“Family stories are the glue that binds together individual family members.”
– Jay Hughes
Wealthy families are fully aware of the importance of trusts and inheritance plans. They also know that succeeding to involve the next generation in the family business is even more critical. It often happens that heirs decide to leave the family business and build their own destiny . Statistics show that approximately 98% of families in America will fail in passing their wealth to the next generations.
So, what is there besides tangible assets, such as investments, houses, cars, etc?
One thing that is crucial for engaging your children in the family business is maintaining the harmony. Every family needs to have a story,, and enable the heirs to see beyond the obvious . Incorporating a strong family story and making it an integral part of your family business might ensure that the next generation will keep the tradition and continue the family legacy.
Here are some ideas on how to engage your heirs on family finances.
Training from the early years
Many families have this practice nowadays – they train their children from the early days to be fully engaged in the family business thus preparing them for their leadership roles in the future.
Let them decide on the timing
Give your heirs a chance to work at their own pace and take responsibilities accordingly. Some of them will show motivation and readiness at an early age, and some will need more time. Give them the tools, resources and mentorship needed, to choose the role they want to play in the family’s growth.
Create financial management and education plans
The importance of financial literacy is crucial for families who intend to keep their family business growing. Educating children about the economy and helping them understand the value of managing finances in the future strengthens their financial well being.
Flexibility and Transparency
New generations think differently. Sometimes, a light and straightforward approach makes it easier to build a bridge between generations. Being open to change and accepting the heirs’ way of thinking is crucial to feel appreciated in the company and in the family.
Hire a professional
Hiring a qualified person with both quantitative and qualitative skills, such as finance and family systems is always a great idea. Someone that truly understands family relationships and the importance of financial planning. They will know how to help you preserve and grow your assets, they will create a personalized plan for you, coach you and your family on your way to progress.
Letting the heirs understand the importance of intangible assets will lead towards a better understanding of the tangible ones – family business and finances.
Contact me for a personalized plan.
Elaine King, CFP is an expert on family enterprise consulting, creating strategies for wealth planning, family governance, and financial education programs.