Why Do Some People Blow The Family Fortune? 5 Tips To Build Wealth For Generations

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As more baby boomers (those born from 1946 to 1964) move deeper into retirement, a massive transfer of wealth to younger generations is approaching. One report mentions that over the next 25 years, U.S. households will pass nearly $70 trillion to their children.

But there is no guarantee that a family’s wealth will last for generations. Building and maintaining wealth, so it benefits many generations, requires proper financial education, perspective among family members, and communication, says Chance Robinson, a financial advisor and author of Financial Myths: Important Information You May Not Know About Your Retirement And Financial Future.

“There is much to learn from the reckless wealthy,” Robinson says. “There have been numerous instances where inheritors have squandered wealth. Unfortunately, they could not build upon what was available to them.

“Preserving intergenerational wealth is an uphill task. But understanding the differences between a wealth-generation mindset and a wealth-destroying one can teach lessons that are vital to continuing and increasing intergenerational wealth in your own family.”

Robinson has these tips for families to consider about building and maintaining intergenerational wealth:

View wealth as more than money and property

To Robinson, the first things that come to mind when discussing wealth are bank balances and properties. Still, he adds that a family’s collective wealth goes deeper to include family memories, relationships, and ethos – its aspirations for the greater good. “These intangible but important emotional factors play an important role in keeping the family and its generations on the same page and keeping the financial assets intact,” he says.

Take an unselfish, long-term view

“There is no place for a self-centered attitude,” Robinson notes. “The person intending to generate wealth and leave a legacy behind would likely possess an open and generous mind. He or she would not necessarily look for ways to consume everything in his or her lifetime. The mindset would be to preserve the wealth for future generations, and the heirs need to adopt that same mindset. A great legacy passed on from one generation to the next needs sacrifices from everyone.”

Have patience

Patience should occur on two fronts – with people and with investments. “Short-term obstinacy and stubbornness,” Robinson observes, “can be a sure-shot recipe for family wealth destruction.” And if someone uses stock investments as the main means to create wealth, the period of investment has to be for a significantly long term. “Legendary investor Warren Buffett says his approach to investing is to invest in only 10 stocks throughout his lifetime,” Robinson says. “That means one must pick each share with the utmost care and patience.”

Agree on a financial professional

Robinson mentions that it is essential for families to work with a qualified investment professional, advisor, or advisory team to ensure investment decisions. “They should ask your family questions about its goals and show they are interested in the family’s long-term goals. Younger generations are more involved now in wealth creation and management, so their financial needs and interests are addressed as well as those of parents and grandparents.”

Learn to trust. Families sometimes get sideways with each other in wealth- sharing matters because they don’t trust one another. But communication, Robinson emphasizes, can build trust. “Exploring business opportunities involves trusting one’s instincts, and constant suspicion and insecurities can be non-supportive of business growth,” he says. “Similarly, when it comes to intergenerational wealth, trust and faith among family members are critical for success. Building mutual trust helps ensure growth for all.”

“The journey to building and maintaining intergenerational wealth is long,” Robinson remarks, “and it takes perseverance, generosity, and a positive mind.”

Author Bio: Chance Robinson is president of Strong Point Financial and the author of Financial Myths: Important Information You May Not Know About Your Retirement And Financial Future. An experienced financial advisor who has worked with retirees across the U.S., he is also a sought-after industry coach, advising other professionals on how to better serve clients with personalized care and a commitment to excellence. Robinson is a military veteran and has been featured in numerous news outlets for his financial expertise.

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