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A Review of “Wealth” by Stuart Lucas
By JLP | May 15, 2006
Let me start off by saying that Wealth
For those of you who are not familiar with Stuart Lucas, he is descendant of E. A. Stuart, the founder of Carnation (the company that created evaporated milk). Carnation was run by the family until it was sold to Nestlé in 1985 for about $3 billion, netting the Stuart family around $1 billion. After several years of disappointing returns on the family nestegg, Stuart Lucas decided it was time to take control. He pulled the family trusts out of the bank that was managing them and began managing them himself along with a few other family members. The wisdom that Stuart Lucas gained by managing his family’s wealth is presented in this book.
The book opens with some family history, which I detailed briefly in the previous paragraph. He then moves on to discuss eight principles of wealth management. He then gives a detailed discussion of how everything begins with values and shows how a family’s wealth managment program must have at its core their values. After the family’s values are discovered, they then need to define their objectives, which he explains in the fourth chapter.
Starting with chapter 5, the book gets very “meaty.” This is the part that most impressed me. Chapters 5 – 8 were very interesting to me. I think that most readers would benefit from reading these chapters. Chapter 5 talks about the three worlds of investing:
The Enchanted Forest – “populated by ambitious clients and equally ambitious wealth advisors, both looking for hte secret formula to investment success.”
The Secret Society – “It is the world of hedge funds, private equity funds, concentrated actively managed mutual funds, and opportunistic real estate professionals that outperform standard investments.” This is the world that everyone thinks they want to be in.
The Capital Kibbutz – “It is the world of indexed mutual funds, exchanged traded funds, and term life insurance.” This is the world where most people should belong.
Chapter 6 then shows how to pick the proper investment strategy based on the values, objectives, and type of investor you may be. The simplest strategy is the index strategy and he shows exactly how he would implement such a strategy. In my opinion, this is the strategy that MOST people, regardless of wealth, should utilize. Why? Because most people don’t have the time or the desire to properly pursue an acitve strategy. And, given the record of most active managers, it is too risky to just turn assets over to someone else to manage. For those who do have the time and expertise, the author details an active wealth management strategy and gives a lot of insight from his own experiences.
Chapter 7 offers tips on finding a “financial administrator” (financial advisor). Although he is specifically talking about finding someone to help with wealth management, his tips could also be used in finding a financial planner for someone in the middle class.
The last of the “essential” chapters is Chapter 8, which discusses how to make the IRS your partner in wealth managment by understanding how to position and manage assets. This is a must-read chapter.
The rest of the book is dedicated to topics such as stewardship, giving, and wealth transfer, which are essential to a wealth management program.
This is one of the better-written books I have read recently and one that I think most people, regardless of net worth, will get something out of. On a scale of 1 to 10, with 10 being the higest, I would give Wealth
Here are some other reviews by other bloggers:
Topics: Books | 2 Comments »
May 15th, 2006 at 10:14 pm
Hi JLP:
I hope you do not mind my piggybacking my review of Mr. Lucas new book here on your site (my excuse is that your readers can conveniently catch two reactions to the text.
Wealth
regards,
Barry
July 16th, 2006 at 7:16 pm
Excellent review.
I like the quote “if you transfer wealth to the next generation without preparing them, it’s bad for them and it gnaws at the fabric of a vibrant and productive society.”
So many times have we seen driven individuals create great success for themselves and then the accumulation of this wealth is then lost on the next generation. The principles don’t always get inherited.