Wealth Strategies for Intergenerational Success

Creating lasting wealth that spans generations is a goal many of us strive for. Recent findings show that the majority of Ultra High Net Worth (UHNW) families are seeking to strike a balance between preserving and growing the assets they can hand on to members of their own family and ensuring that they do this in a socially responsible manner.

There is a strongly held belief that great wealth can only be preserved across generations if it has a defined purpose and is used not only to benefit those who inherit it, but also to make a positive contribution to the community.?

I find this to be very true.

They also believe wealth is only sustainable if the family has the skills and experience to respond to the challenges and opportunities of an uncertain environment. These views were even more strongly held by the Next Generation, suggesting they will become more central to the management of the family wealth.

At the core of intergenerational success is the idea of passing down not just wealth, but also knowledge, values, and opportunities. It's about laying a strong foundation that empowers the next generations to thrive and contribute meaningfully to society.

Ultra-high-net-worth investors rank smart investing just below hard work and education as the key factors that are responsible for their financial success.

WENDY CONNETT, Financial Journalist

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Investing wisely is key to growing wealth sustainably. Diversification is a fundamental strategy that involves spreading investments across different asset classes like stocks, bonds, real estate, and alternative investments. This approach helps manage risks and optimize returns, especially over the long term.

Many business owners often choose to hold significant portions of their overall wealth as business assets. For some in fact, their assets are almost entirely wrapped up within the business, and this is also where they would choose to reinvest additional capital.

This commitment to tying up capital in a family business shows that the business has far more meaning to the family than merely the financial capital – it is a vehicle which carries the family’s Intellectual Capital, which is often run in such a way as to espouse the family’s values, often interwoven with the family’s philanthropic interests and is seen as a way in which the family ‘gives back’ to their community.

Nonetheless, with economic uncertainties comes the need for diversification to protect the overall wealth of the family in the event of risk events or adverse conditions that could negatively impact the business. We see more wealth creators holding real assets and artworks as a store of wealth, and more next gens are becoming more bullish on alternatives such as hedge funds than their parents.

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Financial literacy is a powerful tool for intergenerational success. Educating your family members, particularly children and grandchildren, about money management, budgeting, investing, and philanthropy is important. Encourage them to take an active interest in understanding and managing family finances, fostering a sense of responsibility and empowerment.

You can gain alignment on goals, values, and expectations regarding wealth management through effective communication within the family. Have open and transparent discussions about financial matters, family values, and long-term plans. Consider creating a family mission statement or wealth manifesto that outlines shared goals and guiding principles.

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A critical strategy is your plan for estate and legacy preservation which ensures a smooth transfer of assets across generations. Work with legal and financial advisors to create a comprehensive estate plan that includes wills, trusts, powers of attorney, and healthcare directives. Better still, consider setting up or engaging a family office like Genea Family Office to coordinate your estate affairs properly. Consider philanthropic endeavours as part of your legacy, fostering a culture of giving back to society.

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Your generational wealth strategies should be dynamic and adaptable to changing circumstances. Regularly review and update your financial plan to reflect life events, market conditions, and family dynamics. Seek professional advice and guidance as needed to ensure your strategies remain relevant and effective. This is what your family office will do for you.

By implementing these wealth strategies, you can create a legacy of success that transcends generations, leaving a positive impact on your family and community. Intergenerational success is not just about wealth accumulation; it's about building a legacy of resilience, values, and opportunities that endure for years to come.

Are you an affluent family or wealth creator looking to set up the right structure to grow, manage and transfer your wealth to the next generation? Are you interested in creating a family office framework to take care of your business, wealth and family interests? Engage with us today via [email protected] to discuss your specific needs.?

PS. I share thoughts on sustainability in family businesses and transgenerational wealth. Learn more about my work with enterprise families and ultra-high net worth individuals here: www.geneafamilyoffice.com?