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Family Inc.

Book Description

Actionable, intelligent CFO training for the Chief Family Financial Officer

Family Inc. is a roadmap to financial security for the family CFO. Too much personal wealth management advice essentially boils down to goal-setting, which isn't helpful or effective in terms of overall financial planning. This book takes a different track, giving you a crash course in corporate finance and the tools to apply the field's proven, time-tested principles in the context of your family's financial situation. You'll learn the key principles of wealth creation and management, and learn how to make your intellectual and real capital work for you. Your family situation is unique, and your principles must sometimes differ from the standard financial advice—and that's okay. Life is not a template, and even the best strategy must be able to adapt to real-life situations. You'll learn to chart your own path to financial security, utilizing the author's own tools that he developed over 15 years as an active board member, chairman of the board, or chief financial officer of multiple companies.

Oversimplified wealth management advice does not leave you equipped to manage your real-world finances. This guide is written with intellectual rigor, but in the language of family discussion, to give you a real, practical guide to being an effective family CFO.

  • Create your own financial prosperity and security
  • Align financial acumen with your family's specific situation
  • Adapt to real-world situations and make your financial advisor work for you
  • Utilize powerful financial tools to help you build financial independence

Every family needs a CFO to manage wealth, and the principles of corporate finance apply from the boardroom to the living room. Family Inc. delivers actionable advice in the form of CFO training to help you plot a real-world family financial plan.

Table of Contents

  1. Foreword
  2. Acknowledgments
  3. With Appreciation for America’s Armed Forces Service Members
  4. Introduction
  5. SECTION I EVERY FAMILY NEEDS A CHIEF FINANCIAL OFFICER
    1. Chapter 1 Why Do I Need a CFO? I Don’t Even Own a Business
      1. Assumptions and Reality
      2. But What Does a Family Chief Financial Officer Specifically Do?
      3. The Big Picture
      4. Key Conclusions
      5. Notes
  6. SECTION II MAXIMIZE THE VALUE OF YOUR SINGLE BIGGEST ASSET—YOUR LABOR
    1. Chapter 2 Double the Value of Your Labor through Education
      1. Educated People Earn More
      2. Educated People Work Longer
      3. Not All Degrees Are Created Equal
      4. Education May Be a Great Investment, But How Do I Pay for It?
      5. Reality Check
      6. Key Conclusions
      7. Notes
    2. Chapter 3 Make Career Choices that Extend Your Possibilities
      1. Reconciling Contradictory Arguments
      2. Allocate Your Labor Like a Growth Investor Allocates Capital
      3. Key Conclusions
    3. Chapter 4 Think Like an Investor When Making Career Decisions
      1. Evaluating the Opportunities
      2. Key Conclusions
      3. Notes
    4. Chapter 5 Don’t Overlook Retirement Benefits Just Because They’re Not Imminent
      1. Obstacles to Planning
      2. Key Conclusions
      3. Notes
    5. Chapter 6 Complement Your Career Decisions with Insurance
      1. How Needs Evolve
      2. Key Conclusions
      3. Notes
  7. SECTION III MANAGE YOUR ASSETS LIKE A CFO MANAGES A BUSINESS
    1. Chapter 7 Your Financial Assets Serve Many Functions in Your Family Business
      1. The Elements of Asset Management
      2. Key Conclusions
    2. Chapter 8 Diversify Your Family Business with the Right Investments
      1. Strategic Asset Allocation: How to Arrange the Big Picture
      2. The Conventional Asset-Allocation Models
      3. Weaknesses of the Conventional Models
      4. A Wealth Effect
      5. Tactical Asset Allocation
      6. Asset Classes with Unique Characteristics
      7. Key Conclusions
    3. Chapter 9 Define the Right Goals for Your Asset Management Business
      1. Where the Money Disappears
      2. Key Conclusions
      3. Notes
    4. Chapter 10 Use History to Make Reasonable Investment Assumptions
      1. Long-Term Investment Returns
      2. Living with Volatility
      3. Should You Borrow?
      4. How Do Taxes Affect the Case for Equities?
      5. Theory versus Real World Application
      6. When Markets Gyrate, Think Like a Business Owner
      7. Combining History with Today’s Environment
      8. Managing in a World of Dollars, Not Percentages
      9. Key Conclusions
      10. Notes
    5. Chapter 11 Safeguard Your Assets from the Main Risks
      1. Key Conclusions
    6. Chapter 12 Not All Debt Is Bad! Use Debt to Purchase Assets and Maximize Your Liquidity
      1. Debt or Fixed Income as an Investment
      2. Borrowing for Family Inc.
      3. Key Conclusions
    7. Chapter 13 Which Is Better, Active or Passive Investment Management? It Depends. . . .
      1. The Case for Passive Management
      2. The Case for Active Management
      3. Key Conclusions
      4. Notes
    8. Chapter 14 Use Indexing for Your Low-Cost Investment Portfolio
      1. International Allocation
      2. Rebalancing Your Portfolio to Maintain Appropriate Market Exposure
      3. Key Conclusions
    9. Chapter 15 Understand When It Makes Sense to Pick Individual Stocks and Managers
      1. Active Management by the Family CFO
      2. Actively Managed Broker Accounts
      3. Actively Managed Funds
      4. The Unfortunate Reality of the Investment Management Game
      5. Recommended Role of Your Financial Adviser
      6. Key Conclusions
    10. Chapter 16 The CFO’s Step-by-Step Guide to Building the Family Investment Program
      1. Reality Check
    11. Chapter 17 Know Yourself—Understand the Psychological Factors That Can Torpedo Your Goals
    12. Chapter 18 Don’t Sweat the Details of Your Asset Management Business
      1. A Word of Caution—Time’s Impact on the Quality of These Recommendations
  8. SECTION IV FAMILY INC. DOES NOT MANAGE ITSELF
    1. Chapter 19 Create Tools and a Reporting Dashboard for Managing Family Inc.
      1. The Family Inc. Income Statement
      2. Adding a Balance Sheet
      3. Asset Composition
      4. Liability Composition
      5. Set Up a Financial Dashboard
      6. An Owner’s Manual
      7. Employing Forecasting, What-If Scenario Analyses, and Monte Carlo Simulations
      8. Understanding the Mathematics of Saving
      9. Beyond the Balance Sheet
      10. Key Conclusions
  9. SECTION V MANAGE YOUR FAMILY ENDOWMENT IN RETIREMENT
    1. Chapter 20 Understand How Your Family Business Changes in Retirement
    2. Chapter 21 Sleep Well—Protect Your Retirement through Insurance
      1. Longevity Insurance
      2. Techniques to Minimize Annuity Costs
      3. Rules for Annuity Purchase Programs
      4. Rebuttal to Annuity Critics
      5. Social Security as an Annuity
      6. Health-Related Insurance Products
      7. Long-Term Care Insurance
      8. Key Conclusions
      9. Notes
    3. Chapter 22 What’s Your Number? Determine When and How Much You Can Afford to Spend in Retirement
      1. The 4 Percent Withdrawal Rule
      2. First Determine Your Acceptable Shortfall Rate
      3. Identifying <i xmlns="http://www.w3.org/1999/xhtml" xmlns:epub="http://www.idpf.org/2007/ops" xmlns:m="http://www.w3.org/1998/Math/MathML" xmlns:svg="http://www.w3.org/2000/svg">Your</i> Withdrawal Rate Withdrawal Rate
      4. Modifications to Personalize <i xmlns="http://www.w3.org/1999/xhtml" xmlns:epub="http://www.idpf.org/2007/ops" xmlns:m="http://www.w3.org/1998/Math/MathML" xmlns:svg="http://www.w3.org/2000/svg">Your</i> Unique Withdrawal Rate Unique Withdrawal Rate
      5. The Modified Percentage Withdrawal Calculation
      6. Turbocharging Your Retirement Number
      7. A Number Is Just a Number
      8. Managing Your Retirement Portfolio to Minimize Taxes
      9. Using Debt to Defer or Minimize Your Tax Liability
      10. Understanding What Inflation Does to Your Purchasing Power in Retirement
      11. Key Conclusions
      12. Notes
  10. SECTION VI AVOID THE RAT RACE—CHANGE THE GAME BY CHANGING THE RULES
    1. Chapter 23 Pay Yourself What You’re Worth through Entrepreneurship
      1. Key Conclusions
      2. Notes
    2. Chapter 24 Jump-Start Your Heirs’ Financial Security
      1. Key Conclusion
    3. Chapter 25 Develop a Succession Plan to Groom Your Replacement(s)
      1. Key Conclusion
    4. Chapter 26 Develop and Manage Your Estate or Uncle Sam Will
      1. Key Conclusions
    5. Chapter 27 Maximize Your Charitable Legacy
      1. How to Select Worthy Charities
      2. How to Give
      3. Key Conclusions
  11. SECTION VII A CALL TO ACTION
    1. Chapter 28 “But It’s Different This Time. . . .”
      1. Key Conclusions
    2. Chapter 29 Put Down the Book—Just Do It!
      1. The Real Prize
  12. Appendix: How to Calculate Expected Lifetime Labor Value
    1. Notes
  13. Glossary
  14. Notes
  15. Index
  16. EULA