Introduction to Wealth

We are all pretty clear on what is meant by wealth. When we think of wealth the first few things that tend to come to mind first are money, net worth, or societal status. In this section we want to suggest that when we think about wealth in the context of family owned businesses, it’s possible to ‘develop’ many different kinds of wealth.

Hmmmm…..’developing’ a family’s wealth intentionally. What a concept – see what you think.

• Family wealth is developed when the family, through regular communication generates respect and trust.
• Financial wealth is what the family must do to sustain its monetary wealth often by creating clear, and realistic expectations among heirs.
• Human wealth is developed when families build self-esteem and identity independent of having money.
• Societal wealth is created when the family expresses their values in the community through action such as involving all family members in service and philanthropy.
• Spiritual wealth is put into place when a family understands the deeper meaning and purpose of wealth in their lives.
• Structural wealth develops from a combination of a written family constitution, regular meetings of family councils, accountability and clear communication to beneficiaries.

You can probably see the value of developing a more diverse ‘lens’ concerning wealth – value to the family in working together and value to the business because a stable, cohesive family is the business’ foundation.

Another thing to think about is how we may want to ‘spend’ our wealth. The two broad categories in which most of us will cluster are ‘Personal Proprietorship’ and ‘Stewardship’.

It’s important that family heirs understand their own point of view as they look forward to their inheritance.

Personal proprietors feel fortunate to have the wealth that has been given to them or inherited by them, but don’t feel obligated to preserve it for future generations; they primarily use the wealth to benefit their current quality of life.

Stewards of wealth is an attitude in favor of legacy, responsibility, risk aversion, spending disciplines and education of the next generation; wanting the family to benefit from this wealth even long after the existence of the family business.

Although there is no right or wrong answer, you can see how each preference would begin to drive some of the other decisions regarding stewardship of the family legacy.