Fostering a Thriving Family Culture

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You might assume keeping wealth in a family is easier than growing it in the first place. But the data suggests a more complicated story. Of the original Forbes 400 list of the wealthiest families in America in 1982, only 17 remained in 2022 Perhaps we shouldn’t be shocked. After all, most cultures around the world have a proverb similar to the English-language adage, "shirtsleeves to shirtsleeves in three generations," to describe the reality that family wealth is often gone just two generations after it was created.

While the challenges and complexities of maintaining wealth are real, our experience working with hundreds of families and their wealth planning strategies paints a more hopeful picture. Families that are intentional about defining generational success—and adopt aligned practices—are more likely to achieve it. These families communicate effectively, build deep trust with one another and make better shared decisions as a result. Private Banking has a substantial role in this.

The key is building a rich family culture that allows individuals to feel connected to—but not restricted by—the stories, sacrifices and values that helped them achieve financial success. To remain welcoming and appealing to future generations, families should endeavor to create a culture that is flexible enough to change with the times and with their family.

While thriving may look different from one family to the next, we have found there are some universal characteristics of thriving families. Namely, they support the purposeful development of each family member and their collective ability to generate value over time. For those with significant financial resources, this pursuit becomes easier in some ways and more complicated in others. Our experience, and a growing field of research, has shown the most successful families are rooted in their family lineage, demonstrate generosity and continuously invest in their human capital. These families adopt policies and practices (governance) to implement and sustain this behavior over time.

Rooted in the past with an eye way into the future

Whether you know your family history dating back many centuries or just have stories passed down from the previous generation, a hallmark of a strong family culture is a deep connection to those who came before. As a matter of fact, in his book, "The Secrets of a Happy Family," Bruce Feiler cited research from Dr. Marshall Duke, a psychologist at Emory University, showing that children who know their family history have more clearly defined values and demonstrate more resiliency throughout their lives.

Gratitude for what you have and generosity in how you give

Another characteristic of thriving families is generosity. Fortunately, it is a trait that can be developed and fostered, through practices of gratitude and expressions of thanks to those who have played a part in your family’s journey. Developing a deep sense of gratitude in childhood has been shown to produce higher grades, increased life satisfaction and social integration. It also is a common motivator for involvement in philanthropy, which is a common practice of thriving families.

Invest in the unique human capital of the family

While we include continuous value creation as a cornerstone of thriving families, we broaden the definition of value creation beyond contributions to a family business. Our definition includes personal pursuits in education, the arts, business and philanthropy—in other words, contributions to society.

Many thriving families have effectively shifted their goals from those championed by the prevailing achievement culture and replaced them with a focus on continuous learning. This culture stands on the principle that your ability to learn is more important than what you know, and that exposure to new thoughts and ideas is meaningful. For families thinking ahead multiple generations, this is required, as we cannot predict and prepare for the challenges we haven’t yet thought of.

According to "Four Pillars of Capital for the Twenty-First Century," a report conducted by the U.K.-based multi-family office Stonehage Fleming, families with an intentional stewardship culture invest their financial capital in ways that grow the nonfinancial forms of capital of the family. These forms of capital are defined as follows:

Intellectual capital

The accumulated skill, knowledge, experience and wisdom that a family can apply to the management of its wealth, its contribution to society, the individual fulfillment of family members and the collective well-being of the family.

Social capital

The ways in which the family relates to and engages with the communities in which it lives and operates. This includes social positions and the networks that help the family to use its wealth and other assets to the benefit of society and good of the family.

Cultural capital

A family culture brings the family together by identifying shared perspectives and themes in the way family members conduct their lives, their approach to business, the way they treat others, the way they contribute to society, their attitude to wealth, and the things they value.

Role of dynamic governance

To sustain family culture from one generation to the next, families typically require some form of rules of engagement. This may include the development of a family mission statement, role clarity and preparation, representation structures, policy-based decision-making, and conflict resolution. It also requires communication, often in the form of family meetings, so there are regular opportunities to evaluate and re-adopt these rules.

Building and maintaining a thriving family culture is a demanding yet worthwhile task. Fifth Third Family Wealth Services was designed with these complexities—and families like yours—in mind. Our team helps clients explore these topics in the context of their unique family circumstances and adopt policies and practices that will help them achieve their long-term goals for family success.