A Guide to Family
Wealth Management

Managing and retaining family wealth stands out as a crucial undertaking that secures a family's financial future and legacy. It's not just about preserving wealth but also about growing it responsibly, ensuring that future generations can benefit.


This guide dives deep into the essence of family wealth management, exploring its components, benefits, and the steps necessary to create generational wealth.

Who would benefit the most from reading this? 

  1. Families starting the wealth management process 
  2. Families looking to improve their current strategy
  3. Families looking to teach their children about financial management

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Ok, let's get back to what you're here for: Family Wealth Management.

What is Family Wealth Management?

Family wealth management is a general term that describes the financial and investment affairs of a family. The goal of managing the wealth of any family is to sustain and grow wealth over generations. Thus, there are various financial areas that fall under family wealth management, including investment management, estate planning, and tax strategy, tailored to the family's unique needs and goals.

Key Components

  • Investment Management: Crafting a diversified investment portfolio that aligns with the family's risk tolerance and financial objectives.
  • Estate Planning: Ensuring a smooth transfer of assets to the next generation while minimizing taxes and other expenses.
  • Tax Planning: Implementing strategies to reduce tax liabilities and maximize wealth preservation.
  • Financial Education: Teaching the heirs how to be financially responsible and understand the value of each dollar.
  • Allowance: Understanding how much to give children or grandchildren without influencing poor money management behavior.

Unfortunately, 70% of families lose their wealth by the 2nd generation, and 90% by the third generation, so it’s vitally important to understand the components above.

purple gradient graphic with money bag icon, text reads "70% of wealthy families lose their wealth by the second generation".

The Benefits of Effective Family Wealth Planning

Managing family wealth effectively brings numerous benefits, from securing financial stability to ensuring a lasting legacy. The main benefit of properly managing the wealth of any family is creating an environment where the values of the matriarch or patriarch are properly passed down to generations. 

Ensuring Long-term Financial Security

The primary goal of family wealth management is to secure a family's financial future, providing peace of mind that resources will be available for future needs and aspirations.

Legacy Planning and Generational Wealth Transfer

A well-thought-out wealth management plan ensures that wealth is transferred across generations efficiently, minimizing losses due to taxes or legal complications. This includes estate planning and insurance but also conversations with the entire family to explain the financial picture. 

Tax Optimization and Efficiency

Strategic planning allows families to optimize their tax situation, ensuring that more wealth is retained and can be passed on to future generations

Challenges in Family Wealth Management

Despite its importance and time spent discussing this topic, families often encounter obstacles in wealth management. It’s no surprise that this happens because values can be tough to pass down, the ages of certain family members could cause challenges, and more. Let’s discuss the common pitfalls and ways to avoid them.

Common Pitfalls and How to Avoid Them

  • Lack of communication - Family members should openly discuss goals, values, and plans for the wealth. Regular family meetings can help facilitate ongoing communication.
  • Not having a clear succession plan - A concrete estate plan with instructions for transferring assets and managing the wealth is essential. Roles and responsibilities should be defined.
  • Not getting buy-in from younger generations - Younger members should be involved in financial decisions and prepared for inheritance well in advance. Their goals and values should be considered.
  • Not reviewing and updating plans - Estate plans, trusts, wills, and other financial documents should be reviewed regularly as circumstances change. An outdated plan can lead to unnecessary taxes or disputes.
  • Letting emotions derail financial decisions - Tensions over inheritance or control can divide a family. Seek mediation or counseling if needed. Make some financial decisions together.
  • Trying to avoid conflict at all costs - Some conflict is inevitable with shared wealth. The key is to have processes for working through issues rationally.
  • Having unclear investment goals - The family should likely have an investment policy. This provides guidance for managing wealth.
  • Not utilizing professionals - CPAs, estate attorneys, and financial advisors can provide expertise and an objective perspective. You can find a financial advisor on AdvisorFinder.

The main strategies are open communication, clear plans, adapting to change, and using experts when needed. With care and teamwork, families can effectively preserve wealth across generations.

The Impact of Not Having a Wealth Management Plan

The lack of a coordinated wealth management plan can lead to unnecessary taxes, messy or unclear wealth transfers, underperformance of investments, failure to pursue family goals, increased family conflicts, and squandering of assets. Without proper planning, opportunities are missed to maximize wealth potential through tax strategies, customized portfolios, impact investing, and effective multigenerational planning. 

In essence, those who fail to proactively plan for their wealth could lose out on substantial opportunities and face preventable taxes, disputes, stagnant investments, and overall mismanagement of assets. A disciplined wealth management plan helps align finances with family goals, optimize growth through prudent investment strategies, and ensure a smooth transfer of wealth between generations.

In one sentence: the impact of not having a plan to manage wealth will likely result in family arguments and missed opportunities.

How to Create a Family Wealth Plan

A comprehensive plan is the cornerstone of successfully managing the family's wealth. Here, we’ll talk about items of a plan that aren’t commonly discussed but are often a question amongst all families.

Steps to Developing a Wealth Management Plan

The first step in developing a wealth plan for your family is to identify who is creating a majority of the wealth. From there, you can then:

  • Assess your current financial situation - Gather details on income, expenses, assets, liabilities, insurance, and existing estate documents to understand your overall position.
  • Define goals - Determine your specific goals for building wealth, but also how you want it to impact your family.
  • Evaluate your family dynamic - How much money are you giving to family members? Who is going to continually need your financial support?
  • Make sure your family has the proper accounts - Are you opening up checking accounts for your children, adding them as an authorized user of your credit card, and ensuring they are educated about what’s going on?
  • Review expenses - Part of managing the wealth of your family is educating dependents on financial management, which includes discussions about their spending habits. This gives you an opportunity to teach them about how you built your wealth, so you can pass down values and work ethic.
  • Continually review and adjust - Revisit the plan regularly to adjust for life changes. You can ask a financial advisor to help lead these planning meetings with you and your family.

Selecting a Financial Advisor For Your Family

Choosing a financial advisor who understands your family's unique needs and values is critical. Look for advisors with experience in family wealth management, work with clients like you, and have qualities that align with your own. Check out our guide on how to choose a financial advisor.

Technology in Family Wealth Planning

Technology plays a significant role in modern wealth management, offering tools and platforms that make managing family wealth more efficient and effective. We’ll talk about some of the concepts that you should know about.

Tools and Platforms

Digital platforms offer families access to real-time financial data, analytical tools, and online estate planning services, making it easier to manage wealth in a complex financial landscape.

These can also include online banking platforms so you can quickly set up accounts for your children. Another benefit that has been created from technology is the ability to quickly monitor and manage accounts, debit cards, and credit cards that you might’ve set up for your children.

Download a Sample Family Wealth Plan

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You can download this sample wealth plan, print it out and hold yourself accountable!

Frequently Asked Questions about Family Wealth Management

Q: Why is family wealth management important?

A: Proper wealth management preserves assets, provides financial security for the family, facilitates the transfer of wealth across generations, and sustains the family legacy.

Q: What are the key elements of family wealth management?

A: Key elements include investment strategy, tax planning, estate planning, philanthropic planning, family governance, communication, and education of inheritors.

Q: How can families avoid wealth depletion over generations?

A: Strategies to preserve wealth long-term include communication, education, establishing a family mission statement, having a disciplined investment approach, and utilizing professional advisors.

Q: How much should high net worth families spend on wealth management?

A: Industry stats show wealth management fees range from 0.50% to over 1% annually for multi-million dollar portfolios. The optimal amount depends on services needed.

Q: What role should family members play in wealth management?

A: Family members should be communicated with openly and included in governance, investing, philanthropy, and estate planning to facilitate engagement.

Q: How can families resolve conflicts over wealth management?

A: Using a neutral third-party mediator, meeting regularly, involving younger generations, and agreeing on shared goals/processes can help prevent and resolve conflicts.

Q: What technology tools help with family wealth management?

A: Tools like aggregation platforms, encryption, specialized apps, data analytics, and digital document storage provide efficiency, convenience, and security.

Q: How do you select the right financial advisor for your family?

A: Look for an advisor experienced with family wealth management who understands your family’s needs and values and brings a team approach.


Family wealth management is more than just managing assets; it's about ensuring the financial well-being and legacy of your family for generations to come. By understanding its components, recognizing the benefits, and avoiding common pitfalls, families can create a comprehensive plan that meets their unique needs and goals. 

With the right strategy and support, managing family wealth can lead to long-term financial security and a lasting legacy.

purple graphic with text that reads "your family legacy" and a white icon of a big family of stick figure style graphic, 2 grandparents, 4 parents, 4 children


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