Stewarding Family Well-Being And Financial Well-Being Through The Generations

How Hawthorn, PNC’s Institute For Family Success guides the affluent to a longevity strategy

by Nicole Perkins, J.D. & Alexandre Monnier

The general impact of longevity has been well analyzed and documented. It started to change the way we live, impacting our families, our work, our educational system, our communities, and even our social contract. It will result in a complete rethinking of time and redefinition of the markers of life. 

However, longevity also impacts wealthy families in a unique way, which is often underestimated by families and advisors alike.

With increased longevity, multi-generational issues will become more complex. With not just three, but four generations sharing the wealth, staying together as a family will be more challenging than ever. Therefore, families will increasingly need to be guided through governance systems, leadership successions or even sometimes orderly separations.

The wealth-planning structure put in place years ago may not sustain the test of time and exponential complexity of multi-generational issues, and families may need help adapting their plans.

The purpose of each family’s wealth is likely to evolve, driven by various generational aspirations. We’re already witnessing a fundamental shift in this area.

The ‘Good Steward’

The previous family-wealth model was primarily focused on being a good steward and preserving wealth for future generations. The new model increasingly is focused on putting wealth to work during the owner’s lifetime. The emerging goal is to have an impact – be it on children, philanthropy, and the entrepreneurial spirit of the next generation or on any other causes important to wealth owners.

Preparing The Family for Wealth
In this context, the Hawthorn Institute for Family Success was launched to expand the traditional wealth management capabilities of Hawthorn, the ultra-high net worth arm of PNC. The objective is to help such families address complex issues like longevity, and more broadly, to advise those seeking to prepare their family for wealth and to enhance their family well-being.

Over the years, we have observed that families who thrive share four common traits:

• They spend purposeful time together to discuss issues associated with wealth
• They have a strong family identity that everyone can articulate
• They have an inner circle of families to learn from
• They seek outside guidance when needed

As a result, these families foster overall success, well-being and enjoyment. They inherently do the work to manage longevity by embracing inclusion and addressing conflict head on, rather than the next generation simply dismantling and rebuilding the first generation’s plan.

To help more ultra-high net worth families cultivate such traits and behaviors, we developed a suite of services to offer clients:

• Salons to share experiences with peers and a knowledgeable facilitator
• Workshops to gather with peers for structured and practical learning experiences
• Family assessments to evaluate a family’s well-being and identify opportunities for improvement
• Family retreats to engage as a family to better manage family success factors
• Coaching to help address family or individual challenges
• Legacy preservation to help capture and share a family’s legacy

Developing a Longevity Strategy

Those who focus on their family well-being as much as their financial well-being are equipped to address the challenges and opportunities they face, instead of shying away from them. In particular, often with the support of their trusted advisor, they can start to develop a “longevity strategy.” For professionals who are ready to take on the associated challenges, there is a compelling opportunity to become a true multi-generational advisor.

But, it starts with the courage to ask the tough questions about issues associated with aging and ultimately death, and to discuss them openly and frequently with the elders and their children.

Longevity will force families and their advisors to rethink the family enterprise. They will need to focus more on “soft issues.” This will ensure they communicate effectively and develop a shared vision for their future together, while engaging the next generation through education on responsible wealth ownership.

Most ultra-high net worth families are not willing or able to deal with these issues on their own. They need the guidance of more knowledgeable facilitators for resources and support. Some families also will need advice to re-engineer their planning. Financial planning will need to weather the test of unprecedented life expectancy. Wealth preservation alone won’t be enough to sustain the wealth through generations, and families will have to generate new cycles of wealth creation.

Advisors who successfully navigate longevity will be the ones who can advise and guide family members to learn sustained patience, while advising and guiding others to let go during their lifetime (which until recently, has been unnecessary). These advisors must also coach all family members on open communication, shared goals and working toward joint alternative plans.

Every complex issue needs a strategy, and longevity is no exception. The challenge will be finding enough experienced resources to develop and implement longevity or “family well-being” strategies” to guide ultra-high net worth families through this complex process, help them stay together across generations and achieve the purpose of their wealth.

For more information about the Hawthorn Institute for Family Success , visit here.