A significant concern among many wealthy families is ensuring the family stays together in the subsequent and later generations. While the first generation sees value in family cohesiveness, the adult children sometimes want to take their anticipated inheritances and go their own way. While there are times when this is the best course of action, there are often opportunities when adult children are better off working cooperatively. While maintaining family cohesiveness becomes more difficult across multiple generations, there are actions families can take to increase the probability of the family members happily working together for the betterment of the family.
According to Angelo Robles, founder and CEO of Family Office Masterclass, “Well-run single-family offices can be instrumental in ensuring family cohesiveness while growing the family’s wealth and addressing concerns for all family members. For example, the ability to get better terms and pricing for various services and solutions is often possible because of the aggregate wealth of the family. Single-family offices can also play a significant role in future generations on several critical topics, such as maximizing their relationships with professionals and ensuring they’re getting results from your charitable contributions.”
High-performing single-family offices are committing more and more resources to constructively maintain family cohesiveness. When most wealthy families do stay together, by most objective measures, the family members are substantially better off. The complication is that many wealthy families are not in the position to establish single-family offices and commit the requisite resources. For these families, they can still take actions to maintain family cohesiveness that advantages the family.
As noted, one of the most potent ways to constructively maintain family cohesiveness is when the wealthy family is philanthropic. “When family members work together, making charitable donations, they not only support worthy causes, they are also regularly enhancing their family relationships,” explains Homer Smith, founder of Konvergent Wealth Partners and director of the DK Family Office Practice, co-author of Making Smart Decisions: How Ultra-Wealth Families Get Superior Wealth Planning Results, “Even when the family members have varying views in philanthropy, and what charitable causes to support, open communication and compromise gets results for all involved.”
Commonly, actions that foster family cohesion are questioned by family members, initially. This is especially the case among adult children, from those in their 20s to those in their 60s. What often happens is that, over time, many of them start to see value in working with family to do good. They also find that their relationships with family improve. One individual from a super-rich family equated working together with his family to smartly donate as being forced to eat his vegetables when he was six. Now, he is vegan.
“When family members experience being philanthropic together, most of them find considerable value in the experience and their ability to make a difference,” says Robles. “It’s a powerful approach to maintaining and enhancing family cohesion that is becoming prevalent not only among single-family offices and the super-rich but a large percentage of successful and accomplished families who are less affluent.”
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.
