As a wealth manager, we see clients from many backgrounds and with varying needs and views. In my experience, one situation that can sometimes arise is what I call ‘the burden of inheritance’. Given everything that is going on in 2020, I am very aware that this is the literal definition of a ‘first world problem’ however that should not prevent us from talking about it. This feeling of a burden can sometimes be a real issue that clients struggle to open up about. I would like to raise the issue in this article in the hope that it might be of help to someone in this position.
We should start with the high-level view. Wealth should be an enabler - it should be empowering. What it should not be is something that clients dread dealing with – the responsibility, the large numbers and the complexity can all be off-putting. However, it doesn’t have to be that way.
I often remind clients that wealth is essentially the vehicle you use to do what you want in life. You can be as hands-on or off as suits you. In the UK we have a fantastic financial and investment advice profession that can guide you through the decisions needed. Note, we cannot always give you the answers as every individual and family is unique, but much like a good coach or mentor, we can ask the right questions and explain often complicated concepts in more straight forward terms.
So if you find yourself in the fortunate position of receiving a large inheritance or being in control of a large amount of family money and this is followed by a feeling of pressure and stress from this new responsibility, here are my three top tips:
- Keep it simple. It can be very easy to make things too complicated in the investment world. It might sound like clever planning at the outset to have numerous different investment vehicles, providers and strategies- and from a technical perspective that may well be true. However, remember our original point made above - wealth should be empowering and for most clients, it should not become a full-time job to manage (that is what you have advisers for) and should be something easily understood. The numbers may be large but that does not mean you should need an economics degree to understand what is going on.
- Flexibility. Life changes and so do the needs of you and your family, often in directions you could not have predicted at outset. Having an arrangement that is flexible can be very useful. When considering your investment setup and strategy, consider factors such as accessibility of capital, liquidity (i.e. how quickly cash can be realised), and whether capital can be given to different members of the family at different times, to name just a few
- Communication is key. Quite often with inheritances and family wealth more broadly, there can be multiple stakeholders to consider. This can be as simple as just your children or as complex as including the children’s spouses, grandchildren and other perhaps more remote (but closely connected) family members. Whilst complete disclosure is often not required, a sense of the overall objectives and guiding principles for the family wealth is something that should be understood within your inner circle. I often find that a regular family investment meeting can be very useful and is something that your advisers can organise and chair if you like. This also helps share the load of any tough decisions and responsibilities.
In conclusion, there are many paths to managing wealth, but they should not feel like a burden. If you are in this position, there may well be areas we can help you with to enable management of the funds in a more positive light. Whilst the technical side of managing investment portfolios is a skillset we have had rather a lot of experience developing during this firm’s 200+ year history, a vital extra resource we often add is the soft skills around the points made here.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
The burden of inheritance
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