something that keeps them busy. Your assets, then just become a top up and never the main thing being awaited.