Many successful families have acquired their wealth the old fashioned way: through hard work, discipline and risk-taking. But acquiring wealth and managing it are different skills. Successful families have many options for wealth management, but numerous options often mean numerous decisions and substantial complexity. This can make managing wealth burdensome.
Many families have acquired wealth through a founder’s creation of a highly profitable business; others acquired wealth through service to a company that went public or to a public company they successfully led. Still others have created wealth through astute investments. Often the wealth creator faces difficult decisions about how to transfer this wealth to later generations.
Some pass on the family business to younger family members. This raises concerns for the future stewardship of the business. Founders often come from humble origins with a strong work ethic and tremendous drive. But their children and grandchildren have grown up under very different circumstances. Founders often worry that later generations may not respect or understand the work and discipline required. This is one reason founders seek a partner to help educate younger generations and foster family values.
Other founders choose to exit their business through a liquidity event. Monetizing the business leads to an influx of capital the founders may need help in managing. Wealth must be protected by ensuring younger family members respect the lifetime of work that went into its creation.
Families often seek to minimize their tax and expense burden by investing wealth through vehicles such as family trusts and special purpose investment entities and by diversifying investments. They may also seek investments unavailable to mass-market investors. Families come to us for independent and sophisticated advice in all of these areas.
As families grow in wealth, they often begin to share ownership of assets among numerous nuclear families across multiple generations. This requires harmonizing the goals of various family members across generational boundaries and between family lines. Family governance through an operating family plan may be needed. This may include a constitution and a family mission statement that reflects the philosophy, stories and values that form the fabric of the family.
Family leaders often turn to specialized professional advisors including attorneys, accountants, investment consultants and insurance specialists. But even this can create complications. Coordinating the efforts of your team of professional advisors requires management. The family needs a strategic partner to get all advisors on the same page and pulling in one direction.