Some families have successfully broken this ‘third-generation curse’ to create truly lasting wealth for their heirs, but how?
A common characteristic among these institutionally wealthy families is they see themselves as custodians of their family’s assets. Although they benefit from this wealth, it’s not exclusively theirs. Instead, this wealth is part of a larger legacy they have a duty to maintain.
Importantly, they’re also more likely to plan ahead – and plan early.
One of the biggest challenges newly wealthy families face is the entrepreneurial mindset – which may have helped them build their wealth – doesn’t lend itself to estate planning.
Wealth creators often find success because of their focus on and commitment to their business rather than a dedication to making money. They are often willing to take risks for the right rewards and they back themselves to make the right decisions.
Making wealth last, on the other hand, requires giving some attention to the wealth itself, not just the work which created it. And while it’s reasonable to take on some risk when managing a portfolio, these risks may not be as great as an entrepreneur might take with their business.
It can also be difficult for these wealth creators to acknowledge their own mortality. Some believe they still have decades to plan their wealth transfer - even into their 70s.
ANZ recently undertook research into inter-generational wealth transfer and the conclusions were fascinating.
Here are some key considerations for making wealth last.