There is a widespread belief that adults make around 35,000 decisions a day.
This intangible tally ranges from the inconsequential, like choosing what to wear to a wedding or where to sit in a meeting, to the crucial, like choosing where to buy your first home or when to start collecting CPP and OAS payments.
Granted, children’s choice between airfare chicken-or-beef or whether to vacation in the Dolomites or Dubai this spring are hardly points of interest for parents.
But what if an adult inheritor never learned to make difficult and critical decisions? How will they steward the family legacy with deliberate governance that’s been refined by real-world experiences?
Decision-making is an indispensable skill. It involves evaluating information, considering the consequences, and choosing a course of action. Learning from a lifetime of choices can bolster confidence, ensuring that your heirs are not just beneficiaries but custodians of your family’s hard-earned wealth. It empowers them to make their mark on the world, guided by the values you hold dear. More than simply a transfer of assets, succession planning is the passing on of values, responsibilities, philanthropic ideals, and the ability to make strategic, informed decisions.
THE PITFALL OF MAKING ALL DECISIONS FOR YOUR HEIRS
While it's natural for parents to want to shield their children from failure and hardship, doing so may inadvertently deprive them of the opportunity to learn from their mistakes. When heirs are not allowed to make decisions and face the consequences, they miss out on valuable learning experiences. This lack of experience can leave them ill-prepared to manage their inheritance effectively when the time comes.
THE BENEFITS OF LETTING HEIRS MAKE MISTAKES
Allowing heirs to make mistakes and learn from them has several benefits:
Develops Critical Thinking
Making decisions and dealing with the outcomes can encourage heirs to think critically and evaluate options carefully.
Builds Resilience
Learning to bounce back from mistakes builds resilience, an essential quality for navigating the complexities of wealth management.
Fosters Independence
By making their own decisions, heirs develop a sense of independence and confidence in their ability to manage wealth.
Teaches Financial Responsibility
Experiencing the consequences of financial decisions firsthand teaches heirs the value of money and the importance of responsible management.
STRATEGIES FOR HNW FAMILIES TO FOSTER DECISION-MAKING SKILLS
Start Early
Introduce the concept of decision-making early on by allowing children to make small, low-stakes decisions about their lives.
Encourage Financial Literacy
Provide heirs with education and resources to understand financial concepts and the implications of their decisions.
Share Experiences
Discuss your own decision-making processes and outcomes, both good and bad, to provide real-world context and learning opportunities.
Set Up a Safe Environment
Create a safe environment where heirs can make decisions and mistakes without fear of severe repercussions.
Involve Heirs in Family Wealth Planning
Engage heirs in discussions about family wealth management, tax strategies, estate planning, and philanthropy to give them a stake in the family's financial future.
BOTTOM LINE
Preparing heirs for the responsibility of wealth management goes far beyond financial education. It requires instilling in them the ability to make confident decisions and learn from their outcomes. Remember, the goal is not to prevent mistakes but to use them as opportunities for growth. In doing so, you can ensure that your heirs are not only ready to inherit wealth but also to manage it wisely for generations to come.
SANDSTONE has a long legacy of specializing in family foundations, with some of our clients in their third generation trusting our expert guidance. If you have any questions or would like to connect, please give us a call.