Don’t Lose the Family Fortune: Help Is At Hand!

Don’t Lose the Family Fortune: Help Is At Hand!

A staggering number of wealthy families – as many as 70% – find that the wealth that is built up by one generation does not last beyond the next generation. And if this is taken to the next stage, to the third generation, the number of families not preserving the fortune which their ancestor has made rises to 90%.

This suggests that the results of a recent survey in which most millionaires questioned revealed that they are never satisfied with how much they have – published in this blog as Millionaire Survey: the More You Have, the More You Want, on May 5, 2015 – have due cause to be concerned.

It appears that the biggest single reason for this, ironically, is because one generation does not trust the next to handle the inheritance, and so does not teach their children about being prudent or investing wisely. Parents are worried that their children will become too comfortable, believing that everything is set up for them, so they do not discuss financial matters with them. Thus, because of this lack of trust and therefore a reluctance to pass on knowledge, the danger that the next generation will waste the inheritance becomes a self-fulfilling prophecy.

And yet, because of their upbringing, children understand that the family has money, even if they do not realise just how much. What they fail to appreciate, because this has in many cases not been discussed with them, is neither the effort which has gone into making that money, nor its true value. So when they receive their inheritance it looks to them like a bottomless pit of cash; and they spend it.

As well as the next generation doing what was feared and squandering the family wealth, reasons given for the loss of the fortune tend to be bad financial decisions; simple bad luck; alcohol dependency; and family squabbles.

But there are some simple steps which can be taken which may lessen the threat of future generations losing the family fortune. Structured succession planning and family governance are crucial; and this is where a family office like Oracle Capital Group can play a very important role and prevent families from losing their wealth. Having been dealing with a number of wealthy families over a significant period of time, Oracle Capital Group has the experience and the knowledge necessary to help its clients through potentially difficult decisions.

Families can take steps to help themselves, too. Perhaps the most straightforward one is: talk to the children (and even the grandchildren). Explain that the family has funds because someone has worked hard to earn them. Explain about investment. If necessary, bring in a specialist, perhaps from Oracle Capital Group, to discuss financial matters with the next generation (as any parent knows even from the experience of school, children will often listen to an outsider more than they will to their parents).

Trust within families is a multi-sided factor. Children grow up trusting their parents; and parents (especially wealthy parents) have to learn to trust their children not simply to do their school homework, but also to learn about all of life’s responsibilities – including the financial ones. Add the impartial, experienced advice which Oracle Capital Group can bring to the table, and there is no reason why family fortunes should not last for many generations to come.

Should you wish to receive recommendations, ask questions or get in touch with our experts, please email us info@orcap.co.uk or call +44 (0) 207 725 6900

Figures given by The Williams Group, a US-based wealth consultancy who use the motto, “We prepare heirs”.

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