Many successful families of wealth understand the need to build connections that span generations — and go beyond wealth. Here’s what that means.
Many families that have been successful in preserving their family legacy, including their financial capital, are intentional about fostering non-financial aspects of wealth. Being intentional and proactive about preparing the family to manage wealth in the long term helps make a meaningful impact in shaping future generations.
Wells Fargo conducted a 2023 study1 on the attitudes of self-made millionaires, or “wealth-builders,” regarding success and family dynamics. The study revealed that wealth-builders believe money conversations with children are essential. At the same time, more than a third of respondents said their heirs have little or no knowledge of their inheritance plans.
Many successful families pay special attention to creating a positive family environment when communicating about money matters. But they go beyond money, they also focus on supporting each other’s talents and goals while creating alignment and engagement, which helps develop human capital — beneficial skills, knowledge, experience, and congruency — across generations.
So how can wealth-builders build lasting skills and values that can become their family legacy?
Starting the conversation
Many successful families of wealth start building human capital by first uncovering and clarifying their values, goals, and concerns. Having open family conversations can be essential. Such conversations may seem awkward at first, but over time, and with practice and sensitivity, family members may start to feel more comfortable and engaged.
These conversations can create opportunities for families to uncover strengths that can be leveraged as well as potential vulnerabilities that may need to be addressed. Families may consider working on the following areas:
- Vision, mission, and values: Family members are able to clearly articulate their individual and family values and the overall purpose or intended impact of the family’s wealth.
- Communication: Family members regularly communicate with each other regarding the family’s wealth and jointly held assets and review financial strategies during recurring family meetings.
- Transitions: The family has a process in place to discuss major transitions such as marriage, divorce, death, or the birth or adoption of a child to help ensure individual members’ perspectives are considered and important documents such as estate plans and trusts are updated accordingly.
- Decision-making: The family creates a structure that provides opportunities for family members to participate in decisions related to the family’s jointly held assets, such as the family business or wealth, including clarification regarding roles and responsibilities of each family member.
- Talent and leadership development: The family actively develops the individual talents and aptitudes of its members. Additionally, the family may desire to cultivate future family business leaders or create a succession plan and an employment policy as it relates to the family enterprise.
- Rising generation preparation: Family leaders take concrete steps to harness emerging talents and skills of its rising generation members and prepare them for ownership and management of their personal financial affairs, including the inheritance.
The questions money conversations can answer
Families that make a concerted effort to engage in these conversations around nonfinancial wealth can emerge stronger and more engaged, with an increased capacity to adapt to continuously changing circumstances. The learning process helps individuals discover how to work together, support the transmission of the family legacy and shared values, and solidify the family culture.
These conversations also help address issues that many families face, including:
- When I do talk to my heirs about money, what should I say, and how much information should I disclose?
- How do I help beneficiaries understand how assets contained in trusts, property, and other investments will flow to them?
- What does the rising generation need to be ready to embrace leadership of and responsibility for our shared wealth?
A well-prepared rising generation may flourish with respect to its own goals, understand and carry family values and legacy, and extend the positive impact of wealth beyond the family to the community and the environment.
1. On behalf of Wells Fargo, Versta Research conducted a national survey of 1,008 wealth creators, defined as U.S. adults aged 50 and over who have at least $1 million in investable assets, excluding those who inherited most of their assets. The sample included 136 from Generation X (ages 50 to 57), 771 Baby Boomers (ages 58 to 76), and 101 from the Silent Generation (ages 77 and older). Data were weighted by age to match current population estimates of U.S. households with $1M+ in investable assets, derived from the Federal Reserve Board’s Survey of Consumer Finances. The survey was conducted January 3 – 18, 2023. Assuming no sample bias, the maximum margin of error for full-sample estimates is ±3%.
Wells Fargo Wealth & Investment Management (WIM) is a division within Wells Fargo & Company. WIM provides financial products and services through various bank and brokerage affiliates of Wells Fargo & Company.