We believe your family's true wealth is more than money in the bank. It is also the culmination of people, knowledge, culture, and relationships that you have developed over a lifetime. Hidden in plain sight, too few black families pause to consider how each form of family capital is an integral part of present and future success.
Before you can build that type of wealth, you must first understand exactly what areas you need to improve on as a family unit. In this article, we'll discuss four different capitals that work well with each other to create a family dynasty that will grow in wealth for many generations to come.
Financial capital is obvious. It is the conventional forms of wealth - your family's cash, investments, real estate, and business interests. These assets form the foundation of your opportunities, and the means of extending your legacy. They deserve careful attention, proactive planning, and quality investment management.
Human capital encompasses the people in your family - their relationships, health, happiness, talents, and potential. There is no single aspect of your family's wealth more important than its people, because nothing puts your financial assets at greater risk than poorly developed human capital.
Intellectual capital is the values, traditions, history, and culture of your family. It is the education, reputation, and life experiences of your family members. These are the things that give your family its distinctive identity. These are the things that, if nurtured and passed on, can ensure the success of future generations.
Social capital is the impact you make on society through your efforts, donations, leadership, and sacrifice. It is an asset that does not show up on your family's own balance sheet, but one you deserve credit for nonetheless. Development of social capital becomes an outward expression of your family's values and the instrument of your long-term legacy.
It is never too early to take stock - as children grow up and patriarchs grow older, as retirement nears and business transitions approach, as you decide what to do with the rest of your life and consider your family's future and your long-term legacy.
We recommend hiring the services of a wealth management company. It is their job to help you identify, capture, and capitalize these intangibles. At a minimum, this means making sure that every strategy being employed with your financial capital passes the litmus test of having a positive effect in each of the other areas. It could also call for specific strategies and services - documenting a family history, facilitating family meetings, planning for succession in a family business, or developing the mission for a private foundation - that will help you protect and grow each area of your family's wealth.