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A Family's Wealth Consists of its Intellectual Assets More than its Financial Assets

Posted by Jamie Downey  March 30, 2009 08:56 AM

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When most people talk about family wealth, they concentrate solely on financial assets. Their thinking consists of generating financial assets, investing them, protecting them, creating trusts and estate vehicles, etc. Few of the people I have met over the years consider the need to develop the intellectual capital of future generations. They rely on the schools and universities to perform this function. However, it is the creation of intellectual capital that elders should pursue to ensure the success of the family.

If the patriarch and matriarch of a family concentrate solely on the generation of financial assets and transferring it to future generations, they are not likely to make a lasting impact. Financial assets created by grandparents will likely be fully exhausted during their grandchildren’s life time. In many cases, the financial assets will not even reach their grandchildren. This is true even for multi-million dollar estates.

The head(s) of families should concentrate their efforts on the development of goals and intellectual capital of their future generations. Elders in a family need to help the younger generations find worthy goals. Elders should teach their offspring that the biggest secret to generating financial assets is having clearly defined goals. With these goals in place, then one can seek the intellectual capital needed to attain these goals. Financial assets are merely a tool that can be used to aid in these pursuits. Too many students enter college unsure of what they want to do, and let chance run their lives. This is neither a recipe for success nor what any parent wants for their child. As Yogi Berra once said, “If you don’t know where you are going, you may end up somewhere else.”

A family’s intellectual capital will determine its wealth and financial assets. By understanding this, older generations can help younger generations develop their goals and nurture their intellect. With these things in place, one can be sure that the family’s wealth will be preserved. The Chinese proverb is quite correct: “Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for the rest of his life.”

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D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of CardHub.com, a credit card and gift card marketplace, and WalletHub.com, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

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