Families that succeed in cultivating an enduring legacy have certain qualities and habits in common, says Dennis T. Jaffe, Ph.D., an author and leader in the field of generational wealth research. First Republic’s Family Engagement and Governance team partnered with Dr. Jaffe to bring you lessons learned from thriving families that have continued to create value for more than three generations, based on his interviews with 100 families with large, global businesses.
What he found: With concerted action and specific steps, families can proactively strengthen their relationships and businesses so that they persist over decades and even centuries.
As you reflect on your own family governance and estate planning, these eight lessons can serve as a north star for building a legacy that grows stronger from generation to generation.
Explore these 8 lessons learned from enduring multigenerational families
Invest in your family relationships
Families are only as strong as the relationships within them. The most successful families invest in one another.
How to do it: Hold family assemblies where generations get to know each other, and use those gatherings to celebrate your heritage with younger generations. Bring family members together with shared philanthropy or another values-driven project.
Build on the values that make your family unique
A sense of purpose can transcend monetary wealth for each family member and successive generation. Embrace, define and share your values to build a resilient family culture.
How to do it: Share personal values across generations while also celebrating the legacy values of the family. Then, create family and business value statements that are lived and reflected upon as a family.
Take an open, collaborative approach to family leadership
While strong, singular personalities tend to lead family enterprises early on, multigenerational families are able to shift the nature of leadership roles as they transition to new generations.
How to do it: Invite family members — particularly the younger generations — to engage with the family business through activities like touring company facilities and meeting with key leaders. Show that you expect a high level of competence and professionalism of them from a young age. Encourage their active participation by always being transparent and asking for their ideas.
Establish boundaries between family and business
A family enterprise faces complex challenges. Those challenges are easier to navigate when the needs of the family and the business are balanced and equally well managed.
How to do it: Establish a family council responsible for priorities like family activities, philanthropy and education. Separately, create a professional board (or boards, depending on the complexity of the business) that is focused on keeping the business profitable and innovative.
Continually evolve and renew your business
Times (and business environments) change. Successful multigenerational families continually reinvent their enterprises along their journeys. Although no two family journeys are the same, they have four major transformations in common: harvesting, pruning, diversifying and grounding.
How to do it: Regularly perform SWOT analyses to more effectively identify when changes to the family enterprise are needed. Give the rising generation a seat at the table if they want it, but allow for all family members to pursue a different path if they choose.
Keep communication open and honest across generations
As younger generations grow within the family and more business professionals outside the family join the enterprise, healthy relationships with family leadership will keep the enterprise on the right track. It all starts with communication.
How to do it: Bring stakeholders of all generations and expertise into the fold. Ask what each group wants as you build a collaborative culture that supports continuity, as well as innovation.
Help young family members reach their potential
No asset is more valuable to a business family than its rising generation. Elders have the opportunity to invest their time, energy and resources into the future leaders of the family to sustain the family enterprise.
How to do it: Establish an ongoing family education program that enables family members to collaboratively learn more about the family’s values and its business. Provide young members of the family with opportunities to participate in the enterprise, find mentorship and plan for the lives and careers they see for themselves.
Find common ground in a greater mission
Multigenerational families seek more than wealth — they want to express their family’s values through philanthropy, corporate social responsibility and impact investing. Doing so can unite family members around a shared passion while engaging younger generations.
How to do it: Encourage family members to share their visions for a better world. Then, work together on philanthropic projects. Tie the mission of the business to social goals and values as you align the family’s actions to a brighter future for everyone.
Read 8 Insights From Long-Lasting Global Enterprising Families to dive deeper into the legacy-defining strategies of families with generational wealth.
First Republic Private Wealth Management encompasses First Republic Investment Management, Inc., an SEC-registered Investment Advisor, First Republic Securities Company, LLC, Member FINRA/SIPC, First Republic Trust Company, First Republic Trust Company of Delaware LLC and First Republic Trust Company of Wyoming LLC.
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