Not sure where to start with preparing your family for the day when your wealth is transferred over to them? Worried about whether your children will be prepared to use the money wisely?
The successful transfer of intergenerational wealth is a process. Ultra wealthy people worth $100 million + often engage family offices to manage this for them - but what do you do if you still have a significant legacy to pass on but don't reach this threshold?
Creating a Family Wealth Pathway is key. It takes years, sometimes decades to get all of the pieces in place but Paul Barrett from Absolute Wealth Advisers explains that as a rule these are the 7 things you need to do to if you are serious about successful management of your wealth for the long term benefit of your family.
1. Create a Shared Vision — Clearly defined core values for the family and goals for shared wealth are important elements for sustaining a family legacy. What is your vision for the family a generation from now? What are your goals for the wealth that is the result of your life's work? How can you make sure your family regularly checks in and stays engaged with these values and goals?
2. Formalize Family Governance — Documenting the family mission and a process for decision-making are critical first steps. How involved will family members be in the wealth management process? What can family money be uses for? Who will make important decisions and how will these be communicated to the rest of the family? How can you ensure your professional advisers (financial planner, accountant and lawyer) are all working within these guidelines?
3. Select Appropriate Ownership Structures — Structuring assets properly often has a greater long-term impact on your wealth than investing the assets properly. How will the decisions you make today affect your grandchildren from a financial, legal and tax perspective?
4. Balance Risk and Opportunity — Every family faces its own unique set of risks and opportunities, which would include the businesses you’re in, the investments you have and even your family members themselves. Documenting, discussing, and creating plans to handle these risks and opportunities arms the family with the skills they need to weather times of crisis and/or transition. What keeps you awake at night? What are the shared risks that accompany shared ownership of assets and investments? Can you define a process for dispute resolution within your family?
On the flip side, each family has its own set of humans with knowledge, ideas and talent. How can this be nurtured? And how can they contribute to the ongoing success of the family?
5. Teach Responsibilities of Ownership — Significant wealth comes with the responsibility of protecting and growing it for your family and future generations. Family members who are taught that they are stewards of the wealth tend are more able to think about what is best for the family over the long-term. What are the characteristics that determine a "responsible wealth owner" in your family?
6. Foster Leadership Skills —Responsibility can be delegated, but true leadership authority must be earned gradually through the testing of skills and demonstrations of achievement. How can younger members of your family test their leadership skills and earn the respect of their older relatives? How and when should they be introduced to the decision making process for family wealth?
7. Establish Benchmarks for Success — It is important to periodically stop and assess the family's performance relative to its wealth management goals and family mission. How does your family define long-term success and short-term value? And most importantly is your wealth being used for its best and highest purpose — which is the self actualisation of each member of your family so that they may each reach their full potential, whatever their talents and passions.
Absolute Wealth Advisers have developed the Family Wealth Pathway to lead high net wealth families (with assets over $10 million) along the journey of successful inter-generational transfer of wealth - it involves a highly personalised, long term partnership with you and your family where your Wealth Manager leads you and your family through each step of the way. If you'd like more information or if you would like to sit down and chat with Paul about your family situation you can email him here. There are no fees until you decide if the Family Wealth Pathway is right for you.