This past month I attended a meeting of licensed financial advisors who are connected by the Kingdom Advisors organization. The main part of the meeting involved a recorded talk that unpacked “Eight Principles of Effective Wealth Transfer.” We were told that effective wealth transfer involves living by certain principles in order to pass values to the next generation, not just valuables.
- Principles are fundamental truths or propositions that serve as the foundation for a system of belief or a behavior – a basic truth or law. Principles are objective.
- Values are the regard that something is held to deserve, one’s judgment of what is important in life. Values are subjective.
I was struck by the honesty of this session and wanted to share some of the principles and values for effective wealth transfer with you here:
Work – This principle stresses the importance of passing along the value of work to the next generation. Helping your children, grandchildren and others in the community who may not have good role models, appreciate an honest day’s work and how their work benefits society, as a whole, will help them to better grasp the value of money.
Blessing – This principle points out that each person’s talents are enduring and unique. Children need to know that parents are committed to helping them fulfill their purpose, and using their unique gifts to make the world a better place. When your children can identify their unique gifts, they better understand how they fit into the world and the legacy that those gifts can leave for future generations.
Gratitude – This principle emphasizes what is right in one’s life, not what is wrong. The opposite is ingratitude, or a level of expectation of what the world “owes” you. Studies show that grateful people are happier and more satisfied with their lives and social relationships. They are more supportive and forgiving than those who are ungrateful. They are less envious, depressed, anxious and stressed. Being thankful for all the gifts – great and small – of this world helps us all to live healthier and happier lives.
Success – “The ultimate good in life is to treat things according to their true value,” says 17th Century Theologian Jonathan Edwards. We spend money and time on what we value. If we buy into our culture’s value system, we will miss out on the joys of knowing God’s best intentions for this life. We become conformed to what we most love and value. We can easily degenerate into manipulating people to get what we think we want. We become driven to accomplish rather than to spend quality time with those we love. Helping our children and those we love to appreciate true success in work, family and spirituality, will make their lives richer in countless ways.
We transfer three types of capital to our children and grandchildren: financial, social and spiritual. These three types of capital comprise the true character of a person. What we do with this capital can affect our posterity for generations to come.
You may be familiar with the American Proverb, “Shirtsleeves to shirtsleeves in three generations.” Or the Scottish Proverb, “Father buys, son builds, grandchild sells and his son begs.” Each of these Proverbs serves as a reminder that a family fortune rarely lasts beyond three generations.
If advisors are aware of the three types of capital that their clients pass onto their children and grandchildren, they can help guide their clients to avoid the “three generational disaster.” If we teach principles and values to our children, their financial, social and spiritual capital serve as our living legacy.
Setting up your family to thrive beyond three generations, not just with valuables, but also your values, is the end game. Do you want your children to have values or valuables? If you don’t give them values, the only thing they’ll get is valuables – and valuables, all by themselves, is really just a “booby prize.”