Not Just Money

I’ve heard some clients tell me they would rather leave their kids $50 million each instead of $10 million each. They assume life is better with more money. The same clients often won’t commit to documenting their wealth management process. These clients are missing the big picture and will likely burden their heirs with wealth.

This post will explain why your financial legacy is more than just dollars and cents and outline how you can cement your legacy with a wealth management process.

Benefits of Having a Process

When you leave your kids $10 million each including a wealth management process they can replicate, it enables them to build on your foundation. Having a process they can replicate gives your heirs security and confidence. Passing down a wealth management process to your kids enables them to continue growing your wealth over the long term, well after you’re gone.

Your kids will thank you for providing them with a wealth management process. I once celebrated the 70^th birthday of someone with several hundred million dollars. His extended family, the senior managers of his business, and his financial advisors were all in attendance. He blew out the candles on his birthday cake and then thanked everyone for attending. I vividly remember the speech he gave the audience after blowing out the candles on his birthday cake. He started by thanking his own father for the solid foundation he had provided him. It was clear the son (now 70) admired his father, not just for his father’s financial success, but for how his father prepared him for the responsibility of wealth.

Families who successfully transition wealth through multiple generations don’t do so by chance. They foster relationships with trusted advisors, they mentor the next generation for the eventual responsibility of managing wealth, and they make plans so they have decision making roadmaps.

Dangers of Not Having a Process

If you leave your kids a big pile of money without an understanding of how to manage it, you are leaving them highly vulnerable. Kids are much more likely to be burdened by wealth when the responsibility is thrust onto them without any of your experience.

Your heirs are much more likely to be suckered into frauds or simply into paying high fees for services they don’t need when their decisions are not grounded in a wealth management process.

How Can You Start?

Here are some basic tips:

• Include your heirs in your wealth management process. Receive their input and consider their opinions.
• Share your experience with your heirs. Tell them about your successes but also tell them about your mistakes.
• Cultivate relationships with a team of trusted advisors and share those relationships with your heirs. This might mean introducing your heirs to your accountant, lawyer, and investment advisors and including your heirs in review meetings.
• Encourage your professional advisors to mentor their successors as well. Introduce those junior partners and associates to your own heirs and encourage them to work together.

If you leave your kids a big pile of money without a plan, your wealth will become a burden to them. Spend time mentoring your heirs to ensure they can steward your wealth successfully.

More Resources

We write about family office and investing topics. Check out our previous blog posts:

• The Investment Policy Statement
• The Family Mission Statement
• Making an ESG Portfolio