The Vision for Your Family

I want to let you in on what I believe is one of the most intriguing investment stories ever told. The story of how the world’s wealthiest families have held onto their wealth over hundreds of years.

There are a lot of families. And there are a lot of rich people. But there aren’t many rich families… at least not ones that last long.

And there’s a good reason. Keeping money and family together over more than a generation is tough. Statistically, it is unlikely. In fact, it is way out on the edge of bell curve.

Which is precisely what makes it so fascinating…

You see, these families have managed to prosper through famines, wars, recessions, depressions, government wealth grabs…and self-serving wealth managers. (Maybe the biggest threat of them all.)

And the existence of these family fortunes is living proof that it is possible to make and hold onto wealth over the long term.

As chance would have it, this is probably more relevant now than ever. Because as conventional investment returns shrink and the financial crisis drags on, a lot of people are understandably concerned for their family’s financial future.

Luckily, these families have left a trail of breadcrumbs that we can follow.

And by using the same techniques…and the same wealth building secrets as these ultra wealthy families…you can follow their lead and secure our own family wealth.

This story might have passed me by, if it wasn’t for a chance encounter with an old friend…in Germany of all places.

His name is Norman Rentrop. He is one of the smartest people I know. And he is one of Germany’s most successful entrepreneurs.

Like me, Norman is in the publishing business. He sold his first magazine while still in collage. Not long after, he was running a multimillion-dollar business.

Norman and I became business partners in 1994. Soon after, we became friends. One thing that always struck me about Norman was how much he loved his business…and how much enjoyment he got out of it.

So you can imagine my surprise when I learned that Norman had suddenly “retired.”

I naturally wanted to know what had led him to give up such a successful career. So I flew to Germany to ask him what had happened.

This is what Norman told me…

“Bill, I realized that if I just kept doing what everyone else was doing, I would get the same results as everyone else. It was time for me to start treating my wealth differently.”

Then he explained how he had learned about the secretive world of how ultra-wealthy European families had been preserving and growing their wealth for generations through something called “family offices.”

And why he believed setting up his own “family office” was the best way to protect and grow his money too.

As you can imagine, I couldn’t get Norman’s words out of my mind…

I know Norman wouldn’t give up running a business he loves, if there wasn’t something even better to be doing with his time…and with his money.

I was hooked…

And two years ago…after much study and investigation of my own…I set up a family office of my own and started a small research advisory to share the insights I’ve learned with a small group of non-family members. I called it Bonner & Partners Family Office.

You may think it odd me studying these ultra wealthy family dynasties (the Rothschilds, the Rockefellers the Pitcairns and so on).

I grew up on a poor tobacco farm in southern Maryland. And my family never had any money to speak of. (As kids we didn’t even have running water. We had to carry water to the house from a natural spring.)

But I got an education. And I decided to make money the old-fashioned way – by starting my own business and working damn hard at it.

Back then I earned a grand total of $25,000 a year! And I had a growing family to feed, and, one day, put through college. But I was lucky enough to be able to grow my business. And now it is a large and successful newsletter publishing business.

And there’s the thing: Now that I have acquired wealth worth holding on to, I realize how difficult it is to hold on to it.

Not only is there the problem of poor investment decisions. (Let’s face it – we all make them from time to time.) But there’s also the taxman to contend with. And then there are all the brokers’ and bankers’ fees, commissions and costs.

And even if you manage to keep your wealth safe from these threats, you’re left with the even bigger challenge: how to pass it on to your kids without spoiling them.

You know what Andrew Carnegie said about inheritances: “The parent who leaves his son enormous wealth generally deadens the energies of the son and leads him to a less useful and less worthwhile life than he otherwise would.”

I don’t want that for my kids. And I’m sure you wouldn’t either.

Fortunately, these are all things that a “family office” strategy can help with.

At Bonner & Partners, for instance, we recommend a unique approach to investing (one that turns most conventional wisdom about wealth preservation on its head). And I’ve hired an ex-Swiss banker to help with that side of things.

But we also take a unique approach to the family side of things. This is what makes the family office strategy unlike anything else. It doesn’t just prepare money for your family. It also helps prepare your family for money.

If you are still on the path to creating wealth, our research won’t be for you.

But if you have accumulated wealth and want to make sure it stays intact for your kids to enjoy, I’ve found that following in the footsteps of the world’s great family success stories can help greatly.

But remember: To have and maintain family wealth you need two things. You need a family. And you need wealth.

If you ignore one element or the other, you will soon not have either – both the family and the money are likely to blow up.

[Ed. Note. Bill Bonner is the editor of The DailyReckoning.com]