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Family Wealth Priorities

By Ultra High Net WorthOctober, 2023March 18th, 20243 min read
family wealth priorities

Where we spend our time and energy is a reflection of our priorities. In a wealthy family, whether or not they have a formal family office, we can think about three types of activity:

money: investment or operating business aimed at growing the family’s financial capital

legal: regulatory obligations, estate planning, tax, insurance, and other risk management

family: maintaining and improving the physical, mental, emotional, and spiritual health and well-being of the family

It is thought that in many family offices, the split between these activities is about 60/30/10. Some say that even the 10% allocation to “family” is generous.

What does this say about a family’s priorities? How does family wealth differ from corporate wealth? Companies have human resources departments whose purpose includes managing the wellbeing of team members. Notwithstanding that recruitment and performance management are not quite needed within families, managing the well-being of the family, both individually and collectively, is surely a function to which family resources should be allocated.

Jay Hughes developed the notion of multiple forms of family capital: human, intellectual, social, legacy (or spiritual) and financial. He illustrates this with a hand where the thumb represents the financial capital, and the four fingers are the “non-financial”, and holds his hand with four fingers out and the thumb pointing down. The purpose of financial capital is to underwrite and enable the development of the other forms of family capital. It is the means, not the end. A family’s greatest asset is its members, not its financial balance sheet.

Consider This: What resources does your family allocate to maintain and improve the well-being of family members? What does it do (proactively and reactively) in support of this well-being? How is the saying “family comes first” reflected in practical terms?

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