5 Strategies High-Net-Worth Families Use To Build Generational Wealth
Written by
Gabrielle Olya
Edited by
Kristen Mae
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You’ve undoubtedly heard the expression, “It takes money to make money,” and this idea rings true for many high-net-worth individuals (HNWIs), as well as their families. Many implement strategies that enable them to use the wealth they already have to grow an even larger net worth, ensuring they can pass it down to future generations.
“For high-net-worth families, building generational wealth isn’t just about growing assets,” said Bill Smith, retirement income certified professional (RICP), master registered financial consultant (MRFC) and founder of W.A. Smith Financial Group. “It’s about ensuring that wealth is tax-efficient, strategically structured and properly transferred to heirs in a way that protects and maximizes its impact.”
Here are five top strategies employed by high-net-worth families to build generational wealth.
Educating Future Generations
Many wealth managers would tell their high-net-worth clients that the foundation for any fortune is financial literacy. In an effort to maintain their wealth, high-net-worth families take the time to educate their children about what it takes to be financially successful.
“True generational wealth starts with financial education,” Smith said. “High-net-worth families prioritize teaching heirs about investments, tax efficiency and wealth stewardship, so they can make informed financial decisions rather than mismanaging their inheritance.”
Disciplined Investing
Financial advisors and investment managers alike will tell you that having a strategy for your money is important. Wealthy families invest their money consistently with a long-term perspective.
“Wealthy families don’t just invest to grow — they invest with purpose,” said Smith. “Their plans prioritize income generation, tax-efficient investing and disciplined market strategies to sustain wealth over generations.”
No matter if you decide on mutual funds, stocks or bonds, you should make sure you put your money to use within your level of risk tolerance.
Building a Collaborative Financial Team
Managing wealth can be complex, so ultra-high-net-worth families tend to employ a whole team of professionals to make sure they are doing so effectively.
“The wealthiest families don’t rely on a single advisor,” Smith said. “They work with a team of professionals — financial planners, tax strategists, estate attorneys and investment specialists — who collaborate to ensure every decision is tax-optimized and aligned with long-term family goals.”
This professional team may also include insurance agents.
“Ask your fiduciary advisor if you need life insurance,” said Gerry Barrasso, certified public accountant (CPA), certified financial planner (CFP), founder and president at United Financial Planning Group. “If you do, have them recommend an insurance agent, and make sure they aren’t collecting commissions off the back end. An easy way to do this is to work with a fee-only advisor.”
Utilizing Advanced Wealth Transfer Strategies
Building generational wealth effectively also means having a well-thought-out transfer strategy.
“Effective legacy planning isn’t just about passing down assets — it’s about preserving and protecting those assets from unnecessary tax burdens,” Smith said. “Many families leverage revocable and irrevocable trusts, life insurance inside trusts and strategic lifetime gifting to reduce estate taxes and maximize what heirs receive.”
Exploring Alternative Investments
Many high-net-worth families use alternative investments to generate passive income and achieve long-term growth.
“While alternative investments aren’t a core strategy, high-net-worth families often allocate a portion of their portfolio to alternatives once their core investment and retirement income needs are met,” Smith said. “This allows them to diversify, generate passive income and create additional opportunities for long-term wealth expansion.”
Caitlyn Moorhead contributed to the reporting for this article.
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