Building a Legacy for Future Generations – Part2
A Value proposition
Successful families who have their financial capital well taken care of are well placed to shift their primary focus away from their financial capital toward capacity building and emotional resilience. They begin to implement the non-financial best practices of multi-generational families, including improving family communication and managing family expectations, building family competencies, and preparing family members for the responsibilities of life with wealth.
These families often grapple with:
• Is our family wealth really at the service of our family or vice versa?
• How do we prepare future generations to learn about and inherit wealth?
• What values do we share as a family?
• What is the purpose of our wealth?
This last question can often create an inflection point for a family. They and their advisors have built a solid, multi-generational enterprise around their financial capital. They have worked hard to prepare their children, and perhaps their grandchildren, to be responsible inheritors of wealth. But they know that money must have meaning beyond its economic value if it is to be sustained. So, successful families take great care in defining a shared purpose for their wealth that is reflective of each family member’s values and thoughtfully balances togetherness with individuality.
After capturing the families shared purpose in a clearly written and agreed document, successful families turn their attention to an efficient family governance process. Family governance defines how a family will work together and make decisions, and can be one of the most difficult elements of sustainability to put in place. The questions are complex:
• What will we do to achieve our mission?
• How will we make family decisions?
• Who will assume which roles?
• What policies are we willing to live by?
However, when coupled with well-prepared family members and guided by a clearly written family purpose, the answers to these complex questions complete the legacy that propels families forward and allows their wealth to last and be a benefit for generations to come.
So what now?
This is the path that we have seen families follow successfully to sustain family wealth. It begins with building a foundation around financial capital, managing it from a multi-generational perspective, and reinforcing it with a professional infrastructure. It then requires a thoughtful approach to preparing and organizing a family’s human capital to manage the family enterprise that is their wealth. Because each milestone takes time to achieve and is accompanied by increasingly difficult questions, the path forward benefits more from the approach of the proverbial tortoise than the hare. It takes time and it does not happen all by itself. It starts with the committed efforts of family leaders who are not willing to leave the ultimate fate and impact of their wealth on their family to chance.