The Wharton Global Family Alliance is a professional initiative by one of the nation’s premier business management schools. It seeks to help families with assets of at least $100 million to extend their wealth across generations. Family fortunes are as old as the hills, but not all clans succeed in keeping the momentum going. Wharton has figured out what makes the difference, and helps the wealthy stay rich. Do not click away just because you are worth less than $100 million, for a distillation of the prescriptions of the business management school follows:
1. Make a mission statement and write out your financial objectives. Hidden agendas help no one. All advisers and members of your family should have a common reference document on where you want to go with your estate.
2. Get professional help. Financial management requires multi-disciplinary skills. Stick to your domain and get outsiders to handle the functions you do not know well.
3. Eliminate conflicts of interest. You may not be able to afford dedicated resources, but at least your advisers should not be tempted to make scurrilous stock recommendations in order to earn commissions.
4. Make people accountable. Do not fall for the trap of acting on casual advice over a drink. Set clear targets and controls for what you expect of each member of your team, and keep friendships out of the way of objective reviews.
5. Separate ownership from management. Your financial estate is just like your body. You are the sole owner, but it would be foolhardy to ignore a doctor’s prescription, or to dabble in self-medication. Respect the professional prerogatives of every member of your team.
It is never too early to put your financial planning on a professional footing. Your descendants will certainly thank you for it.
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