To flourish financially into future generations, author Ellen Miley Perry says affluent families also have to thrive emotionally. A wealth adviser for 25 years and author of A Wealth of Possibilities: Navigating Family, Money and Legacy, Perry has worked with more than 150 high-net worth families throughout her career—often witnessing the same pattern. “I observed that families who flourish the most were focused on qualitative issues, not just quantitative ones,” she says. “They took time and interest in quality family relationships and raising the next generation. Far fewer families devote the same intensity, energy and commitment to human assets as they do to financial assets.”
Perry’s research through the years has shown that families who flourish financially into the future do five main things:
• Connect as a family. They take connections very seriously. They take the time to have strong communication with one another, build trust, understand their own part in relationships and be emotionally vulnerable. This often is challenging for dynamic, fast-paced entrepreneurs who dedicate long hours to work and travel, often spending time with assistants and colleagues rather than their families.
• Focus on being great parents. The No. 1 secret to a thriving family is great parenting. It’s not about perfect parenting, but intentionality in parenting. For successful people, many of the dynamics—complicated businesses and complex lifestyles—work against this goal by pulling parents away from time with their kids.
• Teach kids financial literacy. Starting as early as possible, make financial literacy as much of a priority as teaching good manners. Look for ways to instill financial lessons, from the grocery store to a large purchase, like a new family car. Allowances also are a great tool to teach kids budgeting and decision-making. But parents shouldn’t bail kids out when they run short—if there are no consequences, then kids don’t learn the lesson. And kids should have summer jobs in high school because it’s how they learn to budget, work for someone and be responsible.
• Pitch a big tent. Families who thrive have a broad definition of who they are. They look for commonality with others and embrace diversity. Because when family members don’t feel included, they detach and find another family to attach to.
• Cultivate joy. Take attention off of assets and focus on small moments with family, finding joy in the every day—from storytelling to their kids’ dreams.
Perry also warns to watch for signs that your kids may be on a destructive path due to family wealth. Issues can quickly arise, from kids being fixed on their parents’ financial success to continually getting themselves into economic distress. Ensure kids are connecting at home and in school, Perry says. “And pay attention to kids not being able to get out from under the shadow that you cast. Sometimes kids of wealthy parents have problems finding their own spot,” she notes. “The parents’ job is to help shine the light on the kids’ dreams. Figure out your kids’ passions and invest time, energy and resources into that.”
Maurice Quiroga of PNC Bank says flourishing financially for generations has become top-of-mind for more and more St. Louis-area families. “The 2008 crisis reminded families how wealth stewardship is so vital to helping maintain wealth into future generations,” he says. “Everyone in the family should know how much wealth they have and if it can sustain future generations.” Quiroga advises educating younger generations about wealth through open discussions about family legacy, philanthropy, and financial goals and objectives, as well as family trust setups. “Educate family members on the basics of the family estate plan, investments and family business, so they understand what is built, what is being built and what it can withstand,” Quiroga notes. And as many people begin to live longer, the management and transfer of wealth has become more important than ever, he adds. “It can be decades before kids receive inheritances.”
John Jennings of The St. Louis Trust Company says understanding the math of your family’s finances is the key to wealth longevity. He says each generation will be dividing the wealth among siblings, decreasing the standard of living in the absence of a proper long-term financial plan. “No matter how good the manager is, the math is working against them,” notes David Diener, also of The St. Louis Trust Company. This is why education becomes so important, Jennings explains. “Talk to the next generation sooner, rather than later.” And consult a trustworthy adviser, Diener adds, to help steward your wealth into the future.