This is a guest post by Brannon J. Fisher, CFP® at Simon Quick. Brannon is a fourth-generation inheritor who lives in Colorado with his wife and teenage daughters. He focuses on preserving wealth for future generations and works directly with high net worth clients to develop and implement their investment and financial planning goals. Connect with him on LinkedIn or via email.
If family wealth is to survive over many generations, each new generation must respect the assets earned and passed down from previous generations. This requires that family patriarchs and matriarchs teach responsible stewardship of the family fortune to their children and grandchildren.
To do so, families must be proactive when it comes to educating younger generations about things like capital preservation, philanthropy, and the importance of giving back. Children and grandchildren often need to learn to view inherited family wealth as a means to do good.
Why Responsible Stewardship Education is Important
Unfortunately, responsible stewardship isn’t something that comes naturally for many people, especially those who are younger. This is why educating younger generations about stewardship is so important. Children and grandchildren often need to be taught about the hard work and sacrifices that went into building family wealth. When they understand what it took for their parents and grandparents to accumulate this wealth, they are often more likely to appreciate their inheritance and view it not as a “free” gift, but as a sober responsibility.
As you teach stewardship to younger generations, stress the importance of adhering to the family’s mission statement and investment policy statement. Perhaps these documents will guide inheritors to preserve and grow principal in order for them to leave even more assets to their children and grandchildren than they received.
So, when is a good time to start teaching children and grandchildren about responsible stewardship? Every situation is unique, and it usually comes down to how mature kids and grandkids are; some can start grasping the concepts of stewardship in early childhood, while others need a little longer. The most important factor is that stewardship lessons begin before any assets are transferred to them.
The Three T’s of Stewardship
As you prepare to teach younger generations about responsible stewardship and generosity, remember that stewardship includes being responsible for more than just the management of assets; it involves the responsible allocation of one’s time and talents, as well as treasure. A true philanthropist gives more than just their financial wealth.
Time
Encourage children and grandchildren to invest their time and energy in causes that go beyond themselves. Challenge them to adopt a cause or charity that’s meaningful to them, roll up their shirtsleeves, and get involved. It doesn’t matter what the cause is—serving at a soup kitchen, picking up trash in a local park, or going on an overseas mission trip with their church—all are great ways that kids and teenagers can invest their time.
Talents
Similarly, prompt kids and grandkids to put their unique talents to work serving others. If they have musical talent, suggest they perform for the residents of a local assisted living or nursing home. If they have artistic talent, they could create artwork and donate it to a silent auction to raise funds for a particular cause they’re passionate about.
Treasure
One of the best stewardship and philanthropic lessons to teach younger generations is the value of percentage giving on a consistent basis. Instead of just giving away money haphazardly or when certain needs arise, this method takes a more strategic approach. It focuses on giving away a percentage of income or assets on a regular basis, and in support of specific organizations that have been vetted for their alignment and effectiveness.
For example, many people give away 10% of their gross income (or a tithe) to their church or other religious institution. The giving doesn’t have to be religious in nature, the important thing is to get kids and grandkids in the habit of giving consistently. As their income and assets increase over time, so will the amount of their gifts.
Create a Plan Now
If you don’t have a plan in place now for teaching responsible stewardship to future generations, talk to other leaders in your family about creating and implementing one. This could end up being one of the most important things you ever do to preserve your family legacy and wealth for the long haul.