Family governance is one of the most important conversation topics among UNHW families. Many wealthy families are now internationally resident, and the wealth can be lost as a result of generational change. Therefore, for almost a quarter of UHNW families, subjects such as succession planning, philanthropy, and wealth structuring are elementary.
According to research done in 2021 for The Australia and New Zealand Banking Group, the banking and financial services company, more than half of private banking clients believe it’s appropriate to start discussing wealth succession with their children before age 21.
Legacy to live on
Sometimes the next generation may not fully understand their family’s wealth—how it was built, how it’s structured, or what has been said about it outside the family. Still, glory and repute are of crucial importance.
In the beginning, it is necessary to know how much the children understand and what else they should be made aware of. Wealthy families may have tricky assets that can’t be easily divided and spread among children.
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These can include businesses, properties, artworks, vintage cars, or other collectibles. Some assets may have sentimental value for the heirs that outweighs their financial worth. It is important to clearly discuss who these assets will be left to and the reasons why.
Key Message
It is good to know what the key message is concerning the conversation about wealth. What is the purpose of the family wealth? What are the intentions behind it? Try to set an agenda with conversation topics. Talking about what you want to work through and letting the heirs or adult children talk about their expectations and ideas is the essential principle of wealth transfer discussion.
Words matter
Family relationships are the most important family matter, and they have to be preserved. So choose a respectful, non-confrontational tone within the conversation. Stay positive and keep the greater good of the family in mind. Keep the language in the initial scripts neutral, avoiding any accusatory words that could hurt a relationship.
Philanthropy Issues
Since the young generation has a different attitude towards family wealth, its priorities are different. Sustainable investing and philanthropy are the most challenging issues of these times. Every wealthy family will have to handle them one day.
Philanthropy is usually something everyone can get behind and opens the door to broader money discussions. Ideally, you’ll talk about the importance of giving when the kids are young so that when they’re older, you can be open about your legacy intentions and how philanthropy might be incorporated into your plan.
Involving Consultants
One of the most effective ways to manage conversations about family wealth with adult children is to start the process by meeting with an adviser before any conversations start. An adviser can be helpful in any part of the conversation. He or she can be the moderator of a legacy discussion or someone who educates the children about financial matters and family wealth management.
Following the trends in the world of finance, he or she can take a new look at financial matters. An adviser can add a lot of value as an objective third party, and if necessary, he or she can also direct family members to other experts.
