In this article, Sandaire approaches the topic of financial literacy in family wealth to help family members be better prepared and make decisions that are financially sound for generations to come.
As a Multi-family Office, we assume the responsibility of investing our clients’ liquidity, independent of their age. It’s essential for each client to understand the factors that lead us to make investment decisions on their behalf and to ensure that their investments are aligned suitably to their objectives and to the level of risk that they are able and willing to take.
A number of our clients are successful entrepreneurs and business people. However, this does not necessarily mean that they are experts in personal finance. Everyone can benefit from acquiring more knowledge in this area, whether individually or as a family.
Charlotte Filsell, Head of Family Office Services, comments, “investing in an effective education strategy is critical to the management of families and their multi-generational wealth needs. Equipping family members with the training they need to be responsible shareholders, and successful stewards of family wealth will provide the appropriate skills needed to make informed decisions. It can also improve communication and help build family cohesion.
Every family wants their wealth to be a source of satisfaction and opportunity for the next generation, so ensuring that children and young adults are prepared for the responsibilities that come with great wealth is a critical task. It is also important to impart an understanding of the family and its values, alongside helping them find purpose with wealth.
Education should not be a one-off event. Educating your family members should be viewed as a life-long process rather than a one-time event. For families, we advise in looking to outside experts to “steady the ship” and help provide the education and preparation the next generation needs for the future.
While an advisor can never replace the role of a parent, they can play a valuable role in providing insight on the practicalities of managing significant wealth and helping curate a plan to match their life goals.”
Whether the families we manage are looking to learn together or individually, we provide education and awareness on investments, ownership structures and philanthropic foundation requirements.
All education opportunities are customised to what each family member wants to learn and what is best for their situation, and we bring in expert partners where required. Additionally, we educate our families by assisting with the documentation of their family values and capturing shared family stories and histories.
Here at Sandaire, we are founding members of a global association, the Wigmore Association, that consists of eight family offices from around the world, with one overarching aim to help families thrive. In order to do this, we share best practices from across the globe.
One firm, US-based Pitcairn, encourages the benefits of play for both children and adults, and they have devised a list of games that weave in financial education and can be played with many age groups.
Additionally, Pitcairn encourages storytelling, getting individuals to come up with questions and ask younger generations to interview their elders.
We have worked with families of wealth for nearly 25 years, and it is clear that ‘responsibility without preparation’ can be a terrible combination. Without intentional training in this important area, it should be no surprise that rising generation members can make poor choices.
Tom McCullough, CEO and Chairman of Northwood Family Office, once commented, “that children pick up many of their money habits from observing how their parents deal with money. It’s often said that “values are mostly caught, not taught”. It is important for parents to honestly look at what lessons regarding money their actions may be demonstrating and educate the next generation on the importance of financial literacy.
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