Family wealth is notoriously difficult to maintain across generations. Without a powerful strategic vision, statistics show that family wealth is bound to dissipate. One useful strategy for nurturing a legacy is to foster an entrepreneurial culture within the family.

Most families of wealth began their stories generations ago with an entrepreneur—a risk-taker with vision, tenacity and optimism—who magically created something of value, seemingly from thin air. Later generations, who benefit from the wealth that was built, feel they have more to lose and grow more and more conservative. Meanwhile, the family grows in size, putting more pressure on their wealth to support them. Ironically, it is precisely the lack of risk-taking in later generations that contributes to the loss of wealth, as families draw it down but are unwilling to “risk” it by re-investing in themselves and their dreams.

Creating an entrepreneurial culture provides opportunity for family members to pursue their dreams and will regularly recharge a family’s wealth for future generations. Admittedly, it may be challenging to re-energize the family and recreate the spark of passion that led the original entrepreneur to create something from nothing. The family’s current situation and perspective has undoubtedly grown far different from the environment that gave rise to that original entrepreneur. Also, families must be prudent about how much risk they take. It’s a very rare (and perhaps unwise) family that would continue to risk everything to support even the noblest and most promising of dreams.

However, without growth, there will eventually be decay, and without risk, there is no growth. Just as an entrepreneurial vision created the family’s wealth to begin with, an entrepreneurial culture will keep the wealth productive and dynamic over generations.

A wealthy family interested in being a family of legacy should examine its current culture and attitude toward risk-taking to determine if family members “have what it takes” to be an entrepreneurial family. If they do, they should consider creating a formal entrepreneurial program to develop and nurture family members, giving them the tools and opportunities to help them achieve their dreams, thereby serving the whole family. If a family determines that it lacks an entrepreneurial culture, then it would be wise to consider what they need to do to build one.

Don’t just preserve family wealth...enterprise it!

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Scott Winget

Scott Winget is senior managing director of the Center for Wealth Impact at Ascent Private Capital Management of U.S. Bank. Scott has more than 20 years of experience in the planning and financial services industries. He frequently lectures on wealth planning and has authored a number of white papers and articles on wealth management.