- Transitions
- How the Wealth Management Industry Works
- Classic Approach to Wealth Management
- Strategic Wealth Management of Your Family Enterprise
- The Eight Principles
- The Family as a Cultural System
- Taking Control of the Wealth Management Process
- The Nature of the Wealth Strategist’s Role
- Conclusion
- Chapter 1: Issues to Discuss with Your Family
This chapter is from the book
This chapter is from the book
This chapter is from the book
The Family as a Cultural System
No two families are alike. All families, wealthy or not, are complex, dynamic organisms that are forever-changing cultural systems. The culture of a family consists of the beliefs, values, attitudes, norms, and behaviors of its members. Each family’s history affects its current culture. Individual family members influence one another in countless, complex ways. Numerous external forces influence the life, identity, and norms of a family as well. Marriages bring “outsiders” into a family, and death and divorce can shatter families and shift lines of power and influence. The extended families of spouses who marry into a family exert their influence too, bringing with them new issues of culture, heritage, business success, family dysfunction, and social prominence.
The very presence of wealth colors the dynamics in any family. Money can be tremendously empowering and can afford its owners extraordinary opportunities. At the same time, money can complicate family relationships, foster resentment, and create dependency. At the extreme, poorly managed wealth can lead to disenfranchisement, degeneracy, and even corruption.
I believe that wealthy parents—like all parents—need to be intentional about instilling values of accountability and responsibility in their children when it comes to the use of money. Indeed, doing so can be critical to the family’s long-term survival! Many wealthy parents indulge their children financially. In so doing, they often foster economic dependency and create a generation of children that feels entitled to the benefits of wealth but that is ill-prepared to manage the responsibilities that wealth entails. Such children often become reliant on their parents for their lifestyles and often lack the discipline, education or even experience to use money wisely. It’s no wonder that some people believe that passing wealth from one generation to the next is doing their heirs and society a disservice.
Not surprisingly, financial dependency can affect a family in significant ways. Just how do you go about raising a generation to be empowered by its wealth, not filled with a sense of overentitlement because of it? I don’t know of a single wealthy parent who doesn’t worry about this issue a great deal.
That’s one more reason why wealth management is about so much more than money. True family wealth comes not from money but from maximizing each individual’s human capital and by nurturing a culture of collective goodwill and personal responsibility within the family. Doing this can ensure the health of families (and their money) for multiple generations. The failure to do it leads to family dysfunction and the rapid loss of wealth.