Many businesses are transitioning to the next generation of leaders, a process which requires significant financial planning to be successful. Jamie Duininck is joined by financial advisor, Mark Pletts, to talk about two things that impact generational transitions most: the math and the emotion.
Mark Pletts, founder of Waypoint Capital Advisors, is passionate about family and believes that financial planning, when done correctly, can positively impact generations to come. He’s been in the financial services industry since the early 1980’s and has helped host, Jamie Duininck, navigate challenges and make decisions for his family business that are best for both the organization and the family. Mark and his partners started Waypoint Capital Advisors to support the multi-generational complexities of managing wealth. He helps family businesses of all sizes align the math and the emotion when doing financial planning.
Jamie (00:02):
This is The Water Table.
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The chance to hear the agricultural side of these issues.
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A place for people to go find information and education.
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Water management is just going to become even more critical into the future.
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How misunderstood what we do is.
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I would encourage people to open their minds and listen to this dialogue.
Jamie Duininck (00:31):
Joining us today on The Water Table podcast is Mark Pletts with Waypoint Capital Advisors. Mark, thanks for joining us.As you’ve advised families of a lot of different levels, how would you start to think about that if you’re talking to a small business owner or manager of a small business with maybe five to 10 employees, and they’re thinking about moving that business from the generation they’re in, whether that’s first or second to the next generation? They’ve got younger family members working in the business and the patriarch and matriarch are getting ready to retire. What are the things that they need to be thinking about? How does somebody like Waypoint work with people like that?
Mark Pletts (01:28):
I think a starting point would be to go up to the 30,000 foot level and say, what transcends all businesses, small and large? What are the issues they need to be dealing with? Sometimes you get lost in the tactical and the very granular issues, but really everything can be boiled down in most family businesses to two perspectives. One is the simple math. There’s math involved in transitioning a business. It’s got to work for all parties. Then there’s the other piece that many families don’t spend lot of time with, which is more emotional, which is how do these decisions affect family members in the business, out of the business from an emotional standpoint. Then speaking to that other component that you referenced, which is what is that legacy? The legacy has usually much to do with the math than it does with the effect on a community, the effect on, again, family members in or out of the business. I think if you boil it down, there’s the math and there’s the emotion. Most advisors with family businesses spend a lot of time on the math and less on the emotion.
Jamie Duininck (02:42):
Yeah. Yeah. That’s partially why I wanted to do this podcast was there are times in my career here at Prinsco where you build relationships with customers and customers end up talking to you about. They have no place to go to talk about these things, so they’ll visit with you about, this is a situation I’m in. I’ll just give an example. We’ll talk about it as one of the questions might be my son or daughter, or both, they seem to be ready to take over the business. They want to. They want me to get out of the way so to speak. I’m just trying to understand if I have enough. Am I going to be able to live and cover all my costs after I exit the business? Some of that is created because as small business owners have the luxury of using the business to pay for some of their personal expenses because then that’s where the emotion comes in. How do you, as an advisor, wade into that stuff and help people understand and get comfortable with how much they need to live?
Mark Pletts (03:51):
If you think about this, you usually start with the math, but most small business owners are so consumed with working in the business that they don’t really think about working on the business. When you start to transition, it’s really, you have to coordinate the two.
Jamie Duininck (04:11):
Thank you, Mark, for all of your advice today and discussion on The Water Table podcast for our listeners. If you’d like to hear the whole discussion with Mark, you can find it at watertable.ag/business.