Wharton@Work

May 2017 | Wealth Management

Running “My Wealth Inc.”: Post-sale Transition Strategies for Entrepreneurs

When a successful entrepreneur sells his or her business, they get a new job — one they might not want or even be prepared for. Charlotte Beyer, founder of the Institute for Private Investors, says that post-sale, they become CEO of what she calls “My Wealth Incorporated.”

“Transitioning from running your business to managing your money looks deceptively easy from the outside. But I have never met an entrepreneur who sold their business who didn’t say it was harder to manage their wealth than to build their business. The business was their passion. Once it’s sold, they have to deal with the proceeds, which requires a completely different skill set.”

Beyer works with these entrepreneurs in Private Wealth Management, a week-long, first-of-its-kind academic program she developed with The Wharton School in 1999. Over the past 17 years, more than 900 members of ultra-high net worth families and individuals have come to Philadelphia to learn, among other related subjects, how to be better CEOs of My Wealth Inc.

Wharton finance professor Richard Marston, who has served as academic director of the program since its inception, says the task of preserving wealth is difficult and even confusing for those new to it. “You’re basically starting from scratch,” he explains. “In Private Wealth Management, we teach all elements of investing, including how to choose a portfolio to meet family objectives; how to understand the different types of investments in that portfolio including stocks and bonds, real estate, private equity, and hedge funds; and how to monitor that portfolio to ensure top performance.

Beyer adds that while the academic sessions fill in critical learning gaps, participants also learn from one another. They work in smaller teams each night on a case study that many describe as eerily similar to their own situation: a highly successful patriarch sells his company, hires an advisor too quickly, and makes mistakes. Family members are involved, and, inevitably, tensions arise. Participants in the program not only come up with investment plans for the family, but discuss the issues it raises over meals and during breaks. With an international group of peers (families from Brazil, Mexico, France, Belgium, Sweden, and China recently attended) they see how these issues are dealt with in other cultures and locations.

“The case makes the Wharton faculty lectures come alive,” says Beyer. “It brings together the family issues and the investment issues — both are relevant. Over the week we build a learning community that is confidential and made up of people who rarely get the chance to work with other families who are grappling with similar issues. They see how others have solved problems and created new opportunities because of their wealth.”

Ultimately, the CEOs of My Wealth Inc. create a plan for running their new “business.” It involves specifying desired outcomes, learning new tools for articulating those outcomes, and creating an investment policy statement. The statement clearly delineates what the money is supposed to do, benchmarks and timeframes to help ensure goals are being reached, and prohibited investments. “The policy statement is like a GPS,” says Beyer. If you are travelling to a new destination, you wouldn’t go without it. Knowing where you want to be, and having a plan to help you get there, will help you succeed in this new venture.”