Family Wealth Management: 5 Ways to Make it Last

Family Wealth Management: 5 Ways to Make it Last

A good way to start your money managing journey is by figuring out why you’re managing it in the first place. You already know that you want to build generational wealth; now, you just need to know how to do it. Once you have a nest egg, you can begin the process of managing it.

How to Build and Manage Family Wealth

To build wealth, you need to have both liquid and non-liquid assets and a team that can grow your portfolio. You should also seek financial advice if you’re new to wealth management.

1. Speak to Your Family Early

We understand having a family wealth management conversation can be uncomfortable as it involves talking about death and a large amount of money. Family fights can happen if a person feels shorted or left out of your estate planning. In case of a dispute arising from estate planning, consulting a trust litigation attorney is advisable to ensure a fair and smooth distribution of wealth, so it’s essential to clear the air before passing on your wealth.

Creating a will and trust is the best way to prevent succession fights, especially if there is a business or any expensive assets on the line. It’s in your best interest to strengthen familial bonds right away and prevent conflict after you pass by putting your assets in the right hands.

2. Consult a Multi-Family Office

A multi-family office is an independent organization that helps multiple families manage their family wealth. Multi-family office services can include lifestyle management, financial counsel, tax and estate planning, risk management, investment advice, and philanthropic management.

In some cases, a multi-family office will handle personal services, like household staff and travel arrangements. Although their services can be expensive, they offer a complete approach to wealth management and are useful for families who have a net worth exceeding $50 million.

If you don’t make enough money to qualify for a multi-family office, you could hire a financial advisor specializing in estate planning. They’re much more affordable for small families.

3. Diversify Your Investment Portfolio

When it comes to managing wealth, time is your best friend. A person who starts investing at 25 can have twice the amount of savings at retirement as a 35-year-old. However, you can’t put all your eggs in one basket because it leaves you vulnerable to economic and market changes.

Retirement income funds, annuities, savings accounts, and bonds are considered “sure things'' because you pay into them and receive the money once you retire. Whereas real estate, stocks, dividends, and variable annuities change quickly. A bit of everything can secure your portfolio.

4. Establish a Budget to Reduce Debts

It won’t matter how many assets you have if you also have a significant amount of debt. You should make a budget that allocates 20% to priorities, 30% to lifestyle, 30% to savings, and 20% to debt. If you have a high amount of debt, consider reducing your lifestyle budget.

To make family wealth management last and increase the amount of money you pass on, you should tackle debts tied to high-interest financial products. You should also speak to your family about interest and how debt can eat away at your savings to reduce familial overspending.

If you die and leave debt for your family, don’t stress. No one else is legally obligated to repay your debt in most cases, although there are excpetions based on state laws and bank rules.

5. Look at Passive Income Streams

Jobs come and go, but a person who only earns an income from their current position could lose everything if they’re ever fired or let go. Even business owners could shut their doors at any time. Preparing for the inevitable is the best way to ensure your savings stay tucked away.

If you have an investment portfolio, you’re already contributing to a passive income stream, but there are other ways to meet your family wealth management goals. For example, you could sell photography online, write an ebook, or create an app. Then, you can transfer these assets to your children.

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