No two families are alike. Each has its own inherent strengths, challenges, personalities and family dynamics. And finding the right balance to achieve family goals that sometimes are in conflict can be a challenging task.

What’s the best route to success?

Making effective joint decisions about your family’s wealth and engaging in productive conversations around its purpose takes a very different set of skills than those needed to grow and manage wealth. Defining what each member of your family wants to accomplish, clarifying who will make what decisions, and committing yourselves to continually expanding your financial knowledge is a dynamic process — but one that leads to far greater confidence in the future. This is the essence of effective family governance.

Why family governance?

The concept of family governance is an idea that’s borrowed from the world of corporate governance. It’s about creating a framework for joint decision making, communication, conflict resolution and ensuring your family's values and goals are upheld across generations — but as shareholders of family assets rather than as corporate shareholders.

Your governance structure, processes and guidelines serve as a roadmap to guide your family interactions as you work together on strategies for sustaining wealth into the future. And it empowers your wealth to have a positive effect on your greatest asset: the human capital that makes up your family.

Next generation education

Are you confident that you are prepared to manage and grow your inheritance? Successful wealth transfer is about more than moving money. It’s about the older generation sharing wisdom, family values, ethics and life lessons. Yet, we all know talking about money can be difficult. Families often spend more time crafting financial documents and structuring their wealth than they do on actually preparing the next generation to successfully navigate the challenges of inherited wealth.

With great wealth comes great responsibility. By taking proactive steps, you can equip yourself with the skills to confidently manage your financial life and handle the responsibilities of wealth. Seek out information and resources that will help you to become a productive, responsible and passionate next generation wealth owner.

Partner with your family and advisors to educate yourself on financial topics that everyone needs to know (regardless of the level of wealth) as well as topics unique to families with significant wealth. For example, everyone should know how to create a budget. However, not everyone will need to know about the specific workings of a dynasty trust.

3 common next generation questions about family wealth

Being a younger member of a wealthy family comes with incredible opportunities, but it also brings unique challenges and expectations. The following are some common areas where next generation inheritors may struggle:

The overall goal of the education process should be to develop your family’s human and intellectual capital, while preparing each individual to be a responsible owner and steward of the family’s wealth. And with clear goals, high engagement and consistency — this can be accomplished.

Money can have a detrimental impact on heirs who are unprepared. Financial literacy is crucial to instilling confidence and the self-discipline needed to effectively manage money and mentally prepare for its impact.

Family meetings

If you owned a business enterprise worth $10+ million, wouldn’t you make sure the company had a defined mission, a strategic plan and regular periodic meetings with key stakeholders? A family with significant financial assets requires that same level of strategy and communication to maintain its success and sustainability.

Most families recognize that their financial capital is important, so they hire gifted estate planning attorneys, investment managers and accountants to manage their assets.

Lesser known, but equally important, is having an advisor to help your family grow its human and intellectual capital (i.e., preparing them for the impact of life with significant wealth). Convening members to discuss the business of the family helps bring meaning to their wealth, creates alignment, prepares for succession and facilitates an understanding of what motivates them to action in order to foster the family legacy.

Periodic family meetings, with a discussion facilitated by a trained family wealth specialist, provide a forum where every family member can feel empowered to openly share ideas, opportunities and challenges — as well as feel valued as you make joint decisions in a truly collaborative manner.

Facilitated family meetings build a culture of communication and trust. They allow family members to identify a common vision or come to a consensus on the things they can all get behind, even if there are other areas where they disagree. And that, in turn, could help solidify your family’s success for generations to come.

Ready to get everyone pulling in the same direction?

Open and honest conversations about your family’s wealth challenges can help everyone — from wealth creators to the next generation — feel more optimistic and confident. It won't solve every issue or challenge, but establishing clear communication can reduce uncertainty and strengthen family bonds.

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