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.
About the Author
DOUGLAS P. MCCORMICK has a lifetime of experiences that provide the foundation for the framework, principles, and tools in Family Inc. As a professional investor, he has spent two decades managing money for institutional clients such as insurance companies, pension funds, entrepreneurs, and high net worth families. Unlike Wall Street money managers who seek to generate paper profits through passive investing, Doug partners with families and entrepreneurs to build and grow their businesses to create sustainable value. Holder of a BS in Economics from West Point and an MBA from Harvard, he is a cofounder and a Managing Partner at HCI Equity Partners. His motivation for writing this book started with his own challenges finding good personal finance advice as a young adult and his belief that financial literacy is one of the largest problems facing Americans today. He is optimistic this problem can be solved through awareness, education, and hard work.
Table of Contents
With Appreciation for America’s Armed
Forces Service Members xv
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 3
Section II Maximize the Value of Your Single Biggest Asset—Your Labor 17
Chapter 2 Double the Value of Your Labor through Education 19
Chapter 3 Make Career Choices That Extend Your Possibilities 29
Chapter 4 Think Like an Investor When Making Career Decisions 33
Chapter 5 Don’t Overlook Retirement Benefits Just Because They’re Not Imminent 45
Chapter 6 Complement Your Career Decisions with Insurance 49
Section III Manage Your Assets Like a CFO Manages a Business 55
Chapter 7 Your Financial Assets Serve Many Functions in Your Family Business 57
Chapter 8 Diversify Your Family Business with the Right Investments 61
Chapter 9 Define the Right Goals for Your Asset Management Business 75
Chapter 10 Use History to Make Reasonable Investment Assumptions 81
Chapter 11 Safeguard Your Assets from the Main Risks 97
Chapter 12 Not All Debt Is Bad! Use Debt to Purchase Assets and Maximize Your Liquidity 101
Chapter 13 Which Is Better, Active or Passive Investment Management? It Depends. . . . 105
Chapter 14 Use Indexing for Your Low-Cost Investment Portfolio 113
Chapter 15 Understand When It Makes Sense to Pick Individual Stocks and Managers 117
Chapter 16 The CFO’s Step-by-Step Guide to Building the Family Investment Program 125
Chapter 17 Know Yourself—Understand the Psychological Factors That Can Torpedo Your Goals 131
Chapter 18 Don’t Sweat the Details of Your Asset Management Business 135
Section IV Family Inc. Does Not Manage Itself 139
Chapter 19 Create Tools and a Reporting Dashboard for Managing Family Inc. 141
Section V Manage Your Family Endowment in Retirement 165
Chapter 20 Understand How Your Family Business Changes in Retirement 167
Chapter 21 Sleep Well—Protect Your Retirement through Insurance 169
Chapter 22 What’s Your Number? Determine When and How Much You Can Afford to Spend in Retirement 179
Section VI Avoid the Rat Race—Change the Game by Changing the Rules 201
Chapter 23 Pay Yourself What You’re Worth through Entrepreneurship 203
Chapter 24 Jump-Start Your Heirs’ Financial Security 209
Chapter 25 Develop a Succession Plan to Groom Your Replacement(s) 213
Chapter 26 Develop and Manage Your Estate or Uncle Sam Will 217
Chapter 27 Maximize Your Charitable Legacy 221
Section VII A Call to Action 225
Chapter 28 “But It’s Different This Time. . . .” 227
Chapter 29 Put Down the Book—Just Do It! 229
Appendix: How to Calculate Expected Lifetime Labor Value 231
Most Helpful Customer Reviews
I feel like I finally found a financial advice book that really resonates with me. Doug's approach to building wealth forced me to take a more holistic view of, in his words, my two most critical "businesses"--my temporary labor business (how much money I can earn in my lifetime through my own labor) and my asset management business (how much money we can earn by properly managing and growing our portfolio of assets). Doug talks very directly to the reader and gives actionable advice. His no nonsense approach seems consistent with Doug's West Point and Harvard Business School pedigree. As a bonus, I think Doug's book is going to have a real impact on military veterans who need this very clear and straightforward framework. Well done and thank you, Doug!
I've just finished reading Family Inc., and as the parent of three young adults, this book has just become a must read for my family! My children are just beginning to consume the most valuable asset they will possess in their lifetimes, as explained by Mr. McCormick, their individual labor asset. Family Inc., details the best way to utilize, capitalize, and maximize this asset in addition to providing the reader with a treasure trove of other practical and useful financial advice for managing and planning a lifetime of financial stability and success. Family Inc., is also now my graduation gift of choice since enacting these strategies early in a career are critical. I wish I had read this book 25 years ago. If it existed, and I had taken Doug's advice, I would be in a much better financial position today.
This book is a must read... for everyone from high school drop-outs to highly successful business people! McCormick explains the fundamentals required to navigate the ever-increasing complexity of today's financial world and build a successful family financial future in simple, understandable terms. He presents a groundbreaking new approach to view, manage and mitigate one's financial risks and opportunities, which flies in the face of conventional Wall Street "wisdom" and advice, and provides clear guidance on how to develop, execute and achieve one's lifelong financial goals. I worked in finance for 17 years, and was astonished to discover that finance professionals are among the worst managers of their own personal and family financial affairs, primarily because they either (1) did nothing; or (2) followed the conventional wisdom. After leaving finance, I started my own business and began to utilize some of McCormick's principles, but in an unstructured and disorganized fashion - ie, mainly by accident. It is refreshing to see a new paradigm created which is both simple and makes intuitive sense. This is not rocket science, nor do you need to be a mathematologist to follow his advice. As McCormick says, "Put down the book - Just do it!" You will be glad you did.
As a CPA, I have a keen interest in personal finance and have read many of the “best-sellers” over the years. This one stands out from all the rest by using proven principles that work in business to guide personal and family wealth creation. From start to finish, this book is well organized to deliver concise, easily understood guidance. This book is at the top of my list for clients, associates and family members that want to take control and improve their financial destiny. The content was so compelling that I couldn't wait until Christmas to give this as a gift to my sons and several other family members.
A fantastic summary of how to approach personal financial planning for a family - with the wisdom and expertise of a successful financial professional, Army officer, and business owner. As a practicing CFP, the two key concepts that I plan to take forward in my work: 1) thinking about family financial planning as a business CFO would & make business-like decisions using a business-proven framework toward building a strong family financial future, 2) thinking of an individual's labor as their single largest financial asset, one that can be multiplied through education and entrepreneurship. The graphs illustrating a family's net worth over time are really fantastic for driving this point home, particularly in that the financial & time value of labor decreases the older an individual gets. Visually demonstrating how to multiply the expected return of your labor through education is what I will think about when I think about this book. - Visually, the layout of the book is fantastic. An easy read - short, digestible points with useful summaries to end each chapter. - Offers excellent insight into how to think about cash & fixed income holdings, not just in response to the current interest rate environment, but also in the historic and expected higher rates of return for riskier assets - Matching insurance coverage (term) to the value of expected labor -> EXTREMELY helpful when designing financial plans since I'm often stunted by the question of how much insurance do I need, and usually end up falling back on heuristics / rules of thumb. This gives me a framework to answer this question thoughtfully and systematically. In short, it is clear that this is Doug's passion, and we all could take away useful and lasting concepts from Family Inc. on how to structure our client's and our own financial futures.