Five ways to create multi-generational wealth

Creating multi-generational wealth isn't only about finances and investments to last across lifetimes, it's about considering and utilising various forms of capital.
how to create multi generational wealth

What you need to know

  • There are five capitals of wealth that all families should be aware of and build.
  • Human resources are one of the most critical capitals as it identifies each family member’s skills and places them accordingly, but there are other, more intuitive types to consider.
  • Financial capital might intuitively feel like the source of wealth, however, money is preserved by other actions outside of just commercial or financial investment decisions.
  • Intellectual, spiritual and social capital all take the larger identity, values and knowledge of the family into account as well and are crucial for future-proofing.
Operations Updated on October 21, 2022

In the last few years, we have seen a rise in money. Technology and its advancements have brought about many more high net worth and ultra-high net worth individuals. Data researched by Trading Platforms UK indicates that 70% of the top ten wealthiest people amassed their wealth from the technology industry as of March 1, 2021. The top ten wealthy individuals control a fortune of $1.14 trillion in total, with tech players accounting for $855.9 billion.

In the world of wealth planning and future-proofing wealth, the current cohort of wealthiest is most likely in the first generation of wealth. However, we all have seen and heard the statistic and old age cliche’s “shirtsleeves to shirtsleeves in three generations”. This adage, which describes the inability of grandchildren to manage the wealth passed down to them from their grandparents and parents, has hung over the world’s highest net-worth families for decades, threatening the continuation of family legacies. According to the Family Business Institute, only about 30% of family businesses survive into the second generation, 12% are viable into the third generation, and only about 3% of all family businesses operate into the fourth generation or beyond. Many may think they are immune to this because the companies become so big that it feels impossible to fail. However, we all know that nothing is impossible. The Titanic was touted as a ship that could never sink, yet unfortunately, its fate proved otherwise. When speaking to family offices and family wealth, it’s crucial to start future-proofing the business and to create multi-generational wealth that goes past just three generations.

About the Authors

Tsitsi Mutendi

Tsitsi Mutendi

Succession & governance

Tsitsi is an award-winning entrepreneur and consultant for family business and offices. As a third-generation family business owner, Tsitsi has extensive experience in international business and family business dynamics.

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