Roman Avdeev - Giving Money to Your Children Is Evil

How and to whom should you leave your assets when you have 23 children? Roman Avdeev, the founder of Credit Bank of Moscow, a billionaire and a father of many, found a rather easy solution.

Roman Avdeev’s estate in the Odintsovsky District of the Moscow Region reminds a small settlement inhabited by children: four houses where every child has a room of his own; two microbuses to drive the kids to school or childcare. The housekeeping is done by Avdeev’s wife assisted by grandfathers, grandmothers and a staff of nannies, teachers and drivers. 

Four of Avdeev’s children are his own and three of them (two sons and a daughter) live separately. The rest 19 children are adopted. In the 1990s, Avdeev tried to help children’s homes but was soon disappointed in the state welfare system and decided that children needed a family. As a result, the family has significantly grown in size. 

Avdeev can afford it. He is the founder and beneficial owner of Credit Bank of Moscow (boasting the 13th largest assets among Russian banks as per January 1st, 2014). He also owns a big pharmaceutical plant Veropharm and some real estate assets. In the Forbes 2013 billionaire rankings the 47-year-old Avdeev held the 69th place with his estimated net worth of $1.4 billion.

Have you thought about who and how will succeed to your business?

For some reason, there is a notion that family and business is the same thing. In my opinion, this idea comes from Middle Ages — the time of artels and artisans. At that time, you could not survive without a family. However, now we live in a postindustrial society and the values have changed.
A business is a form of self-realization, a means to satisfy your ambitions and create something. And then, of course, it is a way to generate your income and solve your financial issues. For me, there is no question of who will inherit my property — I am not going to leave my business to my children.

Don’t you want your children and grandchildren to rule your company?

I am not Raphael and I don’t create immortal things. Everything is temporary. I am ready to sell any of my businesses at any moment if someone is willing to buy them. Of course, as a company founder I am responsible to the people who work here. But it’s a matter of building a management team who can effectively manage the company. Shareholders may change without hurting the business.

So, you don’t really care who the shareholder of your, say, bank is?

No, I don’t. When businessmen start talking about their companies in aesthetic categories, as a mission of their life — it is too much.

OK. Let’s not talk about your company. But how about the capital? Would you like to leave it in the family?

In my family, there is no focus on preserving and increasing the capital. I help my children, I educate them, but that’s about all. It’s like in that saying: what would you give to someone in need — a fishing-rod or a fish? Everyone says that you should give a fishing-rod, but what they really give is a fish. Knowledge is a fishing-rod and money is a fish. Money spoils you.

Is there anything your children can count on except for education?

Sure. Education in any university of the world, plus the bare minimum — an apartment, a car… What kind of car, you may ask. I bought my eldest son a Zhiguli, for example. And then later, he earned money for a normal car.

What kind of education did your older children have?

When my sons finished school, they had sort of nihilism period, so they didn’t go to a university right away. At first, they tried to do something themselves and then they came to work with me.

What will happen to your assets when you pass away?

There are many options. Everything should go to charity. It’s hard to talk about the future now. I’m not that bad, I feel well. In ten years, I am going to work, not play golf.
Of course, life may end at any moment, I realize that. For this occasion, I have a ready-made scenario, but I’m not willing to talk about it — it’s a rather personal matter. I know for sure that giving money to your children is evil. Although, of course, this is not a popular point of view. 

When a businessman is purposefully preparing a successor, it’s a pattern that people can easily understand. Why would you object to family business?

This worked well in an agrarian society. The father passed to the son his knowledge, position in society and heritage. This was the only way to survive. Today, a child needs to decide what he wants to do for himself. He needs to realize himself. Everyone should have a choice and a family business doesn’t give you this choice.
For example, I have always wanted to sing, but I’m totally tone-deaf. So, I can take my child and invest in his singing. But this is the worst I can do for him. 

Your elder sons Anton and Kirill work in Credit Bank of Moscow. Wouldn’t they like to take matters into their own hands?

You should ask them. My opinion is that grown-up persons should earn their living. If you just give them money and position, they wouldn’t do anything. If you look at the American Forbes list, you will see that most of the assets are owned by the first generation. Of course, some Ford’s heirs are present there too, but many heirs have lost the assets of their fathers.

But the bank’s management are well aware of whose sons they are, so they will promote them anyway.

It’s a problem, indeed. But I made it clear that my sons should be held accountable more than others. So, it is more difficult for them to realize themselves in my bank than in anyone else’s.

Will either of your sons become the president of your bank?

Not my bank. As for other banks, I don’t know.

Most Russian millionaires founded their companies themselves. Their children will inherit these businesses. Will the new generation be able to preserve and increase the assets?

I don’t know. The new generation is stronger than the previous one. They are better educated, they can compete better. The new generation is more aggressive, more argent. Our generation comes from the USSR and it has its impact on us. I was supposed to study German at school, but I didn’t — I couldn’t understand why I should do it.

Are you sure it’s a strength, not a weakness of the young? After all, they haven’t been through the school of building the initial capital when someone might just plain shoot you?

Is it a useful school? Well, I’ve been through a Seabee school. They sent me there in my second year at college, for two years. I worked as a floor polisher there. It was rough, in every sense of the term. But I can’t say it didn’t do me good. From a career perspective, I would be better off without it. Perhaps, if I stayed at the university and continued with my studies, I would be a more successful person.  

How else, in your opinion, is the new generation different from the people born in the USSR?

They are more open. I’ve noticed a lot of things, but the most common quality is their openness to the world. I went abroad for the first time in 1989, and I looked at all the new and unusual things with some kind of fear. Our children are not like that. They are better than we are, and they will build a better business than we have. Grown-ups always say that the new generation is no good when it is simply different. I am an optimist here. “Different” means “better”.

If the heirs have a better education and starting position, why do they often “squander” the capital?

People, especially children, must form their personality, and to do this, they need to feel like creators, to do things by themselves. Children of rich parents often have everything handed to them on a plate. So, when they find themselves at the helm, they are often not prepared.

To raise 23 children, you must have a well-defined system that allows to prepare them for a grown-up life. What are its basic principles?

The main thesis is: children must have freedom of choice.

What if the choice is, say, smoking or drinking? Do your older children smoke?

No, they don’t. They used to dabble with it though. There was an incident with my eldest son. In his second grade at school, he came up to me and said he wanted to try smoking. I said, ‘no problem, let’s smoke right now.’ I bought a pack of ‘Belomor’ and let my son try it. Of course, he began to choke on the tobacco fumes — tears, vomiting. ‘Want to smoke some more?’ I suggested. ‘No, that’s enough.’ He understood that smoking is not a ready-made pleasure. And it doesn’t make him a grown-up. 

Your younger children study at an Odintsovsky public school. Why not at a private school?

I’ve had experience with a private school — it is more about pleasing parents rather than teaching children. You shouldn’t lock your children up in some kind of elite reservation.

My son takes up 100% of my attention. How do you make sure none of your children feel neglected?

The idea is not to just spend a lot of time with your children, but to give them attention when they need it the most, then they have a difficult time.
In a large family, children do a lot of things by themselves. They don’t only look up to the grown-ups, they learn from one another and their friends. It’s like a self-contained community. The younger ones learn from the older ones. The older ones teach the younger ones.

What is your role in this community?

I have to act like Baba Yaga with them. I’m joking, of course, but you know, there is a grain of truth in every joke. Oftentimes, I have to literally discipline them. All the serious talk is my responsibility.

How often does your whole family gather together?

Rarely, a few times a year. We try to go someplace together, organize children’s parties. But most of the time, not all of us are involved. My wife is the one who gets the most of it. Just imagine kissing everyone before bedtime. It’s like making a round. 

Are you ready to adopt more kids?

Never say never. But right now, we decided to stop. There is a limit to human physical capabilities, and then, there is the question of responsibility. Parents should stay alive and in good health till their children enter the grown-up life.  

Vice President of Corporate Customer Service of Credit Bank of Moscow, Anton Avdeev (26), revealed why he is going to leave the bank belonging to his father.
My father has a clear-cut position on clanship and succession: he thinks they are bad for business. If children grow in a favorable environment, it is bad for them.

I work in a company whose controlling interest belongs to my father, but we don’t communicate directly. I find myself in somewhat of a dilemma: at first, my colleagues are cautious around me, and then they start to overload me with work. My father always says that there should be no excuses for his children. 

I began to work at around 15. I had no time to study, so I graduated from an extramural university department. At first, I was launching my own small business projects. Then my father’s management began to involve me in his companies’ activities. Parallel to that, I continued with my small business. Recently, the focus has started shifting to my own projects, because I have reached my limit in the bank. My father has built a system according to which I will never be able to take up a leading position in his bank. He doesn’t want to be my boss, so sooner or later I’ll have to go.  

When I just launched my business, I tried to ask my father for advice, but we spoke different languages. Just imagine: I had a car service. A car service director wants to consult a millionaire. We just didn’t understand each other. I felt hurt and took offence, but then I stopped feeling offended and just gave up asking for help out of principle.

I know some people who initially lived in communal apartments and then grew into dollar millionaires. They have a different life philosophy than I do. Among my acquaintances there are many children of very rich parents. I rarely socialize with them because they are different.

It’s like we are from different planets. I have to work hard to earn my million rubles and they can blow a million dollars on nothing. They have values like European bourgeois: the idea is to enjoy life and not to put yourself to any bother. I know my father meant to throw me into a vortex, so I learned to swim, and he has partially achieved his goal: I understand the value of money and know how to earn it. I am interested in conducting business. But that’s not how I’m going to raise my son. After all, there must be some balance between love and severity.