It’s not all about the money

Often, wealth is defined or associated with using financial dollars or net worth as the calculator for success. The more you have, the wealthier you are. Unfortunately, when the financial aspect of one’s wealth is the sole focus and other aspects of your life and well-being are secondary, we risk losing sight of four other forms of capital that support succession and creating healthy generational wealth transfers.

Before introducing the four other forms of wealth/capital, ask yourself who in your life was a great mentor and had a positive impact on your family or career. Do you remember their net worth statement or do you remember them based on who they were and what they stood for? In other words, their work ethic, values and beliefs are typically what make an impact on your life. Obituaries are written with descriptions of the person’s character, how they were involved in their community, and lists the family members that will remember them.

When thinking about the next generations to come, passing on financial assets is one piece of the puzzle. There are also intellectual, social, human, and spiritual capitals of wealth that are critical to completing the puzzle.

Intellectual: Formal and informal education, experiential knowledge/wisdom

Social: Network of relationships inside and outside the family, and the quality of these relationships

Human: Passions, likes, interests, gifts and internal “wiring” of a person

Spiritual: Our values, our purpose, our faith and the courage to live them out

Financial: Assets, liabilities or ownership equity on net worth/balance sheet

James E. Hughes equates that financial wealth is only as great as your wealth in the other four capitals, defining your wealth as your well-being. Building and stewarding wealth is supported by how well the family views the importance of its intellectual, social, human and spiritual capitals. If a family can foster an environment of continued learning, collectively and individually, encourage joint decision making (evolve internal governance), empower self development and intentionally discuss values, beliefs and purpose of the wholistic view of wealth, everyone will thrive. This creates a bigger purpose when everyone has alignment and understanding of how the family wealth is integrated and how their individual contributions are significant.

So, its not all about the money. Wealth is much much more. Your wealth is your well-being.

There are some tactical steps you can start taking to help discover, develop and preserve the other areas of capital within your family. Family meetings are a great way to start having more formal discussions about pertinent topics. Setting the agenda and considering a third party to facilitate them may be necessary. Working on family get-togethers that celebrate the family values and purpose as opposed to bringing this up at family dinners. Learning through attendance at various forums on family office/wealth planning, governance, succession/estate planning and philanthropy.

If you are curious about understanding more about incorporating the five capitals of wealth, I would encourage you to give us a call.

Five Capitals of Wealth	Description	Examples
Intellectual	Formal and informal education, experiential knowledge/wisdom	Life experiences, career growth/ambitions, academic achievements, financial literacy and mentorships
Social	Network of relationships inside and outside the family, and the quality of these relationships	Quality of relationships, ability to make collective decisions, conflict resolution process
Human	Passions, likes, interests, gifts and internal “wiring” of a person	Finding meaningful work, sense of purpose or identity within the family system, defined goals
Spiritual	Our values, our purpose, our faith and the courage to live them out	Beliefs, traditions, family sayings, lifestyle, understanding the family journey to wealth (family history)
Financial	Assets, liabilities or ownership equity on net worth/balance sheet	Liquid securities, real estate, heirlooms, insurance policies