Leo Tolstoy famously wrote in Anna Karenina: “Happy families are all alike; every unhappy family is unhappy in its own way”. While the world might view wealth as a panacea, wealthy families know that their financial position brings a whole set of genuine challenges and complexities.
These fall into a two broad categories: the management of financial vs non-financial capital.
Under financial capital, there is wealth management, estate planning and legal issues, risk management and impact/philanthropy. In many families, these areas can intersect. These fields are the domain of wealth firms, private banks, lawyers, accountants, and other such specialists.
The complexities around cultivation of non-financial family capital are often put on the back burner, but can have a huge impact on the family, especially when things go awry.
In this category are areas like family dynamics, governance & decision making, learning and development (usually with a focus on the rising generation), leadership & transition planning, and health & well-being.
These pose many challenges for families:
- How to minimise a sense of entitlement in children?
- How to develop in them a sense of purpose and ambition, when they actually don’t need to work?
- Teaching them how to find happiness in things other than consumption.
- How to minimise conflict over unfair treatment of family members (actual or perceived)?
- Dealing with a relatively sudden change in financial status (like after the exit from an operating business or an asset sale)