What is Generational Wealth and How Do You Preserve it?
On this episode of A Wiser Retirement Podcast, Casey Smith and Brad Lyons, CFP® introduce a special guest, James E. Hughes Jr., author of Family Wealth: Keeping it in the Family. Hughes talks about how to create a family covenant, the hierarchy of a covenant, the Rockefeller legacy story, and how to structure a team that will work in your best interest. He also discusses some main points from his book, Family Wealth: Keeping it in the Family.
The first step to creating a family covenant is making sure you see your wealth as your well-being. This will help you to look at your wealth differently and sustain it. Another important part of building a covenant is making sure your family can make decisions together. This is pertinent to the success of a family covenant. You must agree on a family goal and make joint decisions. Once you think about your family’s aspirations, agree on a common objective, and turn it into a covenant.
Hierarchy of a Covenant
The hierarchy of a covenant starts with the grandparents as mentors. Then, the next generation is the managers; they work on the day-to-day tasks of building a family legacy. A family needs to work together as a unit. On holidays when the whole family is together, try to make it a point to review your family’s covenant. Repetition is critical for the next generation to carry on the covenant.
Hughes explains at reunions or holidays his family goes around the room and tells stories about the most influential elder in their life and what they have learned from them. This helps grow capital in their family.
The Rockefeller Legacy Story
Hughes explains how the Rockefeller family has flourished due to supportive family members, dream-chasing, and hard work. The Rockefeller family is a powerful story because it shows that each generation must act like the first generation and go after their dreams. Without John D. Rockefeller’s support of his son, the family would not be well-known for their philanthropy and their legacy would be completely different.
The Story – John D. Rockefeller, founder of the Standard Oil Company, retired in 1896. Once he retired, his son John D. Rockefeller Jr. stepped into his father’s role in the business. John D. Rockefeller Jr. quickly decided he wanted to chase his dreams and dedicate his life to philanthropy. He had a conversation with his father, and his father was not only supportive of his son’s idea, but he also wanted his son to help him set up the Rockefeller Foundation. Today, the Rockefeller family is well-known for their philanthropy.
How to Structure a Team for Building a Legacy
The most important thing when building a team is that the people you choose should not be experts with egos. Choose people who will leave their egos at the door and work in your best interest. Because every family is unique, it is important for your team to see your family as a unique system and not compare you to their other clients. Look for people who ask about your aspirations and truly care about your future success.
The James E. Hughes, Jr. Foundation
The James E. Hughes Jr. Foundation, created by Hughes’ close friends, is a non-profit organization dedicated to generational well-being. The purpose of the foundation is to help families flourish so they can help society flourish. Click here to learn more about The James E. Hughes Jr. Foundation.
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