With Ben Law and the Financial Bloke Podcast
Is retirement a dirty word? Oftentimes we find that farms are family businesses and as we live longer and work into our older (and wiser) years, retirement can seem like an elusive thing. But does it have to be this way? Succession planning can be much the same. A difficult conversation to be had with different expectations from each member of the family can make succession planning a particularly difficult journey to embark upon.
As farmers, we learn how to plant the best crop, what nutrients the soil needs, how to rear good cattle, but what we don’t always invest in is business training. The missing link in farming is around financial literacy, in the sense of wealth and the growth, maintenance and transfer of wealth through successful succession.
That is how the Financial Bloke came to be as a persona for Ben Law. The product of a farming family heralding from Quirindi, on the Liverpool Plains of New South Wales, Ben has kept one foot in the agricultural industry and the other in the world of finance. With a career spanning over 22 years, Ben has worked for hedge funds based in London and in financial advice with his own practice here in Australia, but a health scare at age 42 kick started a journey that would fulfil a lifelong ambition to help more people in the agricultural sector, specifically farming families.
“I didn’t want it to be just about the money, it’s not about money. It’s about wealth and wisdom and understanding.”
The three generations curse has been discussed in financial circles for some time. It revolves around the theory that it takes two generations to build wealth and one to lose it. It has been documented that, in cases where failed succession occurs, within two generations, 60% of wealth is lost and within three generations, 90% of wealth is lost. Taking this phenomenon into consideration, Ben came up with the generational prosperity model which centers around helping farmers to grow their wealth, protect their wealth and then successfully transition their wealth to the next generation. Ben considered that many farmers didn’t have access to the training or support to grow and then transition their wealth successfully. Some may need assistance in protecting their wealth and the family relationships that come with it.
Ben states that in the agricultural industry, in the next twenty to thirty years we will see significant wealth tied up in farming assets such as machinery, livestock and land. There is a process to be followed to ensure those assets are successfully transferred to the next generation and the impact that will have on the family is a positive one. This journey begins early on, when children who may look to inherit those assets are young, setting out what is expected of them, almost like an apprenticeship.
More often than not, we may assume that a failed succession is due to bad professional advice. However, statistics show that this occurs in just 3% of cases. 60% of the time, failed succession is due to a breakdown in communication and trust within the family and 15% due to a failure to adequately prepare the family heirs. So surely this is where we should start? With good communication around succession planning.
What most of us who think of as an event, Ben looks at succession as a journey. A journey that starts at a young age on the farm. Ben calls from age 0 to 30 the apprenticeship stage. Whilst learning how to rear the best cattle, when to plant and what, we also need to learn about the family business and business affairs. What is the family and business vision? What are our family values and how do we stick to them as a business? How do we help make retirement as easy as possible, once the time comes? The journey is for the entire family, not just the generation taking over the farm. Ben Law set up his podcast to dive into these discussions and think them through in depth and detail. As a completely impartial party, Ben considers all factors in the succession journey and how to overcome the common themes hindering a successful succession plan.
It all comes down to communication and the right process. That’s the key to maintaining family relationships throughout the journey. Oftentimes we all want a good outcome but just can’t seem to find the common ground to make that happen. A conversation around values and eventually succession from day one can help. The solution is sometimes not how but who. Who can help with the succession planning process? Who can assist in these conversations? Succession is a new skill that every family member needs to learn and that is not going to happen overnight. If you can find the right way to communicate there is a path to successful succession planning to be found and travelled.
The next generation of farmers must be sophisticated and business minded with the rising cost of operations and increasing red tape. They have to ensure each acre is productive and business operations are tight. This can mean they spend more time in the office than ever before. They need a smart team behind them keeping operations on farm profitable. This can be a positive for the next generation of farmers, they’re thinking business, which includes succession planning, wealth growth, management, and transferal.
Farmers as a group are tech savvy business operators and Ben identified that the podcasting medium could solve one or two of the missing links around education in the agricultural industry. Unlike traditional forms of media, podcasts can be consumed on the go, in the car, in the truck or on the tractor. They fit into a busy life on farm. And the podcast can be educational, opening up potentially difficult topics of conversation either directly to the listener or through discussions with guest speakers. Recently Ben sat down with the CEO of Auctions Plus, Angus Street, a young CEO who has harnessed the power of technology which many farmers now use in their day to day operations to purchase cattle or machinery without having to get up from the kitchen table. The episode centers around the use of Agtech and the pace of change we are seeing in this space. Put succinctly, the pace of change in agriculture has never been this fast before, and it will never be this slow again.
Podcast episodes are diverse in their content. Ben sat down with Sarah Becker a mum to an energetic young boy, a grazier from a farming family and a chartered accountant operating a practice in Central Queensland. Sarah discusses her experience with operating within a family business and the ups and downs of transitioning family wealth. It’s certainly not an easy process. There will be hard conversations and compromises to be made, but success stories like Sarah’s show it can be done.
An unexpectedly popular episode of the Financial Bloke Podcast came from an off the cuff episode recorded by Ben on the succession life cycle and why things happen when they do. This clearly hit a chord with many of his listeners. Does this strike a chord with you?
You can find the Financial Bloke Podcast on your regular streaming service, online at www. thefinancialbloke.com.au, on Spotify or apple podcasts. Check out the Financial Bloke website for Ben’s upcoming seminar and coaching dates as well as all his published articles. Download the podcast to your phone and listen on the go. If you find something you like, be sure to share it, we bet your farming friends will like it too!