Many successful families worry about their children becoming stereotypical trust fund babies – lazy, wasteful, and spoiled. They also have reasonable concerns that inherited wealth can create feelings of isolation, addiction, delayed emotional development, and depression. It is frightening to think that after achieving a dream of providing the life you’ve always wanted for your family, that your success could actually have the opposite effect. There is no magic solution to ensure your children grow up grounded, independent and responsible. But at Cresset, we have found the following help individuals and families flourish across generations and into the future.
1. Start with the Why
When engaging with your family about your wealth and what you hope to accomplish with it, it’s important to answer the “why” question. Why are you investing time, energy and resources in empowering and engaging the next generation? What are the expectations? What are your fears? What does success look like – not financial success – but family harmony and the realization of a shared vision?
2. Talk About the Tough Stuff
There is no substitute for open, honest and transparent communication. Relationships take a lot of hard work. Talking about wealth and the desired impact of it can be difficult. So before you start talking, think about creating a safe space where vulnerability and authenticity are encouraged. Being able to talk openly and honestly about achievements, setbacks, money, expectations, and emotions is a wonderful lesson to instill. In order for the next generations to be responsible and prepared, they need to not only know what is coming, but that that the true meaning of wealth is more than money.
3. Involvement Leads to Commitment
Consider the WIIFM question – “What’s in it for me?” If you are striving for an engaged and motivated next generation of family members, find ways to get them involved. Give them a voice. Invite them to participate and listen to their ideas. Share why it is important and how being a responsible, educated steward will benefit them (and future generations).
4. Invest in Learning – Start Now
Calculate how much you spend on the custody, management, preservation, and transition of your financial capital. Imagine spending as much or more time and resources on the development of the human, intellectual, social and spiritual capitals of your family! Make the investment to create a culture of learning in your family. Develop a concrete plan to prepare the rising generation for their roles and responsibilities today and in the future based on their learning style, interests and life stage. Be specific on the roles and responsibilities, as well as the opportunities and challenges they will face. Help identify the skills, experiences and practice (learning from their own mistakes) they will need to be successful and fulfilled.
5. Let Go
Author Hodding Carter said, “There are only two lasting bequests we can give our children. One is roots and the other is wings.” What most deters parents from achieving that ideal state is needing to retain “control”. True, children need to be told no. They need boundaries, rules and structure to feel safe during their formative years. Roots are solidified during this time by modeling your values, showing love and compassion, and creating a safe space where children can discover themselves. That said, there is tremendous value in the struggles and failures that inevitably occur as we grow up. Let your family experience those valuable life lessons. Don’t over-protect or control them. Give them the wings and freedom to fall … and then to get up and fly.
To raise productive, independent, generous and grounded children, first look inside yourself to gain clarity on your values and goals. Role model those behaviors you hope to see in your children. Support their dreams, recognizing their definition of success may be different than your own. Talk openly and honestly with your children. Be vulnerable. Share your fears and failures in addition to your successes. Most importantly, do not wait until it is too late to talk about money and prepare your heirs for its impact.
Jill Shipley is the senior managing director of Family Culture, Impact and Governance for Cresset Family Office. She has nearly 20 years’ experience working with ultra-high-net-worth families and family enterprises to achieve multigenerational wealth sustainability and the successful impact of wealth.