- Good Idea, Bad Start
- When Opportunity Comes Face to Face with Hard Work and Preparation
- End of an Era
- No Strategic Approach to Wealth Management
- Alarm Bells
- It's Hard to Grow Assets AND Enjoy the Fruits of Success at the Same Time!
- Our Wealth Represented More Than Cash
- We Needed to Get a Handle on Our Investment Portfolio
- Introducing Strategic Wealth Management
- We Are Stewards, Not Owners, of Our Wealth
- Taking Control for the First Time
- The Power and Purpose of Entrepreneurial Stewardship
- Philanthropy Has Emerged as a Shared Interest Among Many Family Members
- Closer Family Ties
- The Value of Family Lore
- How My Dad Taught Me the Value of Money
- A Book About Strategic Wealth Management
No Strategic Approach to Wealth Management
Carnation’s sale to Nestlé precipitated a crisis for our family in three ways.
First, our family never anticipated the sale of Carnation. So our family never adopted a coordinated approach to managing our wealth, should that eventuality arise. Thus, in early 1985, when Carnation’s sale was consummated, assets of nearly $1 billion suddenly got divided among a large number of Stuart family members. Less than a decade later, there were at least seven different Stuart family branches, each pursuing its own investment goals and strategies—with widely varied results.
Second, after the company’s sale, our family no longer had a single focal point for its identity. So our common family heritage and history began to slip away. My great-grandfather and Carnation’s founder, E. A. Stuart, died in 1940. His son, E. H. Stuart (my mother’s father), passed away in the early 1970s. Within a year of the company’s sale, not a single Stuart family member worked for Nestlé. The last family member who worked there quipped to me, “The Stuart family connection went from being an asset to a liability.”
Third, after Carnation was sold, our family’s wealth was reinvested in mixed stock/bond portfolios that yielded yearly dividends. But these new investment funds couldn’t begin to match the average annual growth rate of 13% that Carnation stock had enjoyed from 1899 to 1985. In fact, income distributions to Stuart family beneficiaries started to decline in the early 1990s. Soon, some members of my family, who were dependent on investment income for their lifestyles, began to emphasize fixed income investments more than in years past—a move that was destined to further erode our wealth if we weren’t careful.
All of this caused me to look at the Lucas branch of the family—my parents, my siblings, and our children—with a great deal of concern. By this time, I had spent more than ten years in the investment and wealth management industries. After graduating from Dartmouth in 1981, I had gone to work for Wellington Management Company, an investment management firm that manages hundreds of billions of dollars in assets. Over the years, I also became deeply involved in our family’s financial and investment affairs as part of the Lucas family office.
My experience at Wellington Management gave me superb on-the-job training as an investment analyst, and as I looked over the state of our investments, I didn’t like what I saw. The performance of our funds under the trustee who oversaw our family’s assets was mediocre at best—to the limited extent I could measure it.