Sustainable Wealth: Your Roadmap
We have synthesized our learning into a framework for families who are focused on sustainability. We call it The Sustainability Roadmap. This roadmap details the best practices we have observed and organizes them in a way that families can think about their own journey to sustain wealth.
Please mouse over the graphic to learn more about each step.
The Foundation for Your Success
Investing, Tax & Estate Planning, and Risk Management: The Critical Competencies
Your road to sustainable wealth starts with a focus on your family's financial capital and the three critical competencies that are the foundation for achieving multi-generational success: investing; tax & estate planning; and risk management. These three competencies are the building blocks of all successful families because they represent the fundamentals - without effective investments, tax plans or risk management, there is little point in thinking about the other activities critical to sustaining wealth.
Investing
- What should my asset allocation be?
- Am I taking advantage of all the opportunities out there to make money?
- Is my performance achieving my objectives?
- What kind of return should I expect?
- Are my asset managers doing an effective job?
- Do I have the right mix of asset managers?
- How should I measure performance?
- Which money managers should I use?
Tax & Estate Planning
- Am I paying more taxes than I should be?
- What does my estate plan actually do?
- Is my estate in order?
- Should I create a family foundation?
Risk Management
- Am I taking more risks than I need to?
- Am I getting paid enough through my investment returns for the risk I'm taking?
- How much can I afford to spend?
- Do I have enough money to reach my goals?
- Are there any risks that I should be worried about that could significantly diminish my wealth?
Adding The Multi-Generational Perspective To The Core Competencies
If your objective is to sustain your wealth across generations and you are confident that the appropriate building blocks are in place, the next step is to apply a multi-generational perspective to all of the activities. By seeing through a multi-generational lens you can assure that the decisions you make are right not only for your family today, but also for future generations.
Taking The Longer Term Perspective
- Am I investing for the next quarter, or the next generation?
- How should I structure my investments to provide returns for me while also delivering long-term gains that need to outlive me?
- Are there opportunities to trade some liquidity today for higher returns that will benefit future generations?
- How much return am I giving up by maintaining liquidity that I may not need?
Focusing On Asset Location
- Am I paying unnecessary taxes on my longer-term investments?
- Are the assets that are destined for future generations structured in such a way to allow them to appreciate in a tax effective way?
- Are my assets sufficiently structured to be in alignment with my longer-term objectives?
Focusing on Capital Loss
- How much downside risk am I taking with my capital? How much could I potentially lose?
- Am I ensuring that I am not taking too much financial risk so that my capital can keep compounding over the long term?
- Do I have any exposure to a potentially damaging event that could have major negative impact on my assets?
- Have I tried to anticipate all potential scenarios that could have substantial adverse impact on our family's assets?
Finding and Managing the Right Partners
Building A Professional Infrastructure
While you may be the critical decision maker and overseer of your wealth today, being sure that there are resources and structures in place that can ensure continuity is the next critical piece of the roadmap to sustainability.
Professional Infrastructure
- Are the decisions we are making overly reliant on one person or are we engaging others so that our thinking and desired outcomes are broadly understood in case of tragedy or sudden incapacitation?
- Are we making decisions in a vacuum or are we trying to understand the impact of one set of decisions (i.e. investments) on other facets of our wealth management activities (i.e. tax planning)
- Do we have professionals working for us, helping us make decisions and enabling our agenda and wealth intentions?
- Do we have advisors who are looking out for our best interests with nothing that would conflict them from doing so?
- Do all of our providers have our best interests in mind and is their compensation aligned with my success?
Preparing Your Family for Their Financial Future
For assets to remain robust throughout the generations, and for families to enjoy the on-going positive impact of wealth, the final two pieces of the roadmap suggest that families put in place today solutions that will benefit their families tomorrow.
These solutions are focused on the "human capital" of the family - that is, preparing family members for the responsibilities and challenges of life with wealth. We focus on creating connections between generations within a family, ensuring that family relationships remain strong and good decisions are made while providing family members with the personal freedom to pursue their own dreams. GenSpring has observed that it is this focus on and work with the human capital of a family that serves as the "springboard" to sustainability for families that wish to make their wealth last.
Preparing The Human Capital
- Are we managing our financial capital in such a way that it is at the service of the human capital?
- Are future generations prepared to inherit and manage the wealth? Are they prepared to act responsibly?
- What values are important to our family and how can we be sure they are sustained across generations?
- Do we have a mission and purpose for the wealth that is clearly understood and accepted across the family?
- Are we mentoring each generation so that older generations can serve as role models for younger family members?
Preparing Your Family for Their Financial Future
For assets to remain robust throughout the generations, and for families to enjoy the on-going positive impact of wealth, the final two pieces of the roadmap suggest that families put in place today solutions that will benefit their families tomorrow.
These solutions are focused on the "human capital" of the family - that is, preparing family members for the responsibilities and challenges of life with wealth. We focus on creating connections between generations within a family, ensuring that family relationships remain strong and good decisions are made while providing family members with the personal freedom to pursue their own dreams. GenSpring has observed that it is this focus on and work with the human capital of a family that serves as the "springboard" to sustainability for families that wish to make their wealth last.
Governing the Enterprise
- Is the family better off separating into separate branches or staying together?
- Do we have clear decision making mechanisms in the family?
- Have we set a series of policies that can help frame challenging decisions we need to make across different family members?
- Have we developed effective conflict resolution mechanisms?
- Have we focused on succession planning?
- Have we done scenario planning in case of unexpected events or crisis?
