Consider your wealth as a business
- Who are we as a family?
- What do we own?
- How do we own it?
Answering these questions serves as a starting place for your wealth enterprise.
Step 1: Understand the status quo
Ask any successful business owner what his profits and losses are and it is likely he would be able to tell you precisely. Income statements, balance sheets, cash flows – all of these report and present critical information for any thriving business. Why shouldn’t a wealthy family use the same tools to manage the business of its wealth? The first step in building your wealth enterprise is to gather a robust set of financial statements to gain a complete understanding of where you are, where you’re going and where you’d like to be.
Step 2: Three Primary Components of Wealth Management
The next step is to thoroughly explore the three components of your wealth management:
- The Eco-system of Providers: identify all of your family’s providers – Who is providing you services and why? asset managers, private banks, lawyers, accountants, trust companies, custodians, consultants, brokers should be included – anyone who is working with you to manage your wealth.
- Wealth Management Activities – To be sure your mapping is comprehensive, an overview of typical wealth management activities most families need to manage their wealth might be helpful. Aspects to consider would be: Financial Administration, Financial Planning, Estate and Tax Planning, Investment Advisory, Risk Management.
- Strategy, Structure & Governance – This third but most critical component concerns the underlying meaning and purpose of your wealth. How your family makes decisions, how they prepare for succession, how they educate the next generation of wealth owners are all foundational pieces to establish. But despite their importance, many families leave them unexplored.
Once you’ve identified all the most important pieces of information in your wealth enterprise, it will make it easier to see what areas need to be addressed and improved.
To know where you’re going, you have to understand where you are. For a more comprehensive guide to rethinking your wealth, download our guide, "Where Do I Start?" What Rethinking Your Wealth Can Do For You.