Develop a Multi-generational Mentality

Mark Haynes Daniell in Strategy for the Wealthy Family (p. 13) states that an “Effective family wealth strategy requires a forward view across three generations, with each generation addressing its own issues while, at the same time, anticipating those of its children and grandchildren.” He believes that a family should plan for the long term, that being at least one hundred years.

To do so, he indicates that multiple elements must work together to form a framework so that the plan or strategy will succeed.

Before monetary or inheritance issues can be addressed, the family must give priority to understanding their intended family legacy, forming and using family governance and decision making structures and addressing any relationship issues in the family.

Daniell suggests that the elements constituting every families strategy should encompass:

  • The family (bloodlines, history, traditions, values and relationships).
  • Individual family members (due consideration should be given to each person’s unique desires and talents.).
  • Family organization and leadership (what are the roles, who plays them, how are they trained).
  • The family Eco-system (advisors used) and Family Office (if used).
  • Wealth preservation (estate planning, planning for scenarios, tax management, spending patterns, risk management across generations).
  • Wealth management (investments management).
  • The family business (how does it fit in the family organization and wealth management).
  • Philanthropy (development of a wealth sharing program).

The Family development action items preceding this one laid a foundation to develop an understanding of who your family is, how it came to be, what it’s legacy has been and what it wants as a future legacy. The action items were intended to help your family build common ground and work through to your family’s goals to enable you to develop this long term mentality.

This last action item is ongoing. Think about what your family wants to achieve and be remembered for. Define the mechanisms (organization, governance structures, functions, roles) that are needed to help you achieve your goals as a family.

When a family has mastered a multi generational mentality, decisions are made to the benefit of the long term plan, not to an immediate generation.

For instance, perhaps you decide to pool some money into a family bank. The family bank may then be run by leaders of your family organization. It may lend money to someone in a younger generation to start a business (most likely using a contribution to the bank made by a member of the older generation). The business then has the chance to expand the family wealth past the creating generation and make the younger generation part of a new wealth creation effort.

Sources include:

Strategy for the Wealthy Family – Seven Principles to Assure Riches to Riches Across Generations by Mark Haynes Daniell. 2008 John Wiley & Sons (Asia) Pre. Ltd.

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