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The 5 Secrets of Generational Wealth

Transcription:

Hey, everybody! It’s Dugan Kelley with Kelley Clarke. So glad you’re here with us today, and I’m really excited to be able to share with you what I think are the secrets to generational wealth. This is a super cool presentation that I’ve shared around the country to a variety of investors, sponsors, operators, syndicators, and passive investors. So, it doesn’t really matter what category you fall into. If you’re somebody that’s looking to deploy capital and grow your own family’s wealth, or you’re just interested and curious about what the keys to generational wealth are from the standpoint of a practitioner helping people structure deals all around the country, then this is the right one for you.

So, I’m going to share my screen here. All right, so this is what we call the Secrets of Generational Wealth. Let’s start off with one of my favorite quotes. This is from Jim Rohn. He says, ‘For some, worldly riches are gained at the price of lost friends and broken families. For others, fortune remains forever elusive while families remain precariously intact. But for most, we remain forever in one of two categories: either poor seeking to become wealthy or wealthy seeking always to rediscover the happiness that we had when we were poor.’ How true is that, right? So there are usually two camps that people kind of fall into. Here’s another quote for you. We’ve had the most massive creation of wealth for people a lot younger than those who formerly got wealth in the history of the world. The world is full of young people who really want to get rich, and when I left school, nobody thought it was a reasonable possibility. That’s from Charlie Munger, Warren Buffett’s business partner. So if you’re one of those people that is looking to do that, well, we’re going to talk to you about what we see and what we think of when we think of generational wealth and what the secrets are associated with that.

A little bit about our firm and me in particular. So, the firm has over 50 years of collective experience. We’ve structured deals in excess of $10 billion on average. We structure $4 billion or more per year. Last year, I think it was over $5 billion, and we’re close to $3 billion so far for 2023. Licensed in multiple states, and I’ve written a couple of books as a collaborative author with a bunch of other people, called ‘Purpose, Passion, and Profit’ and ‘Success Habits of Super Achievers.’ If you’re interested in that, you can check us out on Amazon. Without further ado, let’s get into what we think the secrets of this generational wealth are.

But for color or context, first and foremost, let’s get some definitions down. So, total wealth, wealth adjusted to remove the effects of inflation. This is held by families in the United States. States tripled wealth held by families in the United States tripled from 1989 to 2019, from $38 trillion to $29 trillion. That’s roughly four times the nation’s gross domestic product, or GDP, to $5 trillion. So, that’s a significant jump if you just think about how there is this large concentration of wealth inside of the United States. So, the growth of real wealth over the past three decades was not obviously uniform, right? There was a concentration of wealth, and it got even more concentrated in a smaller group of individuals. In 2019, families in the top 10% of the distribution held 72% of the total wealth. Families in the top 1% of the distribution held more than one-third, and families in the bottom half of the distribution held only 2% of the total wealth in the country. So, that’s a highly concentrated amount of wealth that’s held by very few individuals, families, entities out there. So, I really think that the biggest, and we’re going to see this throughout this kind of throughout the key ingredients throughout what we consider to be these secrets of generational wealth, is the core principle that we’re talking about. And I really believe it boils down to stewardship. When you look at stewardship, the definition in the dictionary is that stewardship is the careful and responsible management of something entrusted to one’s care. Right? So, I really believe that ultimately, as you look at these secrets that we’re going to share with you, that ultimately, you’re going to come to the same conclusion that I have come to, and that is success comes from being a good steward of what you’ve been given.

Secret #1 in Creating Generational Wealth: Create Value for Others

Secret Number One is all about creating value for others. For those of you who love the book “The Go-Giver,” you might see the similarity with Law Number One in that book. The idea here is that in a free market economy, creating value for others will drive demand for your product, your service, and separate you from your competition. It’s the concept of focusing on creating value for others, rather than what you can get from somebody. It’s about blessing and serving other people.

When we look at generational wealth and the individuals, family offices, institutions, and corporations we’ve had the privilege of representing over the last 20 years, it’s interesting to note that they all share a common characteristic: they create massive value for others. So, we say, “We create value for your clients, your friends, your family, and those individuals the Lord puts you into a relationship with.” It’s crucial to understand that this is a service you provide for other people. As another quote emphasizes, “People do things for their reasons, not ours.” Therefore, you need to find the reasons that drive other people to create value.

Many people wonder how to do this. What are some of the characteristics to implement when creating value for others? We’ve identified key attributes for this process:

  1. Excellence: Being excellent at providing services, products, or opportunities.
  2. Consistency: Maintaining a high level of consistency.
  3. Attention: Paying attention to detail and the overall aspect of everything.
  4. Empathy: Demonstrating genuine empathy by understanding others’ values, goals, and emotions.
  5. Appreciation: Showing gratitude for the people you’re serving.

These are the tools you can implement in Secret Number One to create value for others.

Secret #2 in Creating Generational Wealth: Results Matter

Secret number two, and this is what we call ‘Results Matter,’ right? So we’re going to be intentional and serve other people, but ultimately, our service has to relate to some sort of achievement or result in the active service. It’s not just trying that matters; it’s actually achieving the results. Your clients, friends, family, those individuals the Lord puts you in a relationship with will use you more if they achieve the results they are seeking. So, remember, secret number one is to find out how to create maximum value for other people. And then, secret number two, achieve the results that the people you’re serving are actually looking to achieve. I’m not talking about some sort of massive windfall; it has to be practical in nature. You have to be able to actually achieve some meaningful result, but it’s super important for results for your clients and those that you’re serving to actually feel that you’ve achieved that.

So, what is your actual impact on those individuals? What’s the actual impact of what you’re doing? However beautiful, this is a quote from Winston Churchill: “However beautiful the strategy, you should occasionally look at the results.” Imagine that these are amazing words of wisdom from one of the most prolific people that changed the world forever, Winston Churchill. The reality is we need to occasionally look at the results, not just fancy words. We actually need to put our words into actions, into deeds, works, in order to achieve those results.

Okay, so that’s secret number two.

Secret #3 in Creating Generational Wealth: Grow your Network

Secret number three – many of you often focus on this all the time. So it won’t come as a surprise that secret number three is growing your personal network. People do business with those they like, know, and trust. If you haven’t developed your own network, you’re doing yourself a disservice. This applies regardless of your profession; whether you’re a lawyer like me, involved in raising capital, trying to syndicate a deal, closing a real estate deal, or engaging in a merger or acquisition, or even if you’re simply selling a product or another service. People want to do business with those they like, know, and trust.

Your ability to grow your business using trust, which is the new currency for all businesses, is crucial to your overall success. If you aspire to become generational wealthy, it’s essential to grow your network. Recent surveys show that over 80% of retention and growth come directly from this trust factor. Think about it – over 80%. In the past, they used to say that 80% of success is just showing up. However, the reality is that we’re not just showing up; we actually have to build that trust. People we serve need to feel it and reciprocate it genuinely. If you can do that and grow your network sufficiently, you’ll witness greater stickiness in that process.

Henry Ford once said, ‘You can’t build a reputation on what you’re going to do; you actually need to do it right.’ So remember, creating value for others matters; results matter, not just words. We need to deliver results. Lastly, when we surround ourselves with new people and build our network, we must do that through building trust. Guard your reputation, cultivate it, and be a person of character and continually increasing capability. You don’t have to win all the time, but if you cut corners or compromise integrity, I urge you to reconsider. You don’t have to be the fastest or the best; people will continue to utilize your services if you’re a person of high moral integrity, if you cultivate your reputation, guard it, and build your network. Ultimately, you’ll establish a firm footing of trust, which is the new currency for all businesses.”

Secret #4 in Creating Generational Wealth: Keep it Real and Humble

Alright, Secret Number Four. This is what we like to call ‘Keeping It Real and Humble.’ Here’s a quote that I love from St. Augustine: ‘It was Pride that changed Angels into devils, and it is humility that makes men or women as angels.’ The reality is, we don’t want to be thinking with pride; we want to be humble and keep it real.

In 2018, an investigative article in The New York Times found that only 15% of people possess humility. Can you imagine that? Only 15% possess humility. That means for every 10 CEOs, only one will exude humbleness. Yet, being humble is one of the secrets to succeeding in business and becoming generationally wealthy. You might have heard me say this in my previous videos, but why do I say it all the time? Because being real, humble, transparent, and authentic is how you should live your life. But living a life of integrity, of being real, humble, and transparent, makes you more attractive, and what you do becomes more attractive to those you’re trying to serve. It’s super important.

So, keeping it real and humble is vital. A survey of more than 100 small to medium-sized companies in the computer industry, published in the Journal of Management, found that when a more humble CEO leads a firm, its top management team is more likely to collaborate, share information, jointly make decisions, and possess a shared vision. Imagine that. When you have everyone on the same page, you’re more likely to succeed.

The same core principle can be seen in history. From former CEO of Enron, Jeffrey Skilling, to junk bond king and white-collar criminal Michael Milken, and the onetime leader of American International Group, Joe Cassano, all of them were lionized in the industry before they fell from grace. A key characteristic we see in their stories is the lack of humility. That’s a common opinion when it comes to the idea of staying humble.

So, true humility, as Tyron Train Edwards puts it, is not an abject, groveling, self-despising spirit. It’s merely a right estimate of ourselves as God sees us. Many people mistakenly think that being humble means being weak, lacking inspiration, courage, confidence, and more. But real strength doesn’t require chest-thumping or shouting through a bullhorn to get your point across. Real strength often comes in the form of someone who is assured and can speak quietly but firmly and authoritatively in a situation.

That’s part of Secret Number Four, which we call ‘Keeping It Real and Humble.’ We’ve talked about creating value for others, achieving results, building your network, and staying humble and authentic. If you can integrate all these principles into your life, it will lead to greater success.

Secret #5 in Creating Generational Wealth: Emotional Intelligence

Now, let’s move on to the fifth and final secret, which I call ‘Emotional Intelligence.’ This is incredibly important. Here’s a quote from Daniel Goleman: ‘If your emotional abilities aren’t in hand, if you don’t have self-awareness, if you can’t manage your distressing emotions, if you can’t have empathy and effective relationships, then no matter how smart you are, you won’t get very far.’

A lot of people think that success depends on various factors, such as the school you attended, where you were drafted in the business world, your location, the city you live in, the size of your house, and other things that aren’t true indicators of genuine success or a foundation for generational wealth. However, emotional awareness and emotional intelligence truly are crucial. Consider this: according to a study, over 90% of top performers possess high emotional intelligence. Emotional intelligence accounts for nearly 90% of what distinguishes high performers from their peers with similar technical skills and knowledge. This means that someone who attended what’s considered the best school and someone who attended a less prestigious school can both succeed, but I’d bet that the person with emotional intelligence will be more successful in life.

Emotional intelligence shouldn’t be underestimated. Only 36% of people in the world are emotionally intelligent, but it’s a skill that can be cultivated. Even though some people dismiss its importance, it’s crucial, regardless of your industry, whether it’s real estate, business, tech startups, or launching an IPO. Emotional intelligence is essential for long-term success and generational wealth. A study following 80 scientists over 40 years found that social and emotional abilities are four times more critical than IQ in determining professional success and prestige. This is a significant statistic, highlighting the importance of emotional intelligence.

However, it’s important to note that many people believe they’re self-aware when, in reality, only 10-15% truly are. So, it’s crucial to seek feedback from friends, loved ones, and your spouse to gauge your self-awareness and emotional intelligence.

Summary of the 5 Secrets for Creating Generational Wealth

To summarize, these five key principles, or secrets, are fundamental to building generational wealth:

  1. creating value for others
  2. achieving results
  3. building a network
  4. staying humble and real, and
  5. developing emotional intelligence.

These principles are essential regardless of your industry or goals.

Fear often holds people back from integrating these principles into their lives. Fear can manifest differently for each person, so self-reflection is essential to identify and overcome it. Everyone experiences fear, and it’s important to confront it and push through it.

Lastly, remember that success doesn’t come easily. Life is about consistency, persistence, and the willingness to overcome challenges. As Teddy Roosevelt said, it’s about being the person in the arena, striving valiantly, and daring greatly. Generational wealth is built over time, not overnight. These foundational principles will guide you on your journey to success and peace with yourself.

 

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