Family Wealth Dynamics

Question 1

What percentage of wealth is lost by the second generation?

Answer 1

• Wealth is created in the first generation.
• 70% of wealth is lost by the second generation
• 90% of wealth is lost by the 3rd generation.

Question 2

What is the reason that wealth transfers fail?

Answer 2

60% due to a breakdown of communication
25% is from heirs being inadequately prepared.
15% is from other causes such as tax and other legal issues.

Question 3

What percentage of parents say that want to work with their childs advisor?

Answer 3

70% of parents (think G1) expressed a desire to meet and work with their children’s financial advisor

Question 4

60% of children express what to their parents?

Answer 4

60% of children (think G2) expressed a desire to meet and work with their parent’s financial advisor

Question 5

How many people express a desire to engage and how many actually engage?

Answer 5

2/3rd express the desire to engage

only 1/3rd actually enageages

Question 6

what is typical of 1st generation clients?

Answer 6

1st Generation clients of wealth often display resistance, receptiveness, or hesitancy – but not apathy

Question 7

What is the Immigrants and Natives metaphor?

Answer 7

Immigrants to the Land of Wealth
– New to wealth (lead generation)
– 80% of wealthy Americans
– Receptive or resistant but not apathetic

Natives to the Land of Wealth
– Grew up with wealth (next generation)
– 20% of wealthy Americans
– 90% change advisors with 2-3 years of family wealth transfer

Question 8

What are challenges between 1st and 2nd Generation Wealth

Answer 8

• Parents often do not allow children enough freedom.
• Children often suffer from low self-esteem.
• Parents often neglect their family relationships.
• Children often do not develop relationships outside their social circles.

Question 9

What are challenges between 1st and 2nd Generation Wealth

Answer 9

• Parents often do not allow children enough freedom.
• Children often suffer from low self-esteem.
• Parents often neglect their family relationships.
• Children often do not develop relationships outside their social circles.

Question 10

What are challenges between 1st and 2nd Generation Wealth

Answer 10

• Parents often do not allow children enough freedom.
• Children often suffer from low self-esteem.
• Parents often neglect their family relationships.
• Children often do not develop relationships outside their social circles.

Question 11

What are challenges between 1st and 2nd Generation Wealth

Answer 11

• Parents often do not allow children enough freedom.
• Children often suffer from low self-esteem.
• Parents often neglect their family relationships.
• Children often do not develop relationships outside their social circles.

Question 12

What percentage of wealthy Americans are immigrants to wealth

Answer 12

80%

Question 13

What percentage of Americans change advisors within 2-3 years of family wealth transfer

Answer 13

90%

Question 14

What are 4 core family office services?

Answer 14

• Advisory
• Financial Planning
• Strategy
• Governance

Question 15

What are Family Office Structures and Models?

Answer 15

Single Family Office
Multi Family Office
Virtual Family Office

Question 16

What is a Family Education Plan

Answer 16

Financial capital
Intellectual capital
Social capital
Human capital

Question 17

What is Intellectual Capital

Answer 17

individual or collective capital that comes from intelligence, knowledge, creativity or ingenuity

Question 18

What is Social Capital

Answer 18

potential, 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 itself in the HNW space

Question 19

What is Human Capital

Answer 19

includes one’s knowledge, skills, health, motivation, endurance, effectiveness, character traits, experience, etc. (unique to each individual)

Question 20

What are the keys to a successful family

Answer 20

Engagement
transparency
education
development

Question 21

What is the most opportune time to learn about financial education

Answer 21

7/8 to 13/14 years old.

Question 22

What are the primary sources and uses of money (funds)

Answer 22

• Earn
• Save
• Spend
• Invest
• Share

Question 23

What is a good visual tool to list family members?

Answer 23

Family Genogram

Question 24

What are Governance Goals:

Answer 24

Define process for family decision making
• Clarify family roles, rights and responsibilities
• Develop policies and procedures
• Engage and empower the next generation

Question 25

Governance establishes the processes for what?

Answer 25

• strategic goals are set,
• key relationships are maintained,
• the health of the family is safeguarded,
• accountability is maintained and
• achievement and performance are recognized.

Question 26

What does family governance do?

Answer 26

create frameworks, policies and traditions that determine how a family will operate.

Question 27

What is a Family Mission Statement?

Answer 27

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 — and the principles you choose to govern your family life.

Define your family’s Goals, Priorities, Values, Strengths, and Weaknesses

Question 28

What is a Family Values statement

Answer 28

Document intended to create or develop a shared and core set of principles and beliefs of the family unit.

Often found inside (a part) of the family mission statement.

Question 29

What is a family charter or constitution?

Answer 29

emphasis on structure, procedures and organization.

• formalization of the family structure and mission of the family business
• defines roles and responsibilities
• develops policies and procedures in line with family values and goals
• determines the process for resolving disputes