As families and Family Offices look to increase future generations’ positive impact, high among their common goals, and common struggles, are delivering education and increasing engagement. Based on FOX’s thirty years of working with families, Family Offices, and Enterprise Families; conducting research; and engaging in consulting projects, FOX has found that the most engaged families implement six key best practices to prepare the future generations. Once these family learning practices are in place, a family will be more successful launching education and engagement initiatives.
Family Engagement in Learning
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What Matters Most to You?
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The most problematic challenge wealthy families face is not how to make more money, but how to ensure that it lasts. This requires focusing on something other than money. Successful families, whose wealth lasts for many generations, follow five key practices.
Many wealth management clients often want to know how to prevent their children from becoming entitled. Specifically, they’re concerned that their children will rely on family wealth instead of forging their own paths to success and will lack an understanding of money beyond how to spend it. Moreover, parents may inadvertently seed entitlement in their children even as they’re trying to avoid it. To sidestep the entitlement trap, here are five consistently identified principles to help parents create more self-reliant children.
Families that have accumulated significant assets want to know how to best prepare the rising generation to help them maximize the benefits available to them, while also minimizing the unique challenges that occur when navigating the world of wealth. Younger family members may have different approaches when it comes to wealth. Understanding where these approaches come from is essential when creating an effective family education program. To engage family members of all ages, with disparate beliefs and approaches to money, the best place to start is with what matters most: values.
You Actually Can Afford to Fail (Intelligently)
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Taking cues from entrepreneurs, families with great financial wealth would be well-served to create environments where their children can fail and in doing so, learn invaluable lessons about finance and resilience. While the older generations may set the tone by sharing their own stories about overcoming adversity, the rising generations will learn best by making their own mistakes.
Learning and practicing the basics of money management can have a profound impact on a young child’s life. What parents often overlook, even those who are investors themselves, is taking the education to the next stage once their children get older—say, around age 11 or 12. At that point, it may be the right time to start a conversation about investing. The lessons learned can not only develop the investor and entrepreneur in your child, but also the philanthropist.
Research indicates that multigenerational involvement is the single most important factor in sustaining family wealth into the third generation and beyond. Furthermore, the families that most successfully integrate younger members into their family operations seem to share the same philosophies and core values. It’s a family enterprise mindset that prepares the rising generation to be able to step in immediately and manage the family’s financial assets, run the enterprises, and preserve the culture and legacy.
One of the greatest concerns among wealthy parents is that the family’s great fortune might inadvertently lead to misfortune for their children. Raising responsible children in affluence is a life-long task requiring patience and persistence. Like learning to read, financial literacy is a process that is best started in early childhood. Teachable moments, alongside practical ways to teach children about wealth, are the beginning of financially responsible parenting.
If Money Talks, So Should You
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How much capital does your family have? Is there enough to secure a stable and happy future for you and your children, or even for your children’s children? When the topic is one of financial capital, these are likely familiar questions to anyone dealing with wealth transfer concerns. But what many families often fail to see is the opportunity to build “relationship capital” through engaging conversations — a more intangible but equally important step to incorporate when you are establishing your family’s wealth planning goals.
Family Governance: A Best Practice Framework for Maintaining Family Connectivity, Collaboration, and Continuity
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When it comes to reaching your family’s financial objectives and perpetuating its wealth, integrated family wealth planning is critical. A family governance system can significantly facilitate that process. This evergreen guide offers best practices and key elements of an effective family governance system, one that can be instrumental and flexible enough in equipping your family to navigate the challenges associated with family, business, financial, and legacy continuity.