Centura Wealth Advisory works with high net-worth families because our core focus is helping them explore and implement better strategies and solutions for better wealth outcomes. We’ve worked with many clients whose net worth exceeds $10 million, who have complex financial lives, circumstances, and strategies.
A huge part of implementing strategies in these families includes focusing on generational wealth through purpose. This method includes:
- Unpacking your family’s values and dreams.
- We help your Define, Implement and Track your family's purpose.
- Making your family’s purpose the impetus of your wealth.
- Significantly lessening the burdens of wealth.
The importance of generational wealth as it directly affects the opportunities of generations to come cannot be overstated. Funding a grandchild’s higher education can be a life-changing event that helps them to go on to impact the world.
How is this Kind of Wealth Preserved and Passed Along?
Careful stewardship of generational wealth goes beyond simple preservation and moves squarely into optimization and growth of existing assets. To preserve can mean to lose. IF traditions impede progress, preservation is counter-intuitive. How will you be the steward of your family’s generational wealth? This is also related to financial planning and creating a bulletproof retirement plan with our trusted wealth advisors.
Financial education is crucial to easing family members to understand wealth sustainability.
About 70% of wealthy families lose their wealth by the second generation, and 90% do by the following generation.
Why is Generational Wealth So Hard to Preserve?
The Chinese proverb says, “The first generation makes the money, the second spends it, and the third sees none of the wealth.”
The hard work, determination, and grit it takes the first generation to make the money allows the second generation to be more relaxed, not have to struggle, and consequently not optimize their parents’ wealth to its fullest extent by adding to it.
That generation raises children in wealth and privilege who never saw the hard work of their grandparents and assumes the wealth will last forever, they know nothing of the struggle to make ends meet and spend unwisely.
Without the financial education to ask the right questions they run through the money and, often, end up with nothing, starting the cycle all over again.
How can your wealth last past this generation?
Education, transparency, and boundaries are key to lasting generational wealth.
- Teach your children financial literacy. Include them in conversations about assets and decisions about investments and spending.
- Require a level of commitment to their own success. Graduating without student loans is no reason to take a gap decade. Require that your children create their own success in order to participate in yours.
- Tell stories. It may sound simple but, share insights into what it was like to count every dollar, to struggle, and to build all that you have built. Let them see that what they currently enjoy, required hard work and smart decisions from the previous generation.
Do’s and Don’ts in the journey to multi-generational wealth:
Don’t: Use short-term strategies without clear goals.
Short-term tactics and actions seem like they’re doing something proactive but often, they are more like busywork. Reacting to daily “market conditions'', buying the next hot investment product, or getting too enthusiastic about chasing the latest “wealth strategy or structure” all may seem like they are accretive to wealth accumulation; however, all too often, we come to realize they are disruptive when measured against the long term goals of the family.
Don’t: Use money as a weapon
Money is a tool, not a weapon. When patriarchs (and matriarchs) use money as a means of control, as means to punish or dictate behavior, that money is likely to be used unwisely by generations to come. Healthy family communication is integral to wealth longevity. Hiring a family mediator, a coach or a therapist might just be the step that preserves your family’s money for generations to come.
Do: Think of your family as a business with life cycles
Implement one of the emotional intelligence accountability tools such as the 5 Whys or the Accountability Cycle.
Most decisions once you ask Why 5 times come down to a real emotional desire to do what’s right. Using these tools can help you understand why your grandfather wants to change his will, why your dad wants your brother in charge of Operations, or why you yourself are unwilling to talk about your own retirement.
Do: Prepare for the worst (AKA reality)
Death is coming. If that was a surprise, there’s more bad news… Someone in your family is going to get divorced, someone else will struggle with anxiety or depression. The statistics don’t lie and neither should you. Planning for life’s downturns can be a great experience. When we look into the void we can appreciate more where we are in the moment.
Communication, honesty, education, and transparency are all essential. As is a multi-generational partnership with your trusted advisors. Wealth can, and does, last for generations for the families with diligent stewardship, care, and attention.
Centura Wealth does not make any representations as to the accuracy, timeliness, suitability or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.
We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.
For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.