I believe farming should be treated as a business and business-based decisions equal solid farm decisions.
Recently while paging through the Spring 2013 WSJ (Wall Street Journal) Money Magazine, I found some real treasures of information. Yes, information from a nonag publication can relate directly to the farm business and made me realize once again my need to slow down and take time for such information gathering vacations, i.e. reading.
Today’s lesson comes from an article titled “Lost Inheritance” which delves into mistakes made by our nation’s wealthiest families. Author Missy Sullivan reports the Rogersons’ expensive hobbies and “toys” were one generation’s downfall.
Family members built Boston’s Safe Deposit and Trust into one of the region’s largest financial institutes, but ironically enough, the family never talked about money.
Therefore, two generations after the wealth was attained, it was gone. The next generation was not taught how to handle the money, and they were ill-prepared for the task that one day was placed squarely on their shoulders.
Whether a farm or family has excess of money or is just getting by, it makes sense to allow the next generation time and ability to learn the ropes and see what money is coming in and where it’s going.
How else will they become good financial managers?
Top Ranked Problem
The Williams Group, a California-based family wealth consultancy group, surveyed 2,000 aflluent families over a 20 year period.
It learned that high taxes and poor investment advice surprisingly were not the biggest reasons for the loss of family money. Again, communication breakdowns among family members ranked No. 1.
The importance of communication in the financial aspect of the farm, and all aspects for that matter, is clearly defined in this study.
The question becomes: Will we learn from the study or shrug the results off because we don’t consider ourselves affluent families or business owners?
If we shrug it off we’re only hurting ourselves and the next generation.
Banks and financial advisers are holding “boot camps” and developing websites to teach their clients money basics in hopes of providing what their families failed to teach them — financial management basics.
However, the true importance of communication is seen in the fact that many of these institutions have also hired an employee qualified to counsel families in “family dynamics.” Their sole role is to help families with trust and communications problems.
How many times are farm succession problems rooted in communications and trust issues?
The business world has tackled these issues by providing professional help for their customers. Are farm families willing to learn from business?
Flourishing farm successions and transitions will be based on the solid basic business skills of communication and trust.
Darlene Livingston is executive director of Pennsylvania Farm Link, which strives to encourage the next generation of farmers through educational resources and assistance at www.pafarmlink.org or 717-705-2121.