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Wealth Enterprise ComponentsA wealth enterprise is formed when a family begins to think of and manage their wealth like a business. Over decades of working with families like yours, we have seen that families beat the odds and sustain their wealth by managing it as a professional endeavor, tapping into the same processes and best practices that were used to create the wealth in the first place.

To create a wealth enterprise, they:

  • Establish a clear purpose for their wealth and manage it with a long-term strategy
  • Have a clear understanding of everyone’s role involved in managing their wealth
  • Seek out and purchase, at the right price, the financial products that are right for them
  • Obtain robust reporting capability that allows them to measure progress
  • Establish effective decision-making processes, with transparent governance structures in place
  • Continually evaluate each provider’s effectiveness in managing their wealth

 

What does this mean for you? We help you build your wealth enterprise. Our guide Where Do I Start can help you to start thinking of your wealth as a business.

Three primary components of a Wealth Enterprise

We work with your family to identify and map the three primary areas in your family’s wealth enterprise.

  • Similar to any type of enterprise, the most critical component of your family’s wealth management is the Strategy, Structure and Governance. The decisions being made within this component are essential because they serve as the blueprint for all of your family’s wealth management activities.

    These fundamental activities include:

    1. Conceptualizing the family wealth as a business – beginning with a robust set of financial statements.
    2. Establishing a mission and strategy for your family’s wealth – deciding, for example, what are your family’s short- middle- and long-term objectives for your wealth? How will you prioritize those objectives? What does your family see as the purpose of your wealth?
    3. Clearly defining a decision-making framework that specifies the roles each family member will play. This framework brings transparency to each family member’s role within your wealth enterprise.
    4. Creating an entity for family decision-making, such as a board of directors.
    5. Preparing a clear succession plan, including preparation of the next generation.
  • Once the mission and strategy has been established, the second component of your family’s wealth enterprise is Wealth Management. Your family has many choices of financial services providers, but it is critical that those activities are overseen to be sure they are consistently directed at the purposes you have established for your wealth and the enterprise’s strategy.

    Some of the activities to consider are:

    • Investments
    • Financial and estate planning
    • Financial administration including expense management, preparation of financial statements, and taxes

    The coordination and integration of all these activities is essential and often determines the overall success, or failure, of your family’s wealth enterprise.

  • The average ultra-high net worth family often uses more than 20 service providers to execute various wealth management activities. Managing this “ecosystem of providers” can be overwhelming– we are here to simplify things for you.

    At your level of wealth it is imperative that someone is overseeing your financial providers to be sure they not only make decisions that benefit your wealth management strategy, but also that they benefit your family members themselves. This can be a significant undertaking - extensive knowledge of the functions that each provider performs is required.

These three areas must be managed to function together, with an awareness of how a decision about one area will impact the others. Your family is the center of the wealth enterprise, and each component is designed to function around your objectives and needs. As in any business, each of these areas must function together.