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How to Reengage a Disengaged Spouse

My partners and I spend a lot of time writing about how difficult it is to be a family successor to-be or child working for a parent. We also have many articles detailing how business owners can communicate more effectively with employed family members so they can have positive working relationships while protecting their familial relationships. We’ve explained how important it is to establish boundaries so that work issues stay at the office to provide quality family time at home.

What we haven’t spent enough time on is recognizing how tough it is to be the spouse of an ambitious, successful and highly driven business owner. Typically, although not always, these roles are cast stereotypically, with the husband running the business while the wife holds their personal lives steady raising the children and managing the household. For the sake of simplicity, we’ll talk in terms of the stereotype, but the description works with the gender roles reversed.

The women are dynamic, intelligent, educated, assertive people – many left rewarding careers to care for their families so their husbands could fully concentrate on building a substantial family business. They have typically not been included in much of the financial and business-related decision making because they were not actively involved in the business. When families are young, this makes a lot of sense as each spouse is fulfilling a necessary role to provide and care for a growing family and business. The wife protects her husband from family distractions and worries so he can concentrate on building a business legacy and their financial security. The husband protects his wife from the day-to-day business challenges, makes sure there is enough money to run the household and generally learns it is easiest not to burden her with worrisome details of how he manages the business checkbook. However, when it comes to making the critical decisions that will provide for the financial stability of your children’s future and your financial security, you can bet it is important for both spouses to be involved and participate in the discussion if you want to maintain family harmony and have a smooth transition for the next generation.

The Disenfranchised Spouse

By the time we are engaged to develop and implement a business succession and estate plan, the business owner’s children are usually grown, working in the business and building their own families and the wife/mom is busy being a grandparent, participating in all kinds of civic/community/church activities and planning their next vacation trip. The husband/dad is still running the business and making all of the financial and business decisions.

On the surface, the couple is solid, dedicated to supporting each other, and wants to provide for each other in their declining years. But deep down, there is usually a woman who feels disenfranchised and fairly clueless as to how the business will provide for her personal financial security in the event she outlives her husband. When advisers bring documents for her signature, this is her one time to be able to voice her opinion, take a stand and even hold up progress if she feels uncomfortable with any aspect of the process. She is told not to worry, that she will be provided for – but how and who will she have to turn to after he’s gone? Her children? The managers? The family attorney? Not likely.

We have seen women known to be gentle, supportive and trusting change when it comes to protecting her financial security and whether she will have to rely on someone else running the business or get her monthly allowance from her children or, even worse, a banker.

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Re-Engaging Your Spouse

If you haven’t both been involved with your estate and succession planning team, it is likely you may be experiencing some challenges — perhaps your progress has even come to a standstill, and there may need to be some discussion on this topic before you can proceed any further. What are some of the key factors to make sure that when you are ready to begin your estate or succession planning that you will be comfortable with the people and decisions that must be made? Here are some helpful tips to keep in mind:

  • Never think that protecting your spouse from the truth is being helpful. It indicates you don’t think she will understand, that she will overreact or that she is weak. None of these assumptions demonstrate an appreciation for her inner strength, intelligence and sensitivity to your concerns. Additionally, it prevents your closest, most trusted ally from being able to be part of the solution.
  • Make sure your spouse knows and appreciates the key players you depend on each day to run and care for the business. If all she ever hears is your grumbling about a family employee’s ineptitude, it is highly likely that she will not feel very good about that successor’s ability to manage the business in your absence. The same goes for complaints about any other manager or adviser who is critical to your business stability.
  • When putting together your adviser team (estate attorney, accountant, succession planner), make sure you do the choosing and subsequent meetings together. Interview prospective members of this team together — you both need to feel comfortable with people who are going to help secure your family’s legacy and financial future. There is nothing worse than a business owner who says his spouse doesn’t need to be included in the discussions because she isn’t involved in business operations. It is amazing what kind of insight we get from spouses — about family, employees and managers, and about how their husbands are being affected.
  • Just because your spouse is not an active employee in the business does not mean she is not your partner in every sense of the word. Every decision you make, every success or failure you experience, is shared by your spouse. When you are stressed, so is she; when you celebrate success, so does she. Why then, wouldn’t you consider involving her in decisions that will ultimately affect her, too? You don’t need to discuss every operational decision made each day, but it is important to share the strategically important ones that will affect her future, too.

When you reach an agreement that you have the right people facilitating your family’s future, certain that you will each will have equal input, be respected and listened to, you will have increased your odds for achieving succession success!

Fraud: the Cost You Will Never See

Do you know one of the large drivers of your insurance costs may be something you will never see listed as a line item by your agent or insurer? This is not a hidden fee the industry masks. It is not one you could ever find or have disclosed. It is the cost we all share for insurance fraud, which is the second largest financial crime in America (behind tax evasion).

In Iowa, the crime of insurance fraud happens when a person or business provides false information to an insurance company in a claim for benefits or in an application for insurance, with the intent to defraud the insurance company. Federal laws also contain provisions related to insurance fraud.

Before being appointed insurance commissioner, I do not recall thinking about insurance fraud much. Because of my experience in the insurance industry, I certainly knew that there was insurance fraud.  I recall stories I heard second- and third-hand of people who filed claims on boats that became ruined and then were insured after the fact, or of healthcare providers that billed health plans for procedures that never occurred. But I admittedly did not think about insurance fraud much.

People often think of these types of acts as victimless crimes, because no one is hurt except big insurance companies. However, we are all victims of these acts because fraud affects how much we pay for our insurance.

Insurance regulators see all types of fraud and know the cost is great. According to the Coalition Against Insurance Fraud, nearly $80 billion in fraudulent claims are made annually in the U.S. This figure encompasses all lines of insurance. The Federal Bureau of Investigation estimates that fraud costs each insurance consumer in the U.S. between $400 and $700 annually in increased premiums. These are calculable costs, which probably are far less than the total cost we all pay as insurance consumers, because a lot of fraud is not reported.

In Iowa, we would like to think that there is no insurance fraud. However, the statistics demonstrate a much different picture. On average, the Iowa Insurance Division receives 1.97 referrals each day of potential insurance fraud. From Jan. 1 to Sept. 17, 2015, my team processed 532 referrals with a reported financial impact of $3.7 million. However, only about one quarter of the 532 referrals reported what the financial impact was. Therefore, the $3.7 million is far less than the total financial impact.

Fraud prevention and elimination is a major effort for insurance regulators and insurance companies. It is an area where regulators and companies collaborate. In 42 states and the District of Columbia, fraud bureaus receive and review potentially fraudulent insurance claims. States have robust laws in place to protect consumers and the insurance marketplace from insurance fraud. Companies are required by state statutes to report insurance fraud.

Although these reporting requirements and laws help protect our markets and mitigate the cost of insurance fraud, it is far from eliminated. The need to mitigate or eliminate fraud presents huge opportunities for insurance companies and entrepreneurs to develop innovative tools to combat insurance fraud.

As we all now recognize, insurance companies are big data companies. They possess vast data on their policyholders. This puts insurance carriers in an evolving position to better help deter and eliminate fraud. With advancing data analytics, predictive modeling and simply more data, catching and possibly preventing fraud should become easier.

State insurance departments operate within tight budget constraints. In Iowa, we see innovation and technological developments as very helpful in aggregating data and identifying trends and issues. We are looking to these developments to help us increase efficiency in our investigations so we can combat insurance fraud and protect our consumers.

However, I have no false hope that all fraud will be eliminated. I have every belief that those who want to continue to do damage by committing insurance fraud will also be innovative and adapt to change. In other words, while technology and innovation will help find fraud, the scammers will soon figure out how to get around the new detection methods, too.

Fraud is a fact in every industry, and insurance is no different. However, I believe in the insurance industry there is more opportunity and incentive to commit fraud because of the value of the items insured and the amount of money in play. In addition, because insurance fraud is seen as a victimless crime, it may even be viewed as justifiable. Insurance regulators and companies are improving the capabilities to combat fraud using more technological tools. Credit card companies made tremendous strides in cutting down fraud, and insurance is working toward that goal, too. Innovators and companies that figure out how to succeed in this area will have lower prices and increased market share, and in the end that rewards consumers.

Tips for Bringing Kids Into Your Business

Is your son or daughter your successor? What are some things you and they can do to make this a successful succession? Mistakes to avoid when trying to make your son or daughter your successor? Mistakes they should avoid?

As a succession coach who advises multi-­generational family businesses on how to bring in the next generation, and as a business professional whose daughter has been working with her for nearly 10 years, I can offer a few tips that I have found to be helpful:

  1. While your children are attending high school or completing college, provide work experiences during the summer that allow your children to try out different departments and tasks, working with different managers (best never for you personally).
  2. Develop a family business employment and expectations policy defining requirements for education, professional experience and behavioral and performance expectations. If you are thinking ahead, introduce this to them when they are in high school or college to help give them a sense of how they need to prepare, what they should be studying and what it will take if they are considering a career in the family enterprise. This will create a road map so that your children have an opportunity to succeed.
  3. Before designing a job description or entering into any kind of discussion regarding potential employment in the family enterprise, make sure you spend some time in thoughtful discussion together investigating each other’s vision for the future. You may think you know what your children want to be “when they grow up,” but you may be surprised when you actually inquire.
  4. It can be helpful to engage an experienced coach to conduct the interview, using a personality styles tool (like PDP, DISC or Meyers Briggs) to help frame the conversation related to their natural strengths. Many times, I have found kids feeling like they are being squeezed into their parents’ shoes, and it’s not a good fit. If Dad started the business, is a natural at sales, relationship-building and strategic thinking, and Son is a thoughtful, reserved communicator who is very process- and detail-oriented, I can promise you, it will be a difficult path for the Son to ever live up to his father’s and the company’s expectations. Additionally, he will be miserable.
  5. Once you have identified the ideal career path that excites and suits your son/daughter, bring in your senior management team and discuss what you would like to do with them. Enroll the team in creating the right on-boarding process, job placement and develop agreements for how you expect your children to be managed and mentored. Also, how you will support your managers so they can hold your daughter or son accountable without fear of repercussion.
  6. Lastly, establish a family council to share information with all your children, not just the one or two who are currently showing interest. Let all your children know that there are many ways to participate with the family enterprise. Some may want to be community cheerleaders, helping in events and philanthropic activities, while others may dream of managing a division or eventually becoming your successor. You can achieve succession in a multitude of ways. You don’t have to always create a King of the Mountain, where your children have to vie to take your position upon your retirement.

Working with my daughter, watching her grow, keeping it real has been a great joy. I always, ALWAYS keep the most cherished element of our relationship in mind: She is my daughter. I wish her life to be happy, healthy and fulfilled. If that can happen while she’s working with me, it’s icing on the cake.

The Most Effective Insurance Policy

On Christmas Eve, 1944, somewhere in Europe, two U.S. Army soldiers, played by Bing Crosby and Danny Kaye, perform for the 151st Division, whose commander is leaving. Maj. Gen. Thomas F. Waverly arrives for the end of the show and delivers an emotional farewell. The men in the 151st Division give him a rousing ovation as the war rages in the background. This opening of the iconic movie “White Christmas,” a holiday favorite, sets the foundation for a wonderful story and business principles.

Safety is at the forefront when Kaye saves Crosby’s life from a falling brick building wall. Later, Crosby and Kaye reunite with the major general as civilians and come to his aid as his business and retirement funds are in jeopardy. At the end of the movie, the 151st Division remembers the general and his leadership, and there really is a white Christmas ending.

Watching this classic movie this holiday season with our business lenses on, we can learn about business and personal development.

As happened in World War II and during its aftermath, our world today is rapidly changing economically, technologically and culturally. For the financial success of businesses or individuals, the critical principle is the ability to continually and accurately assess risks-the exposure to potential damage or loss because of our decisions or individual activity. What are our risk exposures? What types of risk should we focus on? What are the magnitudes and probability that these risks could occur? What level of control do you have over the situation? While these questions can be answered in future articles, we want to focus on purchasing the most effective insurance policy you can purchase today for your business.

There’s a great deal of talk about loyalty from the bottom to the top. Loyalty from the top down is even more necessary and is much less prevalent. One of the most noted characteristics of great men and women is loyalty to their subordinates. Crosby is poignant in the film when talking about how the general acted when rations were scarce; Crosby says, first we ate, and then he ate. The 151st Army Division was a team. It ate, lived slept and fought as a team for the war and for the general. There was no individuality.

As Gen. George S. Patton said in real life, “This individuality stuff is a bunch of bull….”

The most effective insurance policy you can purchase today, which we call “Insurance Plus,” is developing and practicing a business mindset in finding, hiring and developing people in line with the core values of the company. There is a grand need to have individuals who can solve problems (even before it happens) and to capitalize on opportunities with the greatest efficiency and effectiveness with critical thinking and reasoning. Investing in people can create the greatest and fastest return on investment if the correct training tools are used. The greatest investment is the one made in human resources, and, if assessed correctly, carries the least risk. One cannot purchase a more effective insurance policy.

Patton said, “Moral courage is the most valuable and usually the most absent characteristic in men.” Similarly, in the movie, Waverly’s vision was paramount for the success of his troops, surviving the war and finding purpose in life. His troops returned the gesture by following him “wherever he wants to go.” To be followed, become a better leader.

If you own a company or if you manage people, those who report to you usually get more from watching you than they do by listening to what you’re saying. Never tell people how to do things. Tell them what to do, and they will surprise you with their ingenuity. Demonstrate a positive mental attitude in the workplace. Get back to the basics. You have to sell yourself before you can sell anybody anything. Success demands a high level of logistical and organizational competence.

Purchasing the most effective insurance policy includes getting some third party perspective–some coaching help. Much as Waverly had his team, you will find it easier to assess the risk with help by your side. And you have to focus on values.

To you as the business owner or manager, we raise a glass and toast, “May your days be merry and bright, and may all your Christmases be white (with Insurance Plus)!”

This article was co-written by Phil Wilder. With more than 30 years as an economic adviser and business strategist, he is committed to advise, educate and encourage individuals, as well as organizations, to achieve their full potential and to have hope through these unpredictable times.

Leadership Lessons for My Newborn

Bowen Thomas Swift was born on Wednesday, Aug. 12, at 6.45am. His buddies call him Bo. Weighing in at 6 pounds, 14 ounces, Bo is 20 inches long, has a normal-sized head (which, if you know either of his parents, was a huge relief) and like any baby is completely and utterly dependent on his parents. He is a blank canvas.

So, listen up, son. Here is some advice about how to be a leader, about how to work with people, about business and about life:

Lead with compassion. One of the greatest opportunities in life will be the opportunity to lead people. But remember, with this opportunity comes huge responsibility. The people you lead will look to you every single day for two things: direction and guidance. The words that you choose and the tone that you take will matter at all times. So what kind of leader will you be, Bo? Always, always, always remember to take the individual into consideration first. Serve others, and the world will reward you 10x. There will be times when you may question the actions and decisions of those around you. Always assume the best of people. Take the time to get to know people. Always be open to learning and the perspective of others. Slow down, ask questions and seek to understand. Always be compassionate.

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Live the vision, breathe the mission. Leadership can be defined as the ability to inspire others to achieve a shared objective. The two words that jump out for your dad are “inspire” and “shared.” People will go the extra mile when inspired to do so. But remember, son, they must understand the bigger picture and their individual roles in the mission to be really inspired. Then live the mission, Bo. Live every single moment of every single day. Be passionate. Life is too short.

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Be open, honest and constructive. Feedback is a gift. As a leader, you will have the responsibility to provide feedback. Good and not so good. Both are equally important to the recipient. But, Bo, you must earn the right to give feedback to people. If you don’t earn the respect of those around you, they won’t listen to you, buddy. Always be respectful. People don’t plan to mess up. They don’t wake up in the morning and say to themselves: “Today I’m going to do everything I can to fail.” When the time is right, and you’ll know when, always be open, honest and constructive with feedback. Constructive, for me, is the most important word. Show peopl a path. Guide them down it.

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Make fast, high-quality, data-driven decisions. By the time you get the chance to lead people, the world will be moving way more quickly than it does today. And, son, it moves pretty damn quickly already. Don’t ever make decisions based on a gut feeling. Even when you are under pressure to make a quick decision. We live in a world of big data. You may have a gut feeling about a topic or, as your dad calls it, a hypothesis (thanks, Mike Derezin). But prove your hypothesis with data before you pull the trigger on anything. Business or personal. Slow down to speed up.

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Collaborate to win. The most successful people in the world are the ones who know how to collaborate. They are self-aware enough to know what they bring to the table. But they also take the time to understand the skills, ability, knowledge and experience of those around them. You will not succeed in life, Bo, if you try and go at it alone. And by the way, son, life is way more fun when you respect and work in partnership with those around you.

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Keep things simple. Right now, you eat, sleep and poop. As you get older, you’ll be pleased to know that you’ll have the opportunity to do more things. You will engage with people. People are interesting, but they can bring complexity to life if you let them. As their leader, you will have the job of listening to the complexity, deconstructing their challenges, helping them simplify, helping them get to the core of an issue or a challenge and then sending them on their way. And, please, don’t use 400 words when 10 well-chosen words will suffice. Keep things simple.

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Work hard, play hard. We all have to work, Bo. Life is expensive. But please pick something that makes you happy. Do something you are passionate about. Whatever you choose, remember to have fun. Don’t take yourself too seriously. I don’t, and it has served me well. Don’t be afraid to laugh at yourself. You’ll work hard. You’re a Swift. But always strive for balance in your life. Work to live, don’t live to work. Be present for those around you. There will be so many distractions. Life will get hectic if you let it. And, son, remember to breathe.

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That’s a wrap, Bo. Thanks for listening.