Strategic Assets: Building Wealth With Purpose Across Generations

Anthony Perl: [: 00:00:00

Why Legacy living matters more than waiting until death, and how to educate future generations about the why behind wealth transfers. I'm your co-host Anthony Pearl, and whether you're a successful business owner, executive, or family seeking to align your wealth with your values, it's time to activate your wealth.

Well, David, I think we've gotta talk about something that's really important, which is the role of strategic assets that people have. Talk to me a little bit about what actually qualifies as those assets categories for you. Well, I mean, strategic assets is always an

nd the family group and the, [: 00:01:00

So you can look at it from a whole range of different perspectives. So a strategic asset might be, well, how are you generating an income? So that strategic asset may be your job, that's an asset. You have an income stream that rolls through there, but also it could be your business. So your business is a very strategic asset because that's providing you with the income stream.

But there's a point where you then progress and say, well, at what point can I utilize proceeds that are coming out from my business or my job to build an asset base that's outside? And that will start to build to provide an income stream going forward. But that's also, for instance, superannuation.

asset pool in some respects.[: 00:02:00

And by the compounding effect, you know, you start small and you build and build and build and build, and you keep building that asset along the way. That becomes a very strategic asset because creditors can't access your super fund, whereas the business they can. So there's this real mix between where do you start to deal with part of those scenarios.

But the other thing that starts that I find quite interesting when we start to talk about strategic assets is what is the asset that's cascading down from a generation above? Because there may be quite a large asset pool that sits above from a parent or grandparent, or it could be someone that may wanna push it upwards, but it's predominantly cascading down.

t. To educate them and teach [: 00:03:00

And by adding small amounts of money, this starts to compound. It could be supporting a child or a grandchild into a piece of real estate to help them through that process. So strategic assets can be across a whole range of scenarios, or it's not just at one time in your life, it moves through your whole.

Generation. So that's when we start to get people to start to think about, not just as a single asset, but there's a whole lot of layers that can sit inside the strategic asset allocation that we would put forward for various people.

Anthony Perl: I mean, how do you actually prioritize, is that the right word? Which ones you, you have to focus on or knowing which ones are gonna be important?

'cause it's, as you say, it's probably gonna vary at different stages of your life.

own career. So it does, it's [: 00:04:00

Okay? You, you may be operating your own business. Children are more likely to be still in their secondary years, primary or secondary years of school. You may still hold some debt on your principal place of residence, but you may not, depending on how you are going, or you may be in a position that you've got capacity, you have a an appropriate principal place of residence.

Therefore, we've got capacity now to potentially use a funding facility to use money to invest outside of the home. So that could be, you could already be making maximum contributions into super. So now you're starting to say, well, should I buy real estate? Should I buy some equities? But should I do it outside of my super fund?

in an older generation where [: 00:05:00

You've got 40 to 45-year-old children and then there may be some grandchildren. Therefore, that's also a different discussion that says, why are we wasting until summit is deceased? This is where we start to talk about legacy living. How do I want to cascade those assets now? But I wanna see the joy of giving it as much as the recipient receiving it and educating them through that process as well.

How can we utilize that? So the timing depends upon individual circumstances. Sometimes it can be how their assets are held. If they've got a very good operating business, they may in a position that they can't cascade assets out yet. But it depends. It may be pushing a fee to cash out, but again, how do you deal with it?

roup. But there're also may, [: 00:06:00

But what do I wanna do from a philanthropic perspective? You know, do I want to look at a charitable component? But that is also part of your strategic asset allocation. 'cause that might be part of your tax planning that says, I want to have a charitable. Donation process that may bring in family members to help you through that scenario.

So it's very much a individual basis as to what it is. There's no blanket. These are the rules that you have to follow. It comes back to personal

Anthony Perl: circumstances, to be honest. And how much of it is an education? Are looking at them as assets in the first place. I mean, is that the way that people should be thinking about it in that strategic way?

I might have an investment. [: 00:07:00

David Murdoch: Yeah, Ben, I agree. I think one of the issues is that there's always that degree of the no knowns and the unknowns. And I mean, sometimes it is, it's just part of it is just pure, pure education. Sometimes people have just not, I wasn't aware of doing something like that or. That's the way I've been bought up.

So therefore that's why I continue to do it that way. You know, it's a bit like the argument between, oh, I would never buy equities, the share market's all over the place. It's always property. But you know, that, that again, is part of an education. There's a balance for both. I, I'm agnostic, whether it's equities or property.

Because it's also at a point [: 00:08:00

I was just said, I've got it on my desk and, and I really liked the concept spend around for quite a while, but it, it's about understanding what's the asset pool that I can have that will support my income. So I've got a requirement I might have. Finished work. So I'm transitioning, or you may be working, you go, well, you know, there's a point where you say, I've got an enough asset or income coming through, but then I've still got additional proceeds.

So let's do something with that. So, so let's go on a holiday. Let's not wait until, oh, once I get to this particular point, it's a query around, this is legacy living as well. About Oh, soon, when I get to that. Soon. So this query that people have. What I'm trying to encourage a lot of people to look at is to say, if you've got that, let's do that trip.

week off, and it might be a [: 00:09:00

So therefore, to me that's also part of your strategic asset allocation is that, am I putting assets into a area that provides me with an income and not always capital increase? So we're starting, like, there's an interesting thing that we, we are having more and more discussions about. There's a point where you say, and I'll use the round numbers of, let's say it's $5 million.

Okay? All of a sudden there's $5 million asset pool and I'm at an age and I'm enjoying, you know, there's been success and I, I'm enjoying spending some time. With various family members and friends, do you want to grow that 5 million to 10 million or do you want to look at it and say, well, I've got a house, I've got this, and I actually want to get the income stream off that $5 million to go and do things.

my capital growth may not be [: 00:10:00

Higher risk asset pool to grow that capital, even though that capital at five mil will cascade down to them, ultimately, it's this real balance. It's like, no, no, I actually want more cashflow coming through to go and do the things that I want. Again, that's a very strategic asset allocation process that you take because it supports the lifestyle that you've got.

But let's also run down. Some of the money that you've got. Like do you do? That's right. He talks about DI Driver zero. You know, there's a point that you turn around and go, well, I've worked hard, I've built this asset base. I'm gonna spend it as we go along. But also, I don't wanna wait until I'm at a point where my health declines a little bit, or all of a sudden there's too many stories where you do get it, where someone goes through a certain age and they stop and they go to try and do stuff and bang, they have a, you know, they either get an illness.

re so, it's like, oh, I wish [: 00:11:00

Anthony Perl: And how difficult is that to, if you are working with someone and they're in their forties and fifties and. They're looking at what they're doing, but they also wanna look at what their parents are doing. How difficult is to, is that to, to change that? Because, you know, we, it, it really is generational. The way you look at, at money is so different, isn't it?

Today is, is very different to how it was, you know, 30 years ago.

n a business or do do have a [: 00:12:00

And so that then becomes one of the issues. How do we. How do we encourage people? Because the Gen one generation looks above and says, oh, look how space space's so easy for them. They've made all this money and I've got all of these expenses and huge, you know, debts and I've got school fees and I've got all these other things.

When's it gonna be my, not so much turn, but how? How do we manage that? Part of that is a really interesting, because then when you go down to say the mid twenties. They've got a very different perspective on a lot of stuff. I go, yeah, but what's the purpose? What's the purpose of what we're doing? Yes, I acknowledge the fact that I have some wealth in our family and I'm enjoying what I'm doing, but I'm not just doing my role because I'm getting paid.

ank. And to them that's like [: 00:13:00

Whereas someone else would be like, oh my God, if I had a hundred thousand in the bank, I'd be wrecked. Do you know what I mean? And so it is very much that mindset. Part of it is just trying to encourage people that, and demonstrating that, that capital pool, if it's invested in such a way, they won't spend it.

They won't, their mindset is not to spend it aggressively. They probably won't spend it in the timeframe that they may have available to them, but if you're gonna spend it, spend it with purpose. So, so if you are, you are gonna pass it down to a generation, support it to someone else. Don't just, I'm not a big fan of people, just, oh, I'll buy another house, I'll buy another car, I'll buy.

friends and just pay for the [: 00:14:00

Right? It's not, 'cause you can not because you feel as though that you have to or whatever, but you know, life to be enjoyed and unfortunately sometimes it's taken from you very quickly and it's amazing how quickly that time seems to disappear. Even this year,

Anthony Perl: I know where it's gone. It does, doesn't it? I mean, you know, they say is the older you get the, the quicker the, you tend to fly by.

Right. It, it's scary when you think it was five minutes ago that you were the same age as your children. And I know,

David Murdoch: and I'm clearly remember that as they're, you know, finishing, I've got an oldest daughter that's traveling overseas and just having, you know, a lovely time and I just look at some of her photos and what she's doing.

I think, oh, I remember that thing.

d the rest of your life with.[: 00:15:00

And then suddenly you're thinking about children and settling down, and that opportunity to travel and do those things disappears. But I think getting back to it, you know, what you're talking about in terms of purpose, I mean it, it's a word that is used. Quite a bit these days, it's sort of become populous, but it really, it resonates, doesn't it?

I mean, it is a word that is important to think about in lots of contexts and certainly, you know, day to day in how you spend your money. Uh, well, it's this conscious

David Murdoch: spending, like be con, don't just go, oh, I'll just, you know, 'cause I can, what is it for? But the purpose of the spending is not always just for your own enjoyment.

Sometimes it's, I mean, generally it is because why would you spend it if you weren't enjoying spending it? Well, you'd hope not generally that's because it's a fine, rather than, you know, a decision that's being forced upon you. You know, it's always one of these issues that people start to really think about, why am I doing something?

t older, your risk tolerance [: 00:16:00

If you are generating enough income out of it, can you spend it that fast? But if your natural sort of money mindset is not so much scarcity, but I've, you've always controlled where your spending is, it's very difficult to just flip that and go, oh, that's ridiculous. Just keep spending. I mean, there's a point where you go, I, I don't.

I don't need to keep spending. But again, how are you gonna cascade it through? But I think the value of that is also then teaching the younger generation. The reason that you're spending is for purpose and for enjoyment. Like the real value that comes in. I mean, one of the things that we really get people to think about this whole basis is to sort of, the question really becomes how will future generations know the why behind what they receive?

Interesting that like I [: 00:17:00

Because it is absolutely at the discretion of people. It's trying to educate people also around the basis that it's just not an expectation that you would be receiving funds from the generation above. You know, let's understand why there is a decision that was made to pass something on, and I think that's a really important discussion.

And once we get people talking about some of these things, they start to become a little bit more comfortable. And it is, you know, when it's like doing the lap, you know when the first time you've, you've moved somewhere and you go between two points and the journey there, you sort of think, oh, alright, I didn't notice that.

to become more comfortable, [: 00:18:00

And that's not just family and friends. It could be to a charity or anything. Yeah,

Anthony Perl: I mean, it is really. You know, taking that time to ponder that idea. And I was thinking even, you know, the other day I went to the supermarket, just had to buy some normal stuff, wandered past the the freezer and saw a particular ice cream that I might know my daughter had been talking about.

se. And but it, it can often [: 00:19:00

Well, this is a mean,

David Murdoch: we were having a discussion with someone the other day, man, and I said, just, it's not always about the money, that the money has given you choices. So part of those choices might be that you want to walk along the beach with a child or a grandchild. That you would not normally have done, and so all of a sudden you're trying to nurture that relationship that you're encouraging this an hour that you've got, or two hours or the morning with a particular individual that you just wanna spend some time with.

Now, you might go down and get a coffee, you might get a hot chocolate. You might just go for a walk along the beach. You might take a little picnic debt, but do you know what I mean? It's not always about having to spend enormous amounts of money. The greatest gift you can give someone is your talent. We all have the same 24 hours in a day, but you are then making a conscious decision to spend it with that person.

, you just gave that example [: 00:20:00

That that is gold. And it's those little things that people get very focused on because it's also try to encourage people to move away from just the focus on, I've gotta keep driving, driving, driving to build and build and build this business or build my wealth and that's what I need to leave everyone.

It's like, you know what? You grandchildren, they'll sit there. They won't really care that you'd done X amount of hours and you grew this huge amount of money, but they'll remember the times that you. Did stuff with them or attended their sporting event or went to their school or, you know, we use an example with, you know, if grandparents take the kids and grandkids on a holiday, the grandkids will remember that, oh, grandma and grandpa said we could have as many soft drinks as we wanted.

Anthony Perl: Really?

they, they're away for the, [: 00:21:00

Because those lessons of age and wisdom, I mean, even you mentioned your daughter, she's like, oh, I've got time to do the travel. We all know as we all get a bit older, wow, if I could come back, you know, mentally you've got this idea of yourself as a 21-year-old and you're in your fifties and you think, oh, they were the.

Well, I could read 'em, but sometimes you still think you can be like that and then you pay for it the next day, you know? And that can be exercise or you know, parting or, you know, it can be all sorts of different things that you think, well, yeah, perhaps I'm not as young as I used to be. I've pulled up a bit sore.

the gym or, you know what I [: 00:22:00

Anthony Perl: Thanks for tuning in to the Activate Your Wealth Podcast.

For more information about how to get in contact with David Murdoch and the team at Paxton Bridge. To learn more about wealth activism, take a look at the show notes. There's plenty of information there, including details of the website and all the social media channels to. Follow David. This podcast has been produced by podcast Done for You.

I'm Anthony Pearl reminding you to subscribe so you never miss an episode.