Many families have managed their wealth for generations and have healthy, productive and successful sixth- and seventh-generation family members to show for their efforts. What are the secrets of their success? One commonality we’ve seen in our more than 20 years of serving families is they’ve made sticking together a priority. Following are seven family continuity recommendations that have stood the test of time:

1. Identify and communicate the benefits of working together. Keeping the family together has a number of benefits. It offers economies of scale in investing (better manager, fees, greater access to a wider variety of asset classes), insurance (discounts on premiums, fewer gaps in coverage) and management of everything from fleets of cars to estates to domestic staff. More importantly, by working together you’ll have an easier time educating the family on how to live with wealth and preserving your family legacy.
2. Develop a common vision and agree on a set of goals. Are you a proprietor or a steward? Building or maintaining? What are you going to do with your wealth? As Dennis Jaffe writes in his latest paper, Good Fortune: Building A Hundred Year Family Enterprise, "The 100-year family enterprise is not an accident.” The successful multigenerational family of wealth is a family of affinity, that is one linked by shared values.
3. Establish a process for making decisions together that can be revised as needed. Develop a family constitution detailing decision makers and the decision making process. Whatever you decide, make sure everyone understands the rules.
4. Teach young family members the meaning of stewardship. There are a number of important values you can teach your children from a very early age, including how money is valued, how you choose to spend it, what the family business means to the family, and how you choose to give back to the community. Beginning this education at an early age gives you a better chance of keeping the family together.
5. Recognize the family office as an investment in the future owners of the family. An effective family office costs money, but it also serves as the glue keeping the family together and allows family members to take advantage of economies of scale. Successful multigenerational families recognize the benefits of the family office and view its costs as an investment in the family’s future.
6. Protect the confidentiality of each family member’s financial affairs. A family office can only help provide a return on the family’s investment if family members feel comfortable sharing sensitive financial information with them. Family members need to feel their privacy is protected; and efficient, discreet reporting helps avoid bad feelings, jealousies and rivalries among individual members.
7. Periodically survey clients to determine their level of satisfaction with the family office. A family’s needs change over time, so the family office needs to continually monitor service and adapt to new demands.

Above all, success depends on frequent, open communication. The families that stay together across generations work continually to maintain their connections and commitment to each other.

Related Links

FOX Guide to the Professional Family Office