Some thirty years ago, an anxious parent removed the training wheels from Lance Armstrong's tiny two-wheeler.
No doubt Lance wobbled, fell a few times, skinned a knee or an elbow. When Lance left the sidewalk to ride in the street, their anxiety increased.
A continual parenting dilemma is when, where or whether: to hang on, to let go, or to seek a healthy in-between I call "letting grow". As children grow older, more independent, and the risks of their bad judgment increase, our search for "letting grow" becomes more complicated.
Picture Lance Armstrong, riding a state-of-the-art racing bike in the Tour de France, but with training wheels attached. That's how some frustrated adult beneficiaries in wealthy families view themselves. The training wheels are still attached to their finances. They long to balance on two wheels and ride in the street with their financially self-parenting peers.
For some beneficiaries there is no choice. The financial training wheels are welded to frame by rigid legal documents. For others, the training wheels are bolted to the frame, removable at the discretion of fiduciaries.
Every day, those in business make a fundamental choice: operate, sell, or liquidate the company. Fiduciaries with the discretion to distribute make similar choices: hang on, let go, or "let grow". Hang on, withhold distributions, and avoid improvident expenditures by beneficiaries. Let go, pay it out, and hope that it isn't spent foolishly.
A very wise "let grow" professional fiduciary I know holds a budget conference with adult beneficiaries at the beginning of each year. Her approach over discretionary distributions is quite simple: "Please keep me from ever having to say 'No'". So long as budgeting works, the beneficiaries don't seem bothered by the training wheels.
"Letting grow" may mean including beneficiaries in investment reviews, investment decision-making, or naming them as co-fiduciaries. Eventually, "letting grow" may mean no review at all of what beneficiaries do with their distributions.
Whatever course it takes, "letting grow" is wisely proactive about removing the training wheels.
Go Lance!
—Gerald Le Van, July 2005
