Intentional Financial Mentoring for the Next Generation

You’ve built considerable wealth over the years, carefully managing and growing your assets, perhaps following a comprehensive financial plan customized for your unique objectives and circumstances.

As you contemplate transitioning these assets to the next generation, now is the time to put in place a thoughtful, proactive strategy to help prepare your heirs to be good stewards of the family wealth you’ve worked hard to build. Many wealthy parents face the same situation, seeking to strike a workable balance between guiding their children on how to oversee the family wealth, and giving them the freedom to make their own decisions.

However, sound decision-making is not something that emerges overnight. Being intentional and starting the mentoring process well in advance of an anticipated wealth transfer, better positions your children for success down the road. Bear in mind that responsible stewardship of wealth is equally the duty of the one(s) transferring it and the one(s) receiving it. Each party plays a crucial role in helping to ensure that this wealth serves its desired purpose for years to come. 

Nurturing the future stewards of wealth

Education is one of the most important foundations for helping your children become competent stewards of family wealth. Teach them the fundamentals of responsible money management, such as effective ways to save and spend, how to create and adhere to a budget, how to invest wisely for long-term growth, and how to maximize tax efficiency. You don’t have to dive into great detail; depending on their age and previous exposure to (or interest in) the subject matter, too much information could be overwhelming. 

Start with the basics, gauge their current knowledge, fill in the gaps where possible, and always encourage questions or conversations about any topics they raise. If you’re not an expert on money management, there are many reputable online resources to support your efforts. In addition, a Corient Wealth Adviser has the training and skills to help you enhance your children’s financial literacy. More on that later.

You might also find it helpful to plan personal mentoring sessions to discuss your own family’s situation and your long-term vision for wealth and your legacy. Share the story of how you built your wealth, perhaps going back a generation or two if that’s when the family wealth truly began taking shape. The children need to hear how much hard work, discipline and sacrifice went into earning and protecting this money. Let them know about your failures and your successes, to give them a fuller picture of your financial journey and what you’ve had to overcome to get to where you are today.

Not only will your mentoring help the next generation prepare for their financial responsibilities ahead, but reflecting on what constitutes effective wealth custodianship may help you gain greater awareness of your own values and attitudes toward wealth. It’s a lot to think through, which is why, in addition to the expertise of Corient Wealth Advisers, we have a specialist team that supports families around the world as they navigate the mentorship process.

Considerations for business owners

If you own a business, share the timeline of how you built it. It may be a good moment to test the waters regarding their interest in taking over the family business when the time is right. If there’s curiosity about what business ownership involves, you’ll need further conversation around the details of how to operate the business successfully, both from financial and people-management perspectives.

Whether or not you own a business, a primary goal of preparing children to oversee family wealth is to instill in them strong leadership and decision-making abilities. You want them to be confident when facing the many financial challenges that will inevitably arise. Consider role-playing exercises, putting them in a position to lead as you present difficult but plausible situations. 

Again, the depth of these exercises will be age dependent. You can observe how they propose to handle financial challenges, then coach them on how you would address the situations. Allow for plenty of dialogue as you mentor them on what you believe is the correct path and afford them the opportunity to make their own mistakes and provide their own input and ideas. You want to empower them to learn, grow and build on their knowledge base over time, eventually reaching the point where you can safely trust them to manage the family wealth effectively and independently.

Count on Corient for leadership

Mentoring your children to become good stewards of capital is a complex and iterative process. The stakes are high and you want your children to succeed. Corient is ready to support and guide you at every step. 

Corient Wealth Advisers are amply equipped to help families understand and implement what intentional mentoring and leadership look like in practice. They will work with you to develop a customized approach to mentoring your children on important financial matters. They can even be directly involved in the process and help educate your children on effective investing and overall money management. 

For years, we’ve been entrusted by ultra-high-net-worth families to manage their wealth and prepare well for effective wealth transition between generations. Contact us today for more information.

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