Tag: finances

By Kathy J. Marshack, Ph.D., P.S.

It was starting to dawn on Dyan that a divorce from Cooper was not enough to protect her children and to teach them the important values of life. Six months earlier she had come into therapy to help her make a decision about her marriage. Her feelings for Cooper had died a long time ago, but she felt guilty breaking up her family, especially because she worried about the grief it would cause her two children, Mara, age thirteen, and Philip, age five. Cooper was not a bad person really, but he and Dyan did not share the same values about life, parenting and money.

Cooper’s entire focus was the thrill of making money, something that he had a knack for. Before age thirty, Cooper had amassed several million. When he and Dyan married, he was already wealthy enough to ask her for a prenuptial agreement. Both had come from humble beginnings, growing up together in a small town. While Dyan focused on getting an education and developing a professional career, Cooper dropped out of college and sought his fortune in the high tech industry. When Cooper asked for the prenuptial agreement, Dyan didn’t mind. She was in love and believed that money would not make or break the relationship. Later her naiveté came back to haunt her, not because she stood to lose a lot of money with a divorce, but because she underestimated the power of money to affect the well being of herself and her children. Though the couple was wise about investments, as their wealth grew, their relationship deteriorated and family life suffered.

There are dozens of resources for wealthy people to guide them in managing their investments. There are conferences and seminars offered by banks and investment firms. There are books and journals full of advice on how best to preserve your wealth. There are lobbyists for interest groups working to change tax laws and create tax shelters. But very little attention is paid to educating the wealthy on how to integrate health and wealth. Ignored are those soft issues, such as keeping an open heart, connecting with a higher spiritual purpose, maintaining loving friendships, and guiding impressionable children in the development of strong self esteem. It’s not that people think these things are unimportant. In fact, most of us believe that God, loving relationships and healthy children are our primary work. However, because these are soft issues, hard to pin down and work on, they are often set aside for later . . . after the phone calls, after the business meeting, after an Internet search, after we pick up the dry-cleaning. However, the meaning of life needs to be attended to first, not later. Money cannot replace the success of having lived a meaningful life.

The challenges that face wealthy families are many. Planning for succession of the business is one. There is much being discussed these days on how to prepare a junior member of the family for succession to leadership. However, it seems to me that this is putting the cart before the horse. To prepare children for leadership in the family business or in the community requires quality parenting from the start. Your child is not a miniature adult. He or she does not have the cognitive development, or the life experiences yet to handle the complexities that comprise the world of most wealthy adults. If you want your child to grow up to be successful in life, whether it be as your successor in the business or in his or her own venture, then your focus from day one should be on building his or her self-esteem.

In order to build self esteem in your children, you must consider parenting a full time job for both parents. This is true with all children, not just the wealthy, but wealthy children require even more attention. Wealth makes your children different and more vulnerable than the average child. You have all of the normal responsibilities of parenthood; that is to instill your most cherished beliefs and values in your children. You must teach them the skills of independence, right from wrong, how to be a good person, how to choose friends wisely, how to dream, develop their talents and work to accomplish those dreams. But in addition to all of this, wealthy children must be taught how to handle the considerable responsibilities that wealth brings into their lives. These children will have fewer peers than the average child. They have more resources and more opportunities than the average child. They are expected by others to know more and accomplish more, however unfair this may seem. These differences are not only statistical; they make the child feel different. And feeling different is a hardship for most children. If a child is unprepared for these differences or responsibilities their self-esteem can be severely shaken and they can sink into depression or at the very least be an underachiever. Many children of wealthy parents fail to graduate from college. There is an alarming rate of teenage suicide among this population. As incredible as it may seem this is a seriously at-risk population.

I believe preparing your children for handling the responsibilities of wealth in a healthy manner is one of your primary tasks in your wealth preservation plan. Carrying out this responsibility is really quite simple. Your children should be part of the wealth management plan from the start. Too many wealthy parents don’t consider the need to introduce young children to this process. But think about it this way. It is important for your child to learn to brush his teeth and make his bed, because it teaches responsibility and important life skills. He must do his own schoolwork too. Even if you have a nanny, housekeeper and gardener, your child probably likes to help around the house and this teaches him or her more useful adult life skills. But even more importantly than skill building, helping the adults makes the child feel as if he is an important contributor to the family. Many wealthy children do not feel important because everything is provided to them without their input or effort. So, give your child a chance to participate in the wealth management of your family estate. Perhaps they can contribute their own earnings to buying their own clothes or they can set up a savings account for college. If they are older they can use their savings to invest in stock or mutual funds. I know of one young man who paid his college tuition from earnings on his stamp and coin business. There is nothing so satisfying as creating your own way in the world.

There certainly are many other psychological challenges facing families in business, but parenting is probably the toughest. Keeping marital intimacy and communication alive and healthy is another. Attending to one’s physical health is still another challenge that I find many wealthy families are poor at. And as I said earlier, one’s spiritual commitment is sorely compromised by the many demands of a family enterprise and the expectations of one’s community. But is it really so hard to keep these priorities in focus? All you have to do is remind yourself each day what you want to be remembered for when you die. If you are willing to take 10-20 minutes each day for a meditation or prayer to center and focus yourself on your most dearly held values and priorities, you will be guided by your open heart and higher spiritual purpose throughout the day.

By Kathy J. Marshack, Ph.D., P.S.

Which would you rather have, an educated customer or one who requires that you walk them through everything? Would you rather have a customer who is familiar with your product or industry, who has background negotiating business deals, who uses normal business systems such as estimates and purchase orders, who can read a schematic? Or would you rather have a customer who knows nothing of these things and you must explain and justify every painful detail, every step of the way.

Let’s put it another way. Wouldn’t you rather that your customer already knows the basics of building a warehouse, so that you can get down to negotiating price and materials? Wouldn’t you rather that your customer is already knowledgeable about farming equipment in general so that you can quickly explain the benefits of modernizing with your new machine? Wouldn’t you rather your customer have purchased and sold a home before, so that they are more realistic about the home-buying marketplace?

Of course there are times when a naïve customer is easier to deal with than a sophisticated one. Occasionally the sophisticated customer thinks he or she knows everything, when they really have just enough knowledge to be dangerous. But by and large your work is cut in half when you have a knowledgeable, educated customer who knows what it takes to get the job done with you. At the very least it is easier if your customer is bright enough and open enough to learn quickly and accepts your expertise.

Ah, but the world is not perfect. So much of your professional time is spent educating, persuading and hand-holding in order to complete your job. But for yourself I would suggest being an educated consumer as often so you can. If you are a family business owner, this means becoming knowledgeable about the connections between your personal life, your family life and your work life. Understanding your personal family dynamics and how they interact with your business creates a more successful business and family life. Even if you are not a family business owner, your personal life influences your business decisions, and vice versa. Therefore, it is well worth your while to become more knowledgeable about your personality style, your family values, your blind spots and how they shape your daily actions.

Come to terms with family, business

Darvin, for example, never really considered that growing up under his authoritarian father affected his business, nor his parenting style. As a child Darvin was expected to work in the family business from the time he was about nine. Whether he was sick or home from school on vacation, Darvin was expected to pitch in. Darvin’s father meant well enough. He was trying to prepare his son for the future and he wanted an heir for the business. However, Dad never considered that his son might have other career interests. He also gave Darvin little time to have a childhood.

When Darvin grew up, married and started having his own children, he was determined that his own sons would be free to choose their own direction. Darvin was now the owner of the business his father had built, but he didn’t want his sons thinking they were obligated to work in the family firm. He encouraged their other interests and gave them liberal time to play. He coached soccer teams and volunteered in the boy’s classrooms, something his father never did.

However, one day, one of his teenagers implied that he expected to work for Darvin when he grew up. In fact the boy suggested that he wanted to be the president of the company some day! Darvin was shocked at his son’s interest, especially since Darvin did not think this particular child had what it takes to be president. Then another even more shocking realization came over Darvin. After spending all these years encouraging his children to follow their hearts, he had paid no attention to grooming as interested child for coming into the family business. In fact, he had almost resisted the idea.

So, to avoid Dad’s mistakes, Darvin made different mistakes, which is a common problem for family business owners who do not recognize that childhood experiences shape you as a business person. Now the task for Darvin is to educate himself about all he learned and interpreted as a child and their connection to his current adult life as a business owner, husband and father. If he is to be a success at all these roles and prepare the business for s healthy transition when he retires, he needs to be educated about family dynamics and how they interact with business planning.

Not everyone is an entrepreneur

Elliott is not the owner of a family firm, but he feels very close to his staff, many of whom have been with him since the founding of the firm. He literally built the business from nothing into a respected national manufacturer.

Elliott is a “can-do” guy. His technical training helped him create the idea for his business, but he had neither business nor marketing training when he set off on his own. Nevertheless, Elliott believes that he can accomplish whatever he puts his mind to. If he lacks knowledge or a skill, he learns it. He reads books, attends seminars and asks experts, then applies the knowledge to his own unique business. This flexibility is the reason Elliott’s business has grown so rapidly. He is adaptable.

Elliott’s problem is the exact opposite of Darvin’s. Because of his confident and flexible approach to problem-solving, he has extremely high expectations of others. Elliott naively thinks his managers, staff and line workers have these same abilities. While it is important to encourage the best in employees so that they can rise to their highest level of competence, Elliott often promotes untrained, unskilled workers beyond their capabilities to a level of incompetence.

For example, he has promoted a welder to a position requiring an engineering degree and a bookkeeper to a position as controller. Even if these employees have the potential to grow into these positions, they do not currently have the skills to handle their jobs, which leads to failure — failure for the individuals, as well as for the company.

If Elliott is going to grow his company further, he needs to get a handle on this problem. As he understands better that his unique personality is not the standard for all people (in fact, very few people are entrepreneurial), ha can make better use of his employees’ talents. He can’t always promote from within, but he can find other ways to honor employee loyalty. When a business gets as large as Elliott’s, it’s time to hire professionally trained managers and staff.

Being a success in business means being honest about your personal limitations too. It means becoming educated about the unique way your personality, childhood lessons and adult business decisions interact. Knowing your values and where you learned them enables you to choose which ones you want to keep, which ones are practical. Knowing your personality better enables you to design systems that complement your contributions. Darvin has been trying to set his children free to follow their own calling, ignoring that at least one of them may be a lot like himself. Elliott, on the other hand, has been grooming everyone to be like him, ignoring that his employees may have a different calling and different contributions to make.

How many of you have problems brewing that are similar to Darvin’s and Elliott’s? It may be hard for you to define your problem even though you know you have one because you don’t have the required education. But the solution lies in becoming educated about the interaction of personality, family dynamics and business systems. When you finally develop enough insight into how you came to be who you are and how others came to be who they are, you can correct subtle problems such as Darvin’s and Elliott’s and avert major disaster when the problems are still small. Remember, we must know who we are first in order to be true to ourselves.

By Kathy J. Marshack, Ph.D., P.S.

Learn From Those Who Know

One of the most challenging of lifestyles is working with your spouse in a thriving business. Most entrepreneurial couples would have it no other way. They love the opportunity to be independent, in charge of their own destinies, and to work along side the one they love and trust most. Maggie and Paul are such a couple. Maggie is a veterinarian with two clinics. Her husband Paul is an assistant district attorney. Although Paul does not work full time in the clinics, he is always a support. Paul is frequently seen at the clinics on his days off, in the evenings and weekends, where he helps Maggie build shelves, organize supplies, care for the boarded animals and so on. And when Maggie brings her “work” home with her, Paul and the children get a chance to be foster family to yet another animal friend.

It hasn’t always been easy for Maggie and Paul, however. Like any other entrepreneurial couple, they have had crises in their marriage and crises in the business that seriously rocked their security. Somehow they pulled through these crises, however, and have come out the other side in superior shape. So the question is . . . how? What do successful entrepreneurial couples know about keeping a marriage and a business on track? And can other couples learn from them? Whether in business or marriage, problem solving requires gathering information. It just makes common sense to find out what successful entrepreneurial couples know and do that works for them. Out of these strategies, you may find a nugget that applies to you and your spouse.

100% – 100% Rule

Over the years I have had the opportunity to meet many entrepreneurial couples and there is a pattern among those who have long-term happy marriages interwoven with a prosperous business life. First and foremost they follow the 100% – 100% Rule. That is, each partner considers her or himself 100% responsible for the quality of her or his individual life as well as their joint ventures (i.e., parenting, household duties, managing and promoting a business). While most couples follow a 50% – 50% Rule, meeting each other half way, by following the 100% – 100% Rule entrepreneurial couples meet each other all of the way. They each put his or her whole self, talents, intuitions, and muscle into the relationships of marriage and business partnership, making each equally responsible for the outcome. Even though for efficiency’s sake they may divide up duties along the lines of who is most capable or available, they still consider themselves as responsible as their partner for the success of the goal.

Encourage Competition

Without question entrepreneurs are achievers and highly competitive. Without these qualities they could not create a successful business venture. Sometimes the achievement motivation and a healthy dose of competitive spirit are all that sustains the entrepreneur during extremely lean times. However, achievement needs and competitive drives are not reserved only for entrepreneurs. These qualities are evident in many people such as corporate executives, Girl Scout leaders, truck drivers, teachers and homemakers.

Sometimes it is not always easy to admit that you are in competition with your spouse, but once the truth comes out you are in a much better position to work with the inevitable. If you are feeling envious of your spouse, or resentful, you are experiencing competition. If you are feeling smarter than your spouse or the need to have the last word, you are experiencing competition. If you evaluate the worth of yourself and your partner by how much you each earn, you are in competition. Instead of being embarrassed by your competitive nature, or suppressing it or even denying it, admit it and acknowledge the problem to your spouse. Then do what successful entrepreneurial couples do . . . they encourage it!

Believe it or not, successful entrepreneurial couples actually encourage competition in their partners but they do put their relationship off limits. That is, their love for each other and commitment to their marriage and family life come before business or career needs. By following the 100% – 100% Rule they forgo competition within the relationship, but can foster it outside the relationship. For example, they give credit where credit is due. If they are copreneurs, working full time together in their joint venture, there are rewards and incentives built into the business for each partner to achieve. Instead of paying only the founder of the business and undervaluing the other spouse’s unpaid help, the supportive spouse is paid what they are worth and not a penny less. Bonuses aren’t banked for the common good, but awarded to the spouse who achieved the reward. Each partner is encouraged by the other to achieve their dreams, to express their strengths, to utilize their talents. If this means besting your partner in a career or business move, it shouldn’t be threatening to your spouse, but viewed as a challenge to work toward his or her own excellence.

Worrying about ego or pride is a waste of precious energy that can better be used in pursuit of your dreams or being creative. Harness that competitive spirit and re-direct your achievement need toward the things you do best at the business or at home. That way not only do you succeed, but your spouse, family, business and community benefits too. What better way to express the 100% – 100% Rule ?

Make Love the Top Priority

With the pull of achievement needs and competitiveness in the business world, entrepreneurial couples have their work cut out for them to sustain balance in their personal lives. Making time for friendship, romance and family togetherness is difficult but imperative. Again successful entrepreneurial couples have figured out how to make love the top priority. They have abandoned the old methods that worked when they were younger and had free time. They realize that spontaneity or waiting for the “right moment” is not likely to happen today with their lives full of so many responsibilities. Rather, they

realize that they have to plan for love to happen and be sustained. And they build a structure they can count on to keep these priorities straight. For example, they schedule once-a-week “dates” with each other to talk and rekindle romance. They make time in the morning or at the end of each day for uninterrupted discussions about anything and everything that is necessary to talk about to keep the flow smooth. They go on frequent mini-vacations of two or three days to pull themselves away from the demands of entrepreneurial life. They each volunteer their time to one community cause or child-related activity. All of these approaches help you remember why on earth you are working so hard anyway . . . to share your successes with the ones you love.

Renegotiate the Terms of the Partnership

By making love the top priority, entrepreneurial couples have a simple way to notice when they need to reorient their lives. If there is no time to give or receive love, from each other or the others in their lives who are supposed to count, then it becomes time to renegotiate the terms of the partnership. If life isn’t meaningful or fun for either of you, it is time to re-evaluate the marriage or the business partnership or both.

In order to keep a business healthy, a business owner must not only be aware of market trends, employment needs, and movements of their competitors, but they must also be prepared to alter their business plan accordingly. Within your personal life, it is no different. A marriage agreement that worked when you were twenty, may be outdated for a couple in their forties, for example. Or aspects of the marriage contract may be archaic while others are still solid. Don’t throw the baby out with the bath as the saying goes, but if some things need changing, do it now, or suffer the consequences of a loveless marriage.

I have met too many entrepreneurial couples where the only thing holding them together is the business. They have forgotten that the business is a function of their love for each other, that by encouraging each other to achieve excellence, they have created a successful venture. By recognizing that the love is diminishing in your relationship and by being willing to renegotiate the terms of your marriage and partnership, you may be able to rekindle the romance and re-direct the business to new heights.

The Guidelines to Success

Although it is a lot work to maintain a healthy personal relationship among the busy-ness of entrepreneurial life, the methods of doing so are simple. Successful entrepreneurial couples already know these secrets. Now it’s your turn to cash in on what they know.

1. Follow the 100% – 100% Rule and you will have a trusted full-time partner at your side.
2. Encourage achievement and competition in your partner and you will share the fruits of his or her success along with your own.
3. When you make love the top priority, you always have a marker to guide your decisions and direction in life.
4. Finally, when you get off course, stop and renegotiate the terms of the contract, so that you can nurture and sustain business and marriage growth.

By Kathy J. Marshack, Ph.D., P.S.

Are you a good old-fashioned American Capitalist? Most of you who are reading this article are entrepreneurs or business owners or executive or managerial employees of local businesses. This makes you American capitalists in the truest sense of the word. You believe in working hard, competing for profit, and setting your sights on the American Dream of financial success and security. Is it any surprise then that health insurance companies are American capitalists too? They were founded by visionaries who recognized a market just waiting to be tapped, employers and employees who needed help paying for medical expenses and who were willing to pay in advance for the insurance that the costs would be covered. Being capitalists, they used the existing American system for setting up their businesses and arranged to make a profit. As more people founded insurance companies, the competition began to heat up, which only fueled the enthusiasm of these early entrepreneurs. Competition honed the industry into the incredible, unbeatable American Dream Machine it is today. Don’t some of you secretly wish you could have been in on the ground floor of this multi-billion dollar industry?

Most of you readers were not in on the ground floor, nor do you own a piece of an insurance company. Primarily you have not been looking at the profitability of a particular insurance company, nor the investment potential of the market/insurance industry as a whole. Rather your main interest in the health insurance business is whether you have a fair and cost-effective plan to offer your employees and whether you, yourselves have the type of insurance that will take care of your health needs. However, in making decisions about buying and using health insurance plans, it is important that you understand that health insurance companies are businesses, just like yours. Their goal is to make money by providing a service/product that can be produced as competently and efficiently as possible. The problem is, can insurance business owners make medical decisions that affect your health, without the advice of professionally trained physicians, psychologists, chiropractors, dentists and so on?

The insurance companies of the nineties, and their cost-management sub-contractors, managed care companies, are indeed making medical decisions for each and every member of their plans. And they are doing so without sound medical and/or psychological advice. They are making these decisions based upon actuarial tables, not upon the unique individual needs of each patient. For example if the cost of a mammogram is cheaper than an ultra-sound to detect breast cancer (and it is), your cost-management company may deny the claim for an ultra-sound. If the actuarial tables suggest that most cancer is detected satisfactorily by mammogram and self-exams alone, then to contain costs, they will deny the ultra-sound. However, if you have a history of “breast lumps,” and so far all of them have been benign, but your doctor is concerned that with advancing age there could be an increasing likelihood of cancerous tumors, or that the benign lumps are hiding the tumor, and in your case an ultra-sound is vital, there is still no recourse with the cost-management company. You may still have your claim denied because you do not fit into the range of what is most cost-effective according to the actuarial tables. There just is no room with insurance companies for the exception to the rule.

In psychology and psychotherapy, the picture is even gloomier. If you have a broken arm, the insurance company will authorize treatment. But if you are suffering from anxiety or depression, regardless of the cause or the intensity of the problem, your claim will be challenged by the cost-management company. One reason is that it is not the event per se that is paid for, but your reaction to it. For example, if you are in an automobile accident and your child/passenger loses his or her life, but you survive, you would be expected to be in shock, to be grieving intensely, to be unable to carry on your daily routine for weeks, months or even a year or two. Yet this event may not be allowable under your mental health coverage because you are reacting normally to the stress. In other words, you can only be covered under your mental health coverage if your reaction to the stresses of life are abnormal. But in my experience, even if you are suicidal (which insurance companies do consider abnormal) you will need to get prior authorization from your cost-management company before you can schedule an appointment with a psychologist. Because the psychologist is a specialist, cost-management companies do not make as much money on their services, so they have established a gate to keep the number of referrals to specialists at a minimum. If you are suicidal you must first call your cost-management company for authorization or make an appointment with your primary care physician, who in turn will make a recommendation to the cost-management company to refer you to a psychologist!

What this all amounts to is that psychological and emotional health do not mix very well with health insurance and cost-management companies. It is important to understand the distinctions between the two realms. Health insurance companies and their colleagues, cost-management companies (euphemistically called managed care companies), are in the business of making a profit by containing the costs of health care. While this goal may be needed or even admirable, it has nothing to do with providing the specific medical or psychological care that you or your employee needs today. The kind of mental health treatment that you or your employee needs today should be a decision between the patient and the doctor based upon the specialized needs of one unique human being. While what the patient can afford, either privately or through their insurance plan, should be considered by the doctor and patient, the best medical/psychological treatment that is necessary for this one human being should always be considered first, not secondarily to what the cost-management company will authorize.

Obviously you cannot ignore the costs of health care, even though psychological health care is relatively inexpensive. However, the biggest mistake that patients make is assuming that their cost-management company is making the wisest health care decision for them, when in fact the cost-management company is diagnosing by the actuarial tables. I know of suicidal patients who went untreated because their cost-containment company could not act as quickly as a phone call to the therapist. I know of patients who want a cure for serious clinical depression within the unrealistic five sessions authorized by their cost-containment company.

I know of patients whose personal, confidential medical records are reviewed by the employer’s human resources department before they are reviewed by the cost-containment company clerk, before they are reviewed by the cost-containment supervisor, before they are routed to the insurance company for a similar series of reviews, before the claim is authorized or denied.

Whether the insurance industry needs cost-management or not is not the question here. What is at stake is the quality of your psychological and medical health care. When making these very important decisions about your health care, consider that your insurance company is not the best source of advice on quality of care. They can only advise you on cost of care. For example, if you choose one of their preferred providers the costs may be lower but cost is no guarantee of quality. For quality of care decisions you have more work to do. Searching for a psychologist, for example, requires assessing just what your needs are, what approach would work best for you, what type of professional you can relate to, what credentials and qualifications make this provider better than another and so on. Furthermore, you may wish to work with a psychologist about problems that are perfectly normal, but that you want help with nevertheless, such as a divorce, child behavior problems, career planning, family stresses at work, work stresses at home and so on. Remember, your cost-management company is not under contract to help you with these problems, only those issues that you are handling abnormally.

When it comes to insurance, Americans are soft. We assume that we are entitled to “life, liberty, the pursuit of happiness and health insurance to cover every conceivable medical expense.” Health insurance is an extra. It has its limits. It is time for Americans to build some unused muscle and start making decisions for themselves again. Stop looking for someone to take care of your every health or emotional need. Stop turning these decisions over to cost-management companies. Instead utilize your good old common sense and decide for yourself, with the help of professional advisors such as your trusted doctors, just what is the best psychological or medical treatment for you, your loved ones and your employees.