There’s been plenty of speculation over the years, through research studies and in the media, about second and third generations squandering the family wealth. But does the “shirtsleeves to shirtsleeves” or “3rd generation trap” theories really stack up?
The way that families engage and interact today is vastly different to families from decades ago, especially when it comes to talking about finances and wealth. Conversations, whilst still difficult at times, tend to be more open and inclusive with family members recognising the need to hold discussions that will increase financial literacy, and encourage better decision making by younger generations.
If you are concerned about how the younger generations in your family will deal with the wealth being passed onto them, then I would suggest the following:
1. Actively increase financial education from a young age.
The more your children (or grandchildren) are exposed to, and are part of, conversations about money and the family wealth the greater the chance at making successful financial decisions in the future. Recent studies show many Australians struggle with basic financial concepts and whilst our schools have financial education as part of the curriculum, it often comes down to the method of teaching as to how well the message gets through. Regardless, it’s still essential for a bit of “home schooling” to ensure you are passing on your knowledge, experience and tips.
2. Consider a Virtual Family Office
A lot of people like the idea of having everything centralised so that all generations can be involved in discussions and decisions. At Paxton Bridge, we have introduced the concept of a Virtual Family Office for anyone who has created a level of wealth, that has evolved over time, and needs help managing the further activation of that wealth and transfer to future generations. We are the primary contact and collaborate with the team of experts chosen by you, who constantly have the “bigger picture” for your family in mind, providing a clear pathway for decision making, growth and wealth transfer.
The Virtual Family Office gives you the peace of mind that your wealth is being activated with a strategy for you and your family to grow, share and protect the money and assets you have accumulated. Additionally, having one trusted point of contact for any family member to call if the unexpected happens allows you the comfort of knowing that your loved ones will always be supported by your team of advisors.
If you would like to know more about whether a Virtual Family Office is suitable for your circumstances, contact us via the website and we can find a time to talk.