Contrary to popular belief, attaining wealth is only half the battle. The only thing arguably harder than attaining wealth is keeping it. This is especially true when it comes to maintaining family wealth over many generations. Family wealth education is important to sustainable wealth. Here are a few tips that will help you create a plan that will maintain your family’s high net worth and benefit your children and grandchildren.
What Does Sustainability Mean to You?
Before you can make a plan for sustainable wealth, you first have to define what sustainability means to you. For example, if you happen to be a business owner who created a company worth millions from scratch, you likely want your wealth to benefit generations to come. Sustainability may also mean that you want the family business to prosper in the future if future generations are interested in running it. Once you’ve defined what sustainability means to you, it will be easier to create a plan towards attaining sustainable wealth.
Focus on Communication, Trust, Positive Family Dynamics
Many people believe that the hugest obstacles to family sustainable wealth are uncontrollable and largely unpredictable factors, such as performance of the markets, investment returns, and government actions. According to a Williams Group study, the failure for wealth to pass down from one generation to the next is attributed to lack of communication and trust in 60% of cases. Money is often a difficult topic to talk about for families. This causes many parents to make the mistake of putting off conversations about money until the heirs are older than 18. Ideally, the earlier you start talking about money, the better. While it is important to not create a sense of self-entitlement and complacency in your children, it is important to have the conversation earlier rather than later.
Hire a Family Office
To ensure the sustainability of your family’s wealth, you should pay for the services of a family office. You can either choose a single family office (SFO) or a multi-family office (MFO). An SFO will manage all the trusts and investments for just one family. Some services that a SFO will handle include managing household staff, accounting, property management, making travel arrangements, and more. Most family offices offer financial education, investment education, and family governance. Typically, families with a net worth of over $100 million hire the services of a family office.
Instead of hiring a single family office, you could pay for the services of a multi-family office. The main distinction between an SFO and an MFO is that the MFO manages the wealth of multiple families rather than just one family. Typically, the services of a multi-family office are less costly. The MFO offers many of the same services as does the SFO.
As you can see, there are many reasons why family wealth education should be important to you. If sustainable wealth is a goal of yours, family wealth education will help you reach that goal.