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Creating an Enduring Legacy

Blog Estate Planning Finance Financial Planning

Jonathan M. Gardey, MBA, CFA®, CFP®

President and Chief Executive Officer

For centuries, affluent families have pursued a dual mandate: cultivating financial wealth while nurturing the intangible assets of character and intellect that define their legacy. Time-honored strategies for safeguarding both prosperity and family cohesion remain as relevant today as ever. Yet, a sobering statistic reveals that only one in ten families successfully preserves wealth by the second generation of inheritors.1

The chasm between aspiration and reality is stark. Nine out of ten families witness a decline in both financial and human capital within two generations. This is often less a failure of financial planning than a breakdown in shared purpose. The consequences are profound: not just the dissipation of wealth, but also the erosion of a powerful force for positive societal impact.

Research has identified key principles that correlate with successful wealth transfer. While financial expertise is essential, it is equally crucial to address the broader dynamics of family unity and shared vision.

Building a Legacy of Trust

Families aiming to pass on values and traditions must adopt leadership and communication structures similar to those in successful businesses. In top-performing companies, leadership fosters a transparent atmosphere of trust and shared purpose by ensuring open communication and making employees feel safe to express themselves. Families looking to build enduring legacies must do the same.

Planning for the Intentional Use of Wealth

That is why it is critical for families with legacy ambitions to have a well-conceived plan anchored by a strong vision of what they want to have happen. A strong vision incorporates the family’s values, its mission or purpose, its unique abilities, traditions, and the principles that will guide future decisions.

Essentially, it requires planning well beyond the numbers to capture the true intent of a legacy and its meaning for every member of the family. Much of the upfront planning focuses on clarifying and solidifying the vision by answering some penetrating questions:

  • What does having wealth mean to you in terms of your beliefs and attitudes regarding family, health, security, and service to others?   Why are they important to you?
  • What would you want to be able to say about your family? What would you want other people to say about your family?
  • What are your ambitions, and why are they important to you?
  • How would you like to use your wealth to create the most shared economic value for your family, the children of your children, and your community?

More critically, the vision must be communicated and revisited often as it becomes the beacon that draws family members and generations together. It forms the preamble of a family constitution that governs family decisions in matters of finance, administration, communication, lifestyle, community, philanthropy, education, investments, as well as the family business.

The key to creating an enduring family constitution is the process in which all family members have a role, and individual aspirations are set aside but respected. And, like our country’s constitution, it is ratified by affected family units and leaders within each generation. Only then, will it be fully embraced as the source of governance through transitions and the emergence of future generations.

Preparing the Family to Embrace the Legacy and the Values Behind It

A study by Roy Williams and Vic Pressier of 3,250 families who lost wealth across generations reveals a stark truth: communication and trust, not financial acumen, are the primary culprits. Over 60% of respondents blamed breakdowns in these areas, while only 3% cited poor financial management.2 The lesson is clear: while financial planning is crucial, it is insufficient without a strong family foundation.

Building trust and open communication is a complex endeavor requiring deliberate effort, shared responsibility, and often external guidance. Families committed to preserving their legacy understand this and invest in strategies to foster these essential elements.

We Can Help Preserve Your Lasting Legacy 

The principles for successfully maximizing the transfer of assets are well-defined and expertly applied by many wealth managers; however, the guiding principles for preparing family members and future generations for the emotional transfer of values and beliefs are often neglected. Family legacy planning focused on strategies is critical to ensure the intentional use of wealth and the perpetuation of a purposeful legacy.

At Gardey Financial Advisors, we can provide expert insights and personalized strategies designed to help you develop your lasting legacy plan. We’re here to help your loved ones become responsible and committed stewards of their inheritances, so you can be sure your hard-earned wealth is preserved from generation to generation. Connect with our team today to learn more about how we can help.


Sources:

1 8 Generational Wealth Myths That Are Holding You Back

2 Williams, Roy and Preisser, Vic. “Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values.” 

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