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Framework for Wealth Creation
By Michael Lee-Chin
It can feel overwhelming at times to keep up with the pace of change in the world and the persistent environment of uncertainty. As investors, it’s easy to get caught up in the noise of the day and feel the urge to react—not from a place of principle, but from a place of fear.
In moments like these, it becomes even more important to pause, reflect, and return to the core principles that have stood the test of time. These are the principles that ground us when markets are volatile, and emotions run high. They remind us that long-term success is not built on reaction, but on discipline. As I sit to write this piece for Evolve magazine, I believe it’s the perfect time to revisit the fundamental principles of wealth creation—principles that should serve as our beacon and guide in every investment decision.
With that in mind, I welcome the opportunity to share with you what I know best: the concept of wealth creation. I began my career over 40 years ago as an investment advisor, sitting across kitchen tables with clients, discussing their financial goals and dreams. It was never lost on me that these individuals invited me into their homes and entrusted me with their hard-earned savings—I wasn’t about to let them down.
I recognized early on that the greatest value I could offer was the creation of wealth. That’s where true alignment began. Wealth creation was the key that unlocked the life my clients envisioned for themselves and their families. Once we were aligned on what we were working toward, the next logical step was to define how? In my view, wealth creation should always be “top of the house” when it comes to financial priorities. Success in any endeavor, especially wealth creation, comes down to a simple three-step process:
Identify a role model
Get their recipe and follow it
Do not change it
In the early years of my career, I dedicated myself to studying the world’s greatest wealth creators—dissecting their decisions, hypothesizing about their strategies, and searching for a common thread that explained their success. I was in pursuit of the Holy Grail: a repeatable framework I could apply to create wealth for my clients. It was at this time that I read a book that changed my life, The Intelligent Investor by Benjamin Graham. Widely regarded as one of the most influential books on value investing, it introduced me to timeless principles that still guide my decisions today. From that moment on, I identified Benjamin Graham and his protégé, Warren Buffett, as my investor role models. I dedicated my career to following their investment tenets. Alongside other legendary investors and institutions—such as the Canada Pension Plan and the Yale Endowment Fund—Buffett represents the gold standard of disciplined, long-term investing.
If we look at how their portfolios are constructed, a clear pattern emerges: they all have an asset mix consisting of public and private businesses.
So, the question is, within the context of the public and private realms, what framework or recipe do investor role models apply to guide their asset allocation decisions?
When it comes to wealth creation, Warren Buffett has said the following:
“To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”
I agree wholeheartedly with Mr. Buffett. To be a successful investor, one requires all three of the following components, working in tandem:
Framework
Control of Emotions
Access
Let us now explore the investment framework needed to make sound public and private investment decisions. Mr. Buffett is a master capital allocator and arguably the most successful investor of our time. When Warren Buffett was asked how he became a master capital allocator, he responded:
“I am a better investor because I am a businessman, and I am a better businessman because I am an investor.”
Therefore, to become a great capital allocator you must think and act like a business owner and investor.
What are the principles of wealth creation that define how to be a successful businessperson and investor? Take a moment and think of the wealthiest person/investor role model you know of, anywhere in the world. I am confident that person does five things consciously or subconsciously to create their wealth:
They own a few high-quality businesses
They thoroughly understand those businesses
Those businesses are domiciled in strong, long-term growth industries
They use other people’s money prudently
They hold these businesses for the long term
These principles of wealth creation connect all of the investor role models and, if we were to apply this same framework, we would see results. If we explore the attributes endemic to those wealthy person/investor role models and their wealth-creating businesses, we will see that the businesses have the following characteristics:
The owner of the business is also the operator of the business
Ownership is heavily concentrated
The owners have skin in the game
Key stakeholders are personified in the company and vice versa
Autocratic management style
Entrepreneurial management style / Growth mindset
Low turnover in management positions; the team has a shared vision
Symmetrical risk and reward for management
The business sets goals for the long term
The Board focuses on growth
The value of the business is based on fundamentals: sales, market share, and margin
These attributes, along with the wealth creation principles applied by our investor role models, should be the guiding framework that overarches all of our investment decisions. After all, if our objective is the creation of wealth, is it not logical that we emulate our successful investor role models?
There is a saying: “If you don’t know where you’re going, any road will get you there.” Having a sound investment framework will afford you the financial freedom to fulfill your life goals, whether it be leaving a lasting legacy for the next generation, funding a post-retirement lifestyle, or making a social impact on your community.
Warren Buffett once said, “Investing is simple but not easy.”
That truth becomes especially clear in the midst of a crisis, like the ones we are experiencing today. Market volatility can trigger stress, uncertainty, and emotional decision-making. While it is natural to feel rattled, controlling your emotions is the key to long-term success.
In moments like these, we must lean into our investment framework and remind ourselves that every crisis holds opportunity. Buffett also famously advised:
“Be fearful when others are greedy and greedy when others are fearful.”
It’s human nature to assume that the immediate past will dictate the future—but history has shown us that life, and markets, are not linear.
When we experience market instability, we must remember that it is not reflective of the quality of the underlying business; volatility is simply a reflection of the forces of supply and demand and the emotions of the day.
So, when a crisis arises, return to your framework. If the company still checks all the boxes, it remains a quality business. In those moments, the best course of action is simple: keep calm and carry on.
The wealthy invest differently. If we want to create wealth, we must have access to quality public, private, and alternative investment opportunities that would typically be reserved for the wealthy/investor role models. Therefore, it is vital that we align ourselves with investment professionals that can provide us with access.
We live in a modern age where information is a commodity. We are inundated with a plethora of information on a minute-to-minute basis: headlines, opinions, and noise. It can be overwhelming and challenging to make sense of it all and it is tempting to want to follow the herd in pursuit of fast money.
Remember, if you do not understand what you are buying, you are not investing; you are merely speculating—which is no different from cranking the slot machine and crossing your fingers. I can’t name a single investor role model that built real wealth that way.
