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Peter King: Welcome to the PK Experience. My name is Peter King. I'm the host of the show,

and today I sit down with financial expert and advisor, thought leader, and

author, David McAlvany. I heard about David McAlvany from his book called The

Intentional Legacy, which is a book that discusses how to transfer wealth from

one family generation to the next and the complications that arise from that. I

was a little surprised when I read the book that it was not as financially heavy as

I thought it was going to be.

It had much more to do with personal relationships, personal dynamics, and

how to deal with different personality types, and what to look out for when one

generation is passing it on to the next, what type of different personalities that

impact the decision-making that is required, of course, to deal with a lot of

money and estate money, but again, I found, because there was not as much

financial focus as I thought there was going to be, there's a lot of really great

information in there, even if you don't have money or familial money that is

going to make a significant impact on your life. There's a lot of information in

there that will help you think in terms of your personal legacy, regardless of

your financial track record, if you will. We talk about that and a lot of many

other things on this call. It's a really great call, so sit back and let me know what

you think, and here we are with David McAlvany.

All right. With us is author of the book The Intentional Legacy, David McAlvany.

Thank you so much, David, for taking the time today. I'm very excited to talk to

you. I have some personal reasons to be talking to you, as my family's going

through legacy transformation at the time, but just going through your book,

I'm just, I was fascinated with this concept of legacy from a familial standpoint,

from generational wealth passing down, but also just in one's own individual

legacy and what kind of legacy are we creating. I think there's going to be

members of my audience that both of those situations will pertain to them,

whether it's generational wealth, preservation and growth, or just what is your

own personal identity legacy? Especially as a man. First of all, thank you again

for carving out some time for me today.

David McAlvany: You're welcome. Good to be with you. I'm glad we can have a conversation,

Peter.

Peter King: Yes. One of the things that really surprised me about your book, which totally

makes sense now that I've read it, but I was expecting it to be more of what you

would call a hard structure where there would be more tax strategy and

financial strategy, etc., where really the bulk of the book is much more about

culture, and value, and heart. I was very pleased to see that. Let's dive in a little

bit into legacy and what that means and what you have seen that creates

successful legacies, and then what are some of the things that are pretty

common pitfalls in legacies as well?

 

David McAlvany: Sure. Well, I mean, the concept of legacy, I think, is an inescapable concept.

Everyone is going to leave a legacy of one sort or another. It's just a matter of if

it is the legacy that you hope to leave, or if it's just sort of an accidental process

at the end of your life, people look back and say, "Well, there it is." Certainly,

you've got the ideas of legacy, which apply to the soldier who may leave a

legacy of courage, or the teacher who leaves a legacy of selfless investment in

their students, or his students. There's different versions of it, and I guess how I

would define it is critical to how it plays out in the book, which is really that

legacy is the sum total of your values and of the culture, and really the

aggregation of the choices that you make in life.

You're right, there is a family element to legacy, but there's also a very

individual element, the choices that you, as an individual, make. To me, it's not

really the case that, yes, you have to be married with two children for legacy to

apply. You may be divorced, or widowed, or single, or ... You still have the

opportunity to ask questions about the trajectory of your life and, again, sort of

what is orienting the choices that you're making, such that at the end of your

life, if we're at some future stage, you look back and say, "It's exactly what I was

hoping for. That's what I was aiming for. It's on target."

Peter King: Yes. Hence the intentionality piece of this. Right? I have found that, in my life

and in others that I've come in contact with, that often, that intentional piece,

the ability to pause, and to reflect, and to think, is almost not existent. We're so

busy. We're ... Especially once you have kids. I mean, it's inevitable that you're

just going to be thrown into the fire and just, without that intentionality, be

constantly putting out fires as opposed to preventing them in the first place,

and then, of course, building an actual foundation of an intentional legacy. What

do you see as the prime component of a successful legacy?

David McAlvany: Right. Well, it's a big question, and I would come back to that point of

intentionality first. We know that sometimes our Special Forces, particularly the

Navy SEALs, they, going to get thrown into really tough situations, and that's

kind of their job is to figure out what to do in those situations. One of the first

things that they do when they are on the ground is take what they call an

appreciation. They sit, they stop, and they do nothing. That opportunity to be

intentional about your legacy or be intentional about your life does ... It requires

you to stop and reflect. That's really against the grain of our culture today,

which is, we are so busy, we don't take the time to stop and reflect and to ask

questions about what's going on in our interior lives, what's going on to the

exterior of our life, but definitely has an impact on who we are and where we're

going, but that idea of taking an appreciation, which is just to stop and reflect, is

really important. I guess that's where I would start is that successful legacies are

intentional. They are intentional.

I think if I were to say there's three elements which are really important, it's that

a successful legacy needs to be, and we can expand on these if you want, but

that they're intentional, that they adopt some sort of an ethic that allows for

the disturbances of life to be managed and to be dealt with. I call it a

redemptive ethic where you don't always get what you want in life, but you do

have the opportunity to respond to it, and in the context of family life, you can

either respond by eviscerating relationships or by finding a way back to where

you want things to be. On an even keel, is something broken? How do you fix it?

If it's bent, how does it be made straight again? After intentionality, I would say

it's very important for there to be some sort of an ethic in the family which

allows for things to be fixed, because inevitably, things do get broken. That's

just the nature of life together is that things are not always perfect.

Peter King: [inaudible 00:07:30].

David McAlvany: Then I think the third thing is to focus on the micro, which is to say, focus on

basics. The little things that you do each day that are sort of, that the habits of

life, in aggregate, they end up mattering. I'm not a personal coach, and I'm not a

theologian, and I'm not a psychologist. We run a money management company

and a precious metals brokerage firm, and these two companies have been

around 40-plus years.

What we see so often is the problem proverbially of what's been called

shirtsleeves to shirtsleeves, where one generation makes something or adheres

to a set of values, but by the second or third generation, it becomes to be

dissipated. If you're talking about a real financial resource, somebody, in their

lifetime, becomes a millionaire, but by the second, third, and fourth generation,

something's slipping, such that you're back to starting all over again, shirtsleeves

to shirtsleeves. It kind of spans cultures and spans time. You have the clogs to

clogs, the rice paddy to rice paddy, the stalls to stalls, but it's the idea that

you're starting over because something wasn't communicated or there was a

breakdown along the way. To me, the focus on the basics, the focus on the

small things, goes a long way towards there being continuity between

generations and there being stuff that is in the relationships that matters.

I'll give you an example. I'm married. I've been married for about 18 years, and

my wife and I decided maybe a decade ago that we were going to have a date

once a week. It's very simple, but we're far more religious, if you will, about our

date night than we are to going to church on Sunday. I mean, it matters to us,

and it's a time for two adults to decompress, to think about where we're at and

where we're going, to express either frustrations, on the one hand, or what's

really working well. It allows us to sort of assess what's going on on the family.

I'll tell you, I know folks that don't carve out time with their spouse even on a

monthly basis. Three, four months can go by before an excuse comes along, like

Valentine's Day, and your hand is forced. Socially, you're obligated to play, and

that one thing, I would say, has been critical towards our relationship continuing

to grow.

 

You could pick one thing in every relationship you're in, whether it's with a best

friend, a daughter, a brother, where you adopt a habit, something very small,

but you do it over and over again, and over weeks, months, and years, you find

that it has fortified you, and it has fortified what you're a part of in aggregate in

a very significant way. Long answer to short question, intentionality and ethic

which allows you to survive disturbance, and a focus on the basics, those would

be three things that I think are really important for moving a legacy in the

direction that you want it to.

Peter King: Yes. Just out of a quick side note, curiosity, question, when you go on these date

nights, you mentioned that it's a time for you guys to reflect on stuff like that. Is

it, are you intentional about ... I mean, that almost sounds like a meeting, like a

business meeting. Is it that, or is it, "No, we're just going to go have fun, and if

things come up, then they come up"?

David McAlvany: Yeah. I mean, every week's different. Every week's different. Sometimes, Peter,

it's, "Hey, let's just go to a movie and kind of veg out." It's just for entertainment

value only. Other times, it's almost like a walk down memory lane, going back to

being in college and discussing big ideas again, and lively conversation about

things that don't necessarily tie out to anything practical, but really kind of an

intellectual sparring. Other times, it's problem solving because we're trying to

figure out what's not working with one of our kids where we look at certain

behavioral things. We go, "What are we missing? Can we dial something back,

or where can we meet their needs in a different way," or sometimes it's just

pure romance. A bottle of champagne and staring longingly into each other's

eyes. I mean, so it covers the gamut, and I think there's different seasons in life

where maybe there's a little bit more amazing romance in one season or, "Down

to brass tacks, we've got a lot of problems to solve here." We just kind of know

that there's some ebb and flow and enjoy each season for what it is.

Peter King: That makes sense, and part of the reason why I asked you that more of a

personal question is because a lot of your book is really guidance. It's pointing to

the heart and soul, and the value of creating a successful legacy, but I'm curious

in some of those very, in the minutia, in the tangibility of how you actually go

about doing that. I thank you for answering the question. For being a nonpsychologist,

I was fascinated, actually, with a lot of what I ... Because I've

studied a lot of psychology myself. There's a lot of psychology in this book,

because obviously, we're talking about people. We're talking about, obviously,

the preservation and growth of wealth, but at the same time, all of that

happens through the interaction of people. You bring up some really fascinating

points about pitfalls to avoid in legacies that are unsuccessful. Help us

understand better what are some of those common things that we need to

avoid.

David McAlvany: Yeah. Well, I mean, I think, again, this kind of goes back to my background in the

world of finance and money management. I take the overlay of a balance sheet

and expand what is on the balance sheet and say that there's assets and

liabilities that we're managing, and in those assets and liabilities, we're moving

beyond the tangible aspects of a house or of property that you own, or perhaps

a private ownership at a company, or public shares that you may have in

Amazon, or Caterpillar, or whatever. Those are tangible assets. Everyone's

familiar with those and how they show up on a balance sheet. Intangibles are

resources just like the tangibles, which need to be managed. I think this is where

sometimes perspective is lost, and it's frankly where you do edge into

psychology and in relationship skills, because you're talking about grace

between people. You're talking about the cultivation of love. You're talking

about the skills of listening or what it takes to cultivate loyalty.

You have four little people at home, and I can tell you, when it comes to stuff

versus relationship, very oftentimes, they would choose stuff over relationship.

Well, I mean, what do we do in that interaction to create trust, and a shared

identity, and to teach them how to forgive? I mean, all of these things go into

the management of the resources that we have.

There's, I'm working my way around to your question on pitfalls, but I think it's

important to frame kind of what we're doing and why it does go beyond asset

management, because so often, I mean, in 45, 50 years of being in business, my

dad's generation, now my generation, of being in this family business, we see

families over and over again, whether they have $100,000 in aggregate or $100

million in aggregate.

When there is sort of reading of the will, it ends up being a free-for-all for

[inaudible 00:16:07] gets what, and people get very, very selfish about me,

myself, and I. There is no sense of "us." There is no shared identity. There is no

corporate purpose. There is no larger way in which they feel that they belong.

This is really where I think some of the pitfalls begin to emerge, where I see little

people, our four kids, laying the groundwork for either massive conflict in the

future or cohesion, how they are sorting themselves out today as 10-year-olds,

as 12-year-olds, and as they move towards adulthood, and they either gain the

skills of figuring out how to bury the proverbial hatchet, and get along, and learn

how to forgive, or there will be five and 10-year stretches ...

I find this all the time when we're talking to clients is, "Tell me a bit, a little

about your family background." "Well, I do have a brother. I haven't talked to

him in 15 years," and I'm thinking to myself, "If I hadn't talked to my brother in

15 years ... " I mean, that just, immediate sign something happened somewhere

along the way where there was a rupture in a relationship. It didn't get fixed,

and it's hanging out there. What are we dealing with? Are we dealing with

intergenerational baggage? Are we dealing with an inability to forgive? Because

a part of the core family values did, did not embrace what that looks [inaudible

00:17:37] conflict resolution. I mean, when you have a problem with someone,

do you rip their head off verbally, or do you have a way which is sort of your

family ways of communicating that, "Hey, we're going to respect, fully try to

listen, actively listen," and move towards an understanding, an appreciation of

what's being expressed, whether you agree with it or not.

Again, how do you manage legacy when so much of it deals with your own

strengths and weaknesses as an individual? What you ultimately have to

choose, behaviors that you choose in the context of somebody saying, "You've

just been ... " The bequest is $10 million to you. How do you behave? Does

money change you? Do you have a core set of values and a practiced life

together of shared identity as a group such that you do cohere instead of sort of

split off and go your separate ways? I really [inaudible 00:18:41] the idea of

family wealth versus sort of individuals deciding what they're going to do with

their share, but where you look and you say, "Look at what one generation has

created. There are some benefits that can be derived from being a part of the

family, and here is what we are about. These are our objectives," whether

they're philanthropic objectives or educational objectives, but where everyone

has some play in it. Again, it comes back to more of us versus just the individual.

Peter King: Do you have any examples of clients that you've worked with where the heirs

were not necessarily all on the same page, either personality-wise or whatever,

but that then have a shared vision to success where they were conflicted maybe

on a personal level, but they were able to put their differences aside and

actually have success in growing the legacy?

David McAlvany: Yeah. Well, I think a part ... This is where you do blend the hard structures and

the soft structures, because-

Peter King: Real quick, let's explain to the listeners what the hard and soft structures are.

David McAlvany: Right. Hard structures would be if you're sitting down with legal counsel and a

tax advisor, and they're trying to maximize the transfer of wealth from one

generation to the next, or beyond one generation to the next from a dynasty

standpoint across time at 50 years, 100 years, 150 years. Yeah, I think of the Eltz

family in Germany, who's had the same castle in their family for 950 years.

They've successfully-

Peter King: Wow.

David McAlvany: ... taken something, and it has spanned 34 generations. The decisions that

they've made had to be savvy, from a hard structure standpoint, because if you

look at the tax history and the political history of continental Europe, there were

lots of opportunities for them to be destroyed and for their wealth to be

dissipated through external factors, and the hard structures they set up were

pretty critical to their success, but even more critical were the soft structure.

The soft structures are the things that we were talking about earlier in terms of

grace, and love, and forgiveness, and courage. For the Eltz family, it boiled down

 

to sentimentality, what they recognized as a family is what they had was special,

and each generation took ownership of the fact that what they had was special,

and they wanted to maintain it, and they were committed to maintaining it

through their generation and passing it on to the next.

Civility was another one of sort of the most important things for the Eltz family.

Civility was basically a commitment that three brothers living in one compound,

I mean, you look at this castle structure, there's basically three castles within

one castle. Their determination was, "We're going to have conflict, but we're

going to resolve it with kindness. We have to constantly maintain dignity and

respect in these relationships, and we will be kind to each other." Address the

externalities.

Diplomacy was the third thing that sort of defined their success as a family.

Don't get taken out by the neighboring whatever whatever. Diplomacy, civility,

and sentimentality, again, a lot of that deals with soft structural stuff. You

cultivate it when you're cultivating a family, and you're really talking about

individual choices that deal with the books that you read, the conversations that

you have, the poetry that informs your life, the activities that you enjoy

together as individuals, the kinds of conversations that you have, those all feed

into soft structures. Soft structure's the reason why you like each other versus

hate each other, and the hard structures are, they're the rules of the road.

The rules of the road are, I'll just give you one example. A no-contest clause in a

trust document where if you've got a major problem with this and you don't like

it, fine. You're out. I'm not saying I'm a fan of that, but that would be an

example of a trust document reading such that if you want to be a pain in the

neck and say, "Hey, this isn't fair. I'm not getting an ... " "Great. We're done. The

conversation's over." I'm not suggesting that that's the ideal, but there are

certain things that are put into documentation, trust documents, dynasty trust

documents, that lay out what the next 10, 50, 100, 300 years looks like in terms

of what you can and can't do legally. You're bound to the document. What we

like is the idea that there is a loosely written hard structure, but the real

emphasis is on the soft structures, where, again, it's not us trying to figure out,

"Are we following the rules," but it's really, "Are we caring for each other? Do

we care about someone other than ourselves?"

Look, I mean, every one of, I have older sister, then me, then a younger sister,

then a younger brother. By personality, we're all different. Some of us are

introverts. Some of us are extroverts. Some of us are risk takers. Some of us are

not. Lots of personality studies, just string us out. We're all different across the

spectrum. We still love each other. The soft structures are there, and I don't

know that my parents even were that intentional about creating, but through

time, we've created ...

 

I'll tell you one example of how we, as individuals, have cultivated soft

structures within a brother-sister relationship. For years, we ... Now everybody's

got too many kids, it's almost impossible to do, but sometime ago, we were

committed to getting together, all of us, once a year. Three days, so maybe

that's a weekend in San Francisco where we're going to go to the opera and

have three or four really good meals together and walk around the downtown

area and just enjoy each other. Once a year, it's two days, three days, and that

investment and relationship has continued to really create this relational tie,

which has been invaluable. We weren't raised that way. We just chose, in spite

of our personality differences, in spite of our different priorities in life, to say,

"The only way for relationship to grow is to spend time together, and we're

going to take time out of our schedules to do that."

Peter King: Yeah. That intentionality, I'm sure, has breeded closer relationship. Right?

Which is kind of the whole point in carving out that time for each other. One of

the things, or a more sort of personal question that I have for you is the fatherson

relationship in legacy. Legacy, as a word, is perhaps the most important

word, I think, in the masculine experience, because it's about fulfilling your

potential to the best of your ability and then preserving it in a way. I think when

the heart is aligned in the right way, it's, "How do I pass this on so that it can be

something even bigger and better to my son, or to my family?" I don't mean to

... I have a daughter, too, so I'm not taking-

David McAlvany: [inaudible 00:26:41].

Peter King: ... women out of the equation, but I think there is a special relationship with

men in this journey. I ask you, because one of my other podcast guests, Stephen

Mansfield, talks about the mandate that a father, that a son has to receive from

his father. My father has set up a lot of resources in order to fulfill whatever ...

The mandate for me is getting clearer and clearer, but what really does scare

me is the part of the book where you talk about the cat in the cradle, and the

father that goes away and works. Everybody knows the song, Cat's In The

Cradle. How do you avoid that? What are the things that a father needs to do

with a son, I have a son that's 10 right now, such that we avoid that, so that we

have that cohesiveness and the, we're different. My son and I are different, but

we're the same in some fundamental ways, too. How do we avoid the

proverbial looking back on my life going, "Oh, man. He's just like me, but in ways

that are not healthy"?

David McAlvany: Well, I mean, invariably, every generation has the opportunity to say, "What do I

want to continue with or not continue with?" Sometimes, if you don't stop, I

mean, that appreciation piece that, the intentional piece, this is where it gets

applied again, because you get to reflect on your father's life and say, "There are

some things that I love about him, and I hope, I hope that I reflect those

qualities in my life."

There's other things you say, as I do with my own father. "No. No. I can take the

best, and I don't have to live the worst," but it's going to be my looking carefully

at my life and saying, "How will I make that aspect different?" If it's an ingrained

weakness or if it's just something that didn't show up. I mean, my dad was the

entrepreneur that started our company and took all the risk.

Part of the price paid was time away, three weeks out of the month gone,

traveling, creating a book of business, speaking at various conferences.

Translate that into the life of a 10 or 12-year-old, and you get a lot of this in the

book. I'm sorry, it's a little ... I mean, the only way I understand some of these

things is autobiographical, so hopefully people can look at it and say, "All right, I

get the idea." That's what I'm hoping is that it just serves as an illustration, but

my dad was gone, which meant that when I was at a hockey game, or a lacrosse

game, or a soccer game, everybody else's dads are around the field, my dad

wasn't there hardly ever.

Here's how it's translated into our life as a family today. I am now in his shoes

running a business that requires probably three to four months of travel a year.

What are the choices that we're going to make as a family, knowing that some

of the aspects of our family life, as I grew up, weren't sustainable, didn't work?

Well, here's what it's meant. It's meant that we've chosen to create a flexible

dynamic with our kids' educations, so they homeschool so that the whole family

can travel when I travel.

Peter King: Oh, wow. That's cool.

David McAlvany: That means we've set up some loose guidelines that if I'm gone a day or two, it

doesn't matter. I'm gone three or four days, one of the kids travels with me. If

I'm gone a week or more, the whole family comes along.

Peter King: Wow.

David McAlvany: The logistics of traveling with six is different than traveling with one, so it makes

me more cautious about saying yes to some sort of a dog and pony show that

may take me on the road for two, three weeks, because I'm going to be doing it

with the family engaged. Here's one of the unintended consequences. It's

difficult to engage with our kids with team sports because we may be gone for a

week or two at a time. There's trade-offs, and all of these things relate back to

my experience saying, "Okay, I experienced something from my father I didn't

like. He was gone. Now I'm wearing his shoes and business and I can repeat the

same exact thing all over again, will I? What does it look like, and how am I

going to adapt so that we can prioritize something of value to us as a family?"

Here's the crazy thing. I'm sure that one of our four kids is going to say, "I just

wish I had played team sports. I wish ... "

 

Who knows what their reaction, response is, but my hope is that they're willing

to engage with grace and say, "Look, I appreciate that they did the best that

they could with what they knew in front of them, all the pieces of the puzzle in

front of them. I'm going to do things different, and I love my parents. I respect

the choices that they made, and I'm going to do things similar in some respects

and different in others." We should be preparing the next generation to iterate

and do better, to succeed, us, not just succeed us in terms of taking over what

they left, but actually going beyond anything that we could have done. I mean,

in the dedication of the book, I basically said, "I hope my kids write a better

book. I hope the story of their life is one of greater success." We can talk about

how you define success in 10 different ways, but on a comprehensive basis,

that's what's my hope is.

The father-son relationship that you're describing is really key. I work with my

dad. In some senses, I work for him, because he's the majority shareholder of

one of our two companies, and coming into the responsibility running the

business, I needed to know what that dynamic was going to be, father-son

dynamic as well as employee-employer dynamic. It's an interesting one. Before I

said, "Yes," to coming out and working with the business, we also spent a couple

of weeks meeting with some folks that know us very well, business consultants,

family consultants, transition consultants, and psychologists, to basically say,

"Can we do this, or is this the beginning of the end of our father-son

relationship? If so, then the business piece can stay separate. We don't need to

go down this road."

We were very thoughtful about how we engaged with it, not ... I'm very

intrigued by the emphasis you put on father and son, because this weekend, this

weekend, I am writing a letter to 10 different men, all of whom have had an

impact in my oldest son's life. I'm inviting them to share their wisdom and

insight into what it means to be a man, and-

Peter King: Wow. That's great.

David McAlvany: ... into how you move into maturity emotionally, and spiritually, and

intellectually. Many of these guys are guys that my son would view almost as

surrogate or substitute fathers if something ever happened to me. This is, it's

really important for me not only to share with my son where I think he's going in

the next stage of his life as a young adult, but also for him to know that he's

surrounded by wisdom and surrounded by resources that go beyond what I can

offer him. I want him to have access to those resources, and God forbid

something ever happened to me, I want him to know that there is collective

wisdom and men who care about investing in his life and his future success from

a business standpoint, from a relational standpoint, from ...

We're doing this this next week, and part of the reason for doing this this next

week is, we have a family reunion next week, and my brother's coming back

from Indonesia, and my brother-in-law'll be in from Alabama, and my dad is

back from the Philippines where he lives. We have a unique opportunity to

speak into his life. I think this is where, again, we get to curate something.

Right? Peter, you're curating something. You're curating something right now in

our conversation, and I think a part of your dad asking you and your four siblings

to read the book is also about curating a conversation and opening a dialogue so

that you, as a family, kind of look at things on a more expanded basis.

Peter King: Yes.

David McAlvany: The idea of creative curation in the context of either your own personal life as

an individual or on a more collective basis in the context of family, I think that's

where legacy is ... It's really intriguing. It's really intriguing to me.

Peter King: Yeah. I mean, given the situation, it's a tremendous blessing, but I'm really

starting to feel the tremendous responsibility that comes along with it, and I

really appreciate, first of all, that practice that you mentioned with writing a

letter to these other 10 men is brilliant. I love that. I'm totally stealing that, but

going back to the responsibility piece, what responsibility ... This is going to get

into sort of a series of questions that I have on the actual transformation of

wealth and legacy. You talked earlier in this conversation about, what was it,

shirts, sleeveless to sleeveless, I think? [inaudible 00:36:38].

David McAlvany: Shirtsleeves to shirtsleeves.

Peter King: Shirtsleeves to shirtsleeves. That breakdown tends to come in the second to

third generation, so the first generation builds. The second generation sort of

enjoys, and then that third generation really doesn't have a connection and to

the principles that created it in the first place. My question is, well, my first

question is, what responsibility do the heirs in that second generation have to

maintain the wealth created by the first?

David McAlvany: Well, two things come to mind immediately, and this goes back to, again, sort of

the soft structure side of the equation. One is appreciation, and the other is

grace. There has never been a perfect human being that's ever existed, and

oftentimes, in relationship, where we meet up with someone's imperfections is

where we choose to create relational separation and just be like, "Forget it.

Okay? I'm done." That grace to say, "Nobody is all good or all bad. We're some

composite," and to find the things that you appreciate, even the things that you

don't like, appreciating them for what they taught you, what they informed in

your own life, and the decisions that you've made in light of them, so someone

else's imperfections may lead you to making a set of great decisions. Appreciate

their imperfections. Appreciate their quote-unquote "failure" for what it has

meant in your life in terms of the questions that have been presented to you as

a result.

 

The responsibility piece of the next generation, this gets to the heart of what is

missing, one generation to the next. The founders have a certain skillset, have a

personality bent, and have a certain life experience which allows them to

operate in a certain way. I think of a family that I know down in Argentina. Now,

Argentina used to be one of the wealthiest countries in the world. Today,

they're facing a whole new round of devaluations. The IMF just did the largest

single bailout of any country in the world, $50 billion bailout just a few weeks

ago. They're just in this nasty cycle. Well, this family was in this cycle, too. The

founding generation, this is a guy who was a scrapper. I mean, literally, he was

the best guy in a knife fight you could imagine-

Peter King: Wow. A literal scrapper.

David McAlvany: ... but he could also don the tux and play the part of the gentleman, and he ran

a couple-hundred-thousand-acre ranch. Branding cattle, raising crops, getting

the job done. He knew it soup to nuts. From the external side, what are the

ways in which you can get squashed like a bug, and he was a street fighter, and

he was willing to look at politics from that vantage point and realize that if you

don't play as the diplomat in certain areas, you can be out of a business. You can

lose your land. You can be taxed out of existence, etc., etc. That was who he

was. The next generation says, "We really don't like living on the ranch. We'd

like to be in Buenos Aires." Guess what? A couple-hundred-thousand-acre

ranch, all productive, created a massive amount of wealth, and the theme at the

time was, and this is when Buenos Aires was being built out as basically the

South American version of London and Paris combined. Everybody wanted the

fine house in downtown Buenos Aires. The equivalent of a Manhattan

brownstone. These things are being put up down there.

The whole family moves in, and they travel Europe, and they do all this. Guess

what they don't have? They can't fight with a knife, which means they don't

think about conflict the way that their dad did. They're not aware of the

acuteness of risk or how to solve it the way he was, and they're not able to hop

on a horse and round up 1,000 head of cattle on the weekend, so they're

migrating away from what made him successful, and I think, to some degree, if

you don't have those direct abilities, you better darn well appreciate it for what

they were and what they created, and what happens if you don't have them.

You don't have to be the spitting image of your father or grandfather, but you

better well appreciate that your generation may not be the generation that

takes 10 million and turns it into 100 million, because a certain skillset was

needed to go from nothing to 10, and it's going to take a similar skillset to go

from 10 to 100. It's not going to be accidental. You don't have to perfectly

mirror an earlier generation, but you better appreciate the qualities which made

it work. Again, coming back to that idea of appreciation, and that idea of grace,

I'm kind of glad my dad's not a knife fighter. I mean, the bar fight kind of, that's

not Don McAlvany. That's not who I ... I'm the son. Nevertheless, he's an

entrepreneur. He's a risk-taker. There are certain aspects of that that I don't

mirror. I've started two, three other businesses, but do you know what it's like

to start a business under the auspices of an existing business after two-thirds of

the risk is mitigated? It's so different than starting from nothing.

My version of entrepreneurship is there, but I recognize that I'm not the same

risk-taker. Now, again, it is what it is. I'm not exactly like him, but I can iterate,

and I can change [inaudible 00:42:27]. I want to make sure that my boys and my

daughter understand that they have to be hard workers, and they have to be

men and women of integrity, and they can be their own selves. They don't have

to be like me, but the core values still need to be conveyed from one generation

to the next. Hard work, honesty, and integrity. The things that are vital to

success, you can iterate and put them on display in a different way, but you

better appreciate them, and you better have some grace for the areas in which

the earlier generations weren't perfect, because, again, you won't ...

Sometimes, if you don't have grace for an earlier generation and their frailties

and foibles, I said this earlier, it almost cuts off your ability to appreciate what

they did bring to the table. [inaudible 00:43:20].

Peter King: Yeah. For sure. You've sort of answered my next question, which was sort of,

how, as second-generation heirs, do we make sure that we don't, so that that

third generation doesn't break it down? I think that awareness of what the

strengths and weaknesses is, perhaps, your answer to that. I don't know. I don't

want to take words out of your mouth, but because that, obviously, is where

that breakdown often occurs, and being the parent of potential third-generation

heirs, I want to make sure that I'm giving them the right things, the right tools.

You mentioned, actually, I think it was your mother-in-law, if I remember

correctly, that was honest with your wife growing up, as a child, and shared with

her, "Hey, this is where I'm failing. This is where I'm not doing so well," and that

level of honesty and transparency, I think, is very courageous, number one. I

don't think a lot of parents communicate in such a way with their children. Is

that something that you espouse? Is that something that you recommend, and

would that be part of the way to mitigate the breakdown between the second

and third generation?

David McAlvany: I think so. I think honesty, transparency, I mean, I find that when I make a

mistake as a father, everyone's aware of it, but there's something

transformational which occurs when I sit down with my kids and say, "I blew it,

and I need your forgiveness. That's not the way I should have talked to you," or,

"I would have handled this differently, and I wasn't thinking. I just need to slow

down and ... " Their response is typically, "I know." I mean, they understand

where it's gone off the rails, and there's no sense in perpetuating sort of the

fiction of being a perfect father, whatever else. They know I'm not perfect, and

that actually allows for a greater conversation with them to say, "I don't expect

you to be perfect. Do I expect your best efforts? Yes. Do I expect ... I do have

clear expectations and very high expectations, but I don't expect you to be

perfect." I think candor is good from one generation to the next. I think there is

training, too, which is required for success from one generation to the next.

Take the issue of physical, tangible wealth or generosity. I think that's

something that you can work with your kids on and not only demonstrate, but

invite them in to participate in decision-making processes. What makes sense?

What doesn't make sense? What is your priority and how you think about that?

We're mentoring little people to become big people, and that mentorship

process, if you've ever been in the business environment where leader's getting

ready to step out, you can't just one day hand the reins to somebody and say,

"All right, I had it for a long time, and now it's on you." You need to teach that

person how to make decisions. You need to give them the opportunity to fail

and coach them through that failure. There is, to get a good leader in the

business environment to fill your shoes can take six months to three years, and

that assumes they've got the basic qualities.

If you're talking about the next generation taking on the responsibility of a

significant amount of wealth, it's no different, and yet what we see is lack of

communication between one generation and the next, either because they

don't trust the next generation or they really don't want to disclose to the next

generation what's next. Sometimes, that's wise. I mean, think about what life

would look like if somebody stepped into your world at age 16 and said, "Look,

at age 21, you're going to have $10 million in your bank account. At age 45,

you're going to have another $30 million out of that bank account." Well, what

kind of decisions do you make in terms of your life trajectory? Are you as critical

about the college that you go to, the ways that you better yourself, if you just

say to yourself, "It's kind of easy street from here"? [inaudible 00:47:50]. There's

actually value to people having to be under pressure and make real-life

decisions, real-life decision.

This is one of the reasons why I kind of like the model of there being family

wealth, which no one really owns, but everyone has the benefit of. Again,

there's lots of opinions on this. I'm not saying this is the best way. It just appeals

to me, and it's a direction I'll probably go with our family and our family wealth

insofar as I direct what I'm responsible for or directly create, but where my kids

understand that, yeah, they need to go about their lives and pay their way in life

and pay their dues. Get a job. Have a career. Pay their own bills, and, "By the

way, the family bank does allow for you to have a low-interest or no-interest

loan on a house or fund your master's or PhD if that's something you're

interested in pursuing. There are advantages to being connected to this family,

and here's the family wealth and what we do with it, and here's the property

that we gather on once a year or twice a year to enjoy each other. It's enabled

by this collected pot." I kind of like that.

 

Peter King: We are, unfortunately, running short on time. I feel like we literally just got

started. I only have like 1,000 more questions, but I want to be respectful of

your time, and I know we're running short up on that. One last question,

though, to you, which is a little bit more impersonal in nature is, in terms of

legacy for you yourself, which I think then, obviously, gets expanded into your

own family legacy, etc., was, how do you want to be remembered?

David McAlvany: How do I want to be remembered? It's a big question.

Peter King: It is a big question.

David McAlvany: I want to be remembered by my children as a man who was wise and loving, a

good listener, someone who was responsive to them as a listener. I don't, I'm

not sure I really care how I'm remembered by the rest of the world. There's a

few people who I, really does matter to me. That's friends and family. I want to

be remembered by my friends as someone who was loyal and there for them,

both when they needed me and not just in a moment of crisis, but also available

in the mundane. I mean, I think I could segment out each of the significant

relationships that I have. My wife, my friends, my children, my brothers, my

brother and sisters.

There would be certain things that I would want them to remember me as, and

all of it relates back to those soft structures, that I was someone who was

courageous, that I was someone who's loyal, that I was someone who was

trustworthy, that I was someone who extended grace when others might have

extended judgment. I mean, those are the things that ultimately matter. Having

millions of dollars, or having funded the wing of a hospital, or ... That's going to

matter to people I don't know, and I have a hard time connecting with that.

Yeah. I don't know if that's enough of an answer to your question.

Peter King: No, that's a ... It is. It's an interesting one, because I often ask people that

question, and some of the marketing and brand work that I do is, I ask the

organization, "How do you guys want to be remembered? Not just beyond

generations, but just in any interaction?" I think that probably is the case for you

and your business too and your customers is, they feel that integrity. They feel

that grace that you mention, often.

David McAlvany: Yeah. Well, and in the context of business, it is that our values permeate

everything that we do, which is, right, very consistent with how we started the

conversation, defining legacy as the sum total of our values and of our culture

and of the aggregate of our choices. That's your legacy, for better or for worse,

so I want those choices to reflect the priority that I put on people, on

relationship. I mean, that, to me, is at the center of the universe. Relationship is

the center of the universe. Now, we could wax theological on that, but we could

wax familial on that. From a business standpoint, from a personal standpoint,

just about everywhere I go, relationship is, it's critical. It's core.

 

Peter King: Yeah. You mentioned in the very beginning part of the book one family, the

Edwards family, and how that one legacy permeated generation, to generation,

to generation, to the point where they've left hundreds of leaders in various

industry, and politics, etc., and how another family that was criminal in nature

sort of amplified that and created seeds of corruption and dishonesty, etc.

Obviously, something very worthy of taking some time to reflect. In light of that,

I appreciate you taking the time today speaking about it. Obviously, writing the

book, The Intentional Legacy, which I'm sure you can pick up at Amazon or

bookstore near you. David, thank you so much today. This was fantastic.

David McAlvany: Thanks for inviting me, Peter. I'm glad we could have the conversation.

Peter King: Excellent.