Forbes: Why You Should Manage Your Wealth Like a Business

Our firm has worked with some of the world’s wealthiest families for decades. Over the years, we have observed that the families who beat the odds and sustain their wealth over generations are the families who manage their wealth like a business endeavor. As a result, we focus on helping all of our clients build and sustain their own wealth enterprises by tapping into the same processes and best practices that were used to create their wealth in the first place.

We first wrote about this in 2014 in our white paper, “Why a Wealth Enterprise.”

According to Forbes, the number of high-net-worth and ultra-high-net-worth individuals is growing, and a considerable percentage of these populations is made up of entrepreneurial families who have created wealth like a well-run business is catching on.

This recent article in Forbes describes how the widely known “Three-Generation Wealth Rule” axiom, which is based on the immense likelihood of a family losing the entirety of their family wealth by the third generation, does not have to be inevitable for wealthy families. Instead, family wealth can continue to grow and survive across many generations by managing it like a business. They create wealth enterprises, which often includes:

  • A clear purpose for their wealth and a long-term strategy
  • A clear understanding of everyone’s role
  • The right financial products at the right price
  • Robust reporting capability to measure progress
  • Effective decision-making processes, with transparent governance structures
  • Evaluation of each provider’s effectiveness

The article then explores some of the questions we discuss with our clients.

  • What does managing wealth like a business mean?
  • When should the management of personal or family wealth be professionalized?
  • What challenges may arise when managing wealth like a business and how to overcome them?

“Managing wealth like a business is an ongoing process that is continually evolving as improvements are made,” the article concludes. “For many wealthy families, this remains a challenge as a considerable mindset shift is required to move from family business management to family wealth management successfully. Still, this shift is vital if wealth preservation across generations is to be achieved.”

Read the entire Forbes article here.