I’m a Financial Expert for High Net Worth Individuals — Families Who Teach This Have a Higher Rate of Preserving Generational Wealth
Written by
Dawn Allcot
Edited by
Angela Corry
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When people think about leaving a legacy, they often think of the inheritance they will leave behind. For high-net-worth individuals, that legacy may extend to charitable causes, foundations and business endeavors.
Yet, as Brian Weiner, founder and CEO of the Family Office Resource Group pointed out, there’s much more to a legacy than financial aspects.
“A legacy is not a building. That’s an example of a legacy but it’s not the legacy itself,” he said. “A legacy is how someone wants to be remembered by their family and their community. Your values and more importantly, your deeds, are what define a legacy.”
The Importance of a Legacy in High-Net-Worth Families
Whatever your income level, it’s never too early, or too late, to begin thinking about your legacy. But for high-net-worth families, discussions of legacy carry even more weight. Financial experts have discovered that, in cases where parents impart the importance of a legacy to tweens and teens, these younger generations are more equipped to manage familial wealth when they reach adulthood.
In essence, educating children about their legacy and empowering them to choose causes they care about can help wealthy families dodge the “third generation curse” — a financial phenomenon in which families lose their accumulated wealth by the third generation.
How to Teach Children About Building a Legacy
Kevin Reed, chief revenue officer for Aquilance, said that parents can begin teaching children about the family legacy at a young age.
“I think you can start introducing the concept of legacy as early as your child can have conversations with you. Children can learn about family history, the things their family values, and how their actions today can impact future generations.”
Reed used the example of his daughter, who learned to love the word “more” as a toddler.
“She’s not unique in that regard. We have to teach our kids to be content with what they have and actively find opportunities to help others. Early exposure to charitable giving cultivates empathy,” he said.
“The parents need to be involved,” Weiner agreed. “This is a great opportunity for parents to engage with their kids.”
Weiner suggested letting kids choose a charity or a cause they want to support.
“Nurturing interest in charitable donations is incredibly important. It teaches independence and that their opinions matter,” he said.
Reed pointed out that children can use tools like Charity Navigator to see exactly where their contributions go.
“It was eye-opening to me as a young adult to learn that not all non-profits are well-managed and financially responsible. This impacted the organizations that I volunteered with,” he said.
For the most part, the financial lessons taught to children can have a lasting impact that can help preserve wealth in the third generation and beyond, according to the experts.
“Understanding the importance of financial stewardship can motivate them to make wise financial decisions throughout their lives,” Reed said. “Viewing money as a tool for impact also fosters a much healthier relationship with finances overall.”
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