Overcoming common misconceptions about managing family wealth
Many people are surprised to learn that an estimated 70% of wealthy families will lose their wealth by the second generation and 90% will lose it by the third.1 While these statistics are eye-opening, there are steps that families can take to help preserve and protect wealth across generations. That begins with understanding some of the common misconceptions about multigenerational wealth management.
Myth 1: Multigenerational wealth management is only for the uber wealthy
While it’s easy to assume that multigenerational wealth management is only for the very rich, that couldn’t be further from the truth. Multigenerational wealth management is an aspect of financial planning that seeks to help ensure that a family's wealth and legacy are properly managed and passed from one generation to the next, according to their wishes.
Whether you’re seeking to pass along tens of millions or tens of thousands of dollars in assets, or a business or vacation home, a multigenerational wealth management plan can outline how those assets will be transferred to your heirs in a tax-efficient manner and how wealth will be preserved for future generations.
Myth 2: Generational wealth is easy to maintain
Having family wealth and preserving it across generations are two very different things. Preserving wealth requires a highly personalized and tax-smart plan for managing risk through multiple market, business, and economic cycles, and a deep understanding of the investment, tax, and estate planning concepts and techniques that are right for your family.
That’s why a well-coordinated financial plan and disciplined investment strategy form the core of the multigenerational wealth management process. Your personalized strategy seeks to align the dual objectives of preservation and growth with your family’s values, risk tolerance, and the timeframes established for each of your goals.
Myth 3: Family dynamics are too complex to navigate
Multigenerational wealth management focuses on far more than your family’s financial success. It also addresses family dynamics. Wealth advisors experienced in multigenerational wealth management are able to help families resolve existing conflicts and eliminate the potential for future misunderstandings that can threaten wealth and destroy relationships. This includes helping families to articulate and define family values and goals and establish open lines of communication. Your wealth advisor will educate family members on financial management concepts and tools and help set agreed-upon parameters for the use and purpose of your family’s wealth.
In addition to providing ongoing advice that is personalized, timely, and relevant, your multigenerational wealth management advisor can play a valuable role in coordinating the advice you receive from your professional tax and legal advisors. This will help ensure that all of the advice you receive is fully aligned with your goals and strategy and is implemented in an efficient manner for the benefit of all family members.
For more information about how an experienced team of multigenerational wealth management advisors can help you put a strategy in place to preserve and grow your family’s wealth for generations to come, listen to my latest podcast episode at Frank Wealth Insights. To learn how we can help you and your family pursue the Return on Life® you desire, contact us today for a free consultation.
About Return on Life® Wealth Partners
Return on Life Wealth Partners is an independent Registered Investment Advisor (RIA) founded in 1994, with headquarters in Cleveland. The team provides comprehensive wealth planning services to individuals, families, and business owners. By examining clients’ lives before their money, Return on Life® aligns its advice with clients’ values. With access to its Complete Family Office (CFO)SM and Personal CFO™ services, Return on Life® Wealth Partners aims to help clients achieve the milestones that matter most to them. This personalized approach also extends to the institutional and corporate retirement plan services available through 401(k) Prosperity®.
1“Generational Wealth: Why do 70% of Families Lose Their Wealth in the 2nd Generation?”
https://www.nasdaq.com/articles/generational-wealth%3A-why-do-70-of-families-lose-their-wealth-in-the-2nd-generation-2018-10
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. To learn more about Return on Life’s investment business, including our accounts, products and services, as well as our relationship with you, please review our Form CRS.
