When most people talk about family wealth, they concentrate solely on financial assets. Their thinking consists of generating financial assets, investing them, protecting them, creating trusts and estate vehicles, etc. Few of the people I have met over the years consider the need to develop the intellectual capital of future generations. They rely on the schools and universities to perform this function. However, it is the creation of intellectual capital that elders should pursue to ensure the success of the family.
If the patriarch and matriarch of a family concentrate solely on the generation of financial assets and transferring it to future generations, they are not likely to make a lasting impact. Financial assets created by grandparents will likely be fully exhausted during their grandchildren’s life time. In many cases, the financial assets will not even reach their grandchildren. This is true even for multi-million dollar estates.
The head(s) of families should concentrate their efforts on the development of goals and intellectual capital of their future generations. Elders in a family need to help the younger generations find worthy goals. Elders should teach their offspring that the biggest secret to generating financial assets is having clearly defined goals. With these goals in place, then one can seek the intellectual capital needed to attain these goals. Financial assets are merely a tool that can be used to aid in these pursuits. Too many students enter college unsure of what they want to do, and let chance run their lives. This is neither a recipe for success nor what any parent wants for their child. As Yogi Berra once said, “If you don’t know where you are going, you may end up somewhere else.”
A family’s intellectual capital will determine its wealth and financial assets. By understanding this, older generations can help younger generations develop their goals and nurture their intellect. With these things in place, one can be sure that the family’s wealth will be preserved. The Chinese proverb is quite correct: “Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for the rest of his life.”
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