This whitepaper is intended for the family steward. It is meant for the investor who seeks to actively manage their wealth with the aspiration of providing future generations with not only continued economic success, but also a framework for personal and professional development. If that is you, then whether your holdings survive your grandchildren has less to do with finding the right firm to manage the family trust and more to do with your family’s personal involvement in investment practices and their overarching life values and attitudes. Though seemingly obvious, this is a point worth emphasizing and unpacking. Too often families depart from the core business practices and fundamental life outlook that their forbearers relied on to generate the family wealth in the first place, giving way to the proverbial maxim “shirtsleeves to shirtsleeves in three [or four] generations”. This paper advises families on how to avoid this outcome. Specifically, it:
- Illustrates that passive investments alone are not enough to sustainably secure family wealth;
- Assesses why it pays to be a creator, rather than just a funder, of value in an enterprise;
- Identifies direct investing as a dominant strategy for not only for adding and capturing enterprise value, but also conveying cost conservatism and business savvy to the family’s ethos and lifestyle;
- Lays out options for investing directly, describing corresponding tradeoffs; and
- Outlines the skills and mindset necessary to develop future generations of value creators.