Family Dynamics Flashcards
Research suggests that most family wealth does not survive three generations.
70% of wealth is lost by the second generation
90% of wealth is lost by the third generation
Less than 10% survives to transfers to the fourth generation
Failure and family wealth transfer is due to
60% due to breakdown in communication and trust within the family unit.
25% due to heirs is not being adequately prepared
15% due to other factors, including tax considerations and legal issues
What percentage of parents (first generation) expressed a desire to meet and work with their children’s financial advisor?
70%
What percentage of children (second generation) expressed a desire to meet and work with their parents financial advisor?
60%
What percentage of wealthy individuals expressed a desire to engage in more consistent and meaningful communication regarding financial matters with her children?
2/3rds
What percentage of wealthy individuals actually engage in consistent and meaningful communication regarding financial matters with their children?
1/3rd
What are core techniques for affective client interviewing and communication?
First generation, clients of wealth, often display resistance, receptiveness, or hesitancy, but not…
Apathy
Who are considered immigrants to the land of wealth?
New to Wealth
80% of wealthy Americans
Receptive or resistant, but not apathetic
Who are considered natives to the land of wealth?
The next generation who grew up, wealthy
20% of wealthy Americans
90% change advisors within 2 to 3 years of family wealth transfer
What are challenges between first and second generation well
Parents often do not allow children enough freedom
Children often suffer from low self-esteem
Parents often the neglect their family relationships
Children often do not develop relationships out of their social circles. 
What are family office core services?
Advisory
Financial planning
Strategy
Governance
What are the three rules that exclude family offices from being included from the advisers at regulation?
The Family office can only provide advice to family clients
The family office is wholly owned and controlled by the family
The family office does not hold itself out to the public as an investment advisor
What are the three family office structure models
Single-family office
Multi family office
Virtual family office
What is a virtual family office?
For families looking to achieve the benefits of a family office, but who do not wish to set up an actual company to do so. They can ox to outsource all services to external providers of services and consultants.
Family office guy – EY credit Suisse family office, white paper.
What are the risks concerns and challenges of setting up a family office?
The cost – typical $1 million plus office expense per year and 1% a family asset fee, would require 100 million assets under management to justify the cost.
- The greatest expenses personnel
Market, legal and tax infrastructure
Privacy
Trust and risk and professionals
Performance and risk management
What are the four keys to successful families?
Engagement
Transparency
Learning
Developing
What are the four aspects of a family education plan?
Financial capital
Intellectual capital
Social capital
Human capital
This aspect of a family education plan is the opportunity or ability to bring the other capital elements – particularly human – together, for the benefit of the greater good; often thought of inside the framework of the family at Cell in the high net worth space
Social capital
This aspect of a family education plan includes the knowledge skills, help motivation, endurance, effectiveness, character traits, and experience, unique to each individual.
Human capital
What skills need to be learned in a family education plan
Earn, save, spend, invest and share
How to keep track of money
How to live on a budget
How to handle credit wisely
How to save effectively
How to spend prudently
How to invest to achieve goals and preserve wealth
Effective measurement of outcome in family education plans is done in less than what percentage of formal programs?
20%
What are the primary learning ages?
Ages 7 to 14
Most money related skills have been establish before age 30
What percentage of students say they learn everything they know about money from their parents
90%
What percentage of parents believe their children learn everything they need to know about money at school?
87%
What is a family genogram?
It is visual tool that list:
family members
describes relationships within the family
may include important history
list those involved in the family business and their roles and responsibilities.
What are the four family governance goals?
Defined the process for family decision making
Clarify, family roles, rights and responsibilities
Develop policies and procedures
Engage and empower the next generation
Family governance establishes the process, whereby…
- Strategic goals are set
- Relationships are maintained
-Family health is safe guarded
-Accountability is maintained
-Achievement and performance are recognized
What are the six steps for an effective family meeting?
- Obtain agreement.
- Establish purpose and objectives.
- Design collaboratively and create expectations.
- Clarify expectations and format.
- Obtain information and invite participants.
- Create a safe environment.
What is a family mission statement?
It is a combined unified expression from all family members of:
-What your family is all about
-What it is you really want to do and be
-The principles you choose to govern your family life
Why is a family mission statement important?
-The act of creating a family mission statement helps to strengthen the family bond.
-To create the statement all family membership participate. These meetings, facilitate family discussion around personal concerns, goals, values, and priorities.
-Discussing intimate issues together work to unify the family and create a roadmap to keep the family headed in the same direction.
What is a family value statement?
It’s often found inside the family mission statement.
It’s intended to create a shared and core set of principles and beliefs for the family.
All members of the family should participating and crafting the value statement
This document also defines actions that the family will take to sustain its legacy in the next generation
What is a Family charter or constitution?
Typically includes:
-Formalization of the family structure and mission
-Defines roles and responsibilities
-Develops policies and procedures in line with family values and goals
-Determines process for resolving family disputes
Emphasis on structure, procedures, and organization. 
