Personal legacy planningFamily capital: What it is and how to build it

Key things to know

  • Family capital, beyond financial assets, is a critical influence on intergenerational wealth continuity.

  • Lack of investment in family capital may lead to family disputes and diminishing wealth.

  • Communication, financial literacy and a philanthropic strategy are key to building and transferring family capital.

When they hear the word “capital,” most people probably think about financial assets. But there’s another type of capital that’s just as important for families with significant wealth. This is sometimes referred to as family capital.

Wealthy families tend to focus mainly on the financial side of the equation. But those that invest in family capital are usually more successful when it comes to transferring wealth from generation to generation. In fact, investing in family capital may be just as important as growing financial capital.

What is family capital?

Tom Thiegs, senior leadership and legacy consultant with Ascent Private Capital Management of U.S. Bank, defines family capital as “the knowledge, skills, experience and talent possessed by family members, as well as their unique perspectives, that goes beyond financial assets. Investing in family capital contributes directly to the preservation and transfer of the family’s financial capital to future generations.”


“Investing in family capital is critical to maintaining and growing assets, as well as the evolution of what a family does, especially a family business.”

- Tom Thiegs, senior leadership and legacy consultant, Ascent Private Capital Management


Family capital may include the following:

  • Individual capital: Each family member’s personal strengths and talents.
  • Collective capital: Family members’ collective support for each other.
  • Community capital: The family’s collective contributions to the local community.
  • Spiritual capital: This can take different forms and drives the family’s ethos and values.

“Learning and education can be a vehicle to share family values and expectations from one generation to the next,” says Thiegs. “The best family education plan strikes a balance between formal learning opportunities and informal conversations.”

Family capital is critical to intergenerational wealth continuity

According to John Haggard, leadership and legacy consultant with Ascent, making a conscious effort to transfer family capital to future generations is critical to intergenerational wealth transfer.

“Generational wealth can vanish if families don’t invest in family capital,” he says. This is a phenomenon that’s sometimes referred to as “shirtsleeves to shirtsleeves in three generations.”

Thiegs agrees. “Financial assets can dwindle over time, which can lead to family infighting and even litigation,” he says. “Investing in family capital is critical to maintaining and growing assets, as well as the evolution of what a family does, especially a family business. If family members don’t learn, grow and pass on this knowledge, a business can stagnate.”

Thiegs sees a dichotomy when it comes to financial capital and family capital. “Some families just focus on the financial side, while others see financial and family capital as more integrated,” he says. “They have regular meetings and dedicate time and money to growing their family capital."

Communication’s role in family capital

One challenge with transferring family capital, says Haggard, is that family members have different personalities, communication styles, and personal financial values. This includes generational differences – from baby boomers to Gen Z.

“Successfully transferring family capital requires acknowledging that the life experiences of future generations will be very different from those of parents and grandparents today,” says Haggard.

Having family council meetings on a regular basis is one way to promote healthy communication between disparate family members. These meetings provide all family members with an opportunity to use their family capital in a way that contributes to the family’s long-term success, financial and otherwise. Discussion topics for these meetings could include:

  • Who do we want to be as a family, and what are we trying to accomplish?
  • How will we achieve these goals?
  • Which charitable organizations do we as a family want to support with our time, talents and treasure?
  • What is the succession plan for the family business?
  • Will we require prenuptial agreements for family members who get married?

Financial IQ and the role of philanthropy in family capital

Thiegs believes that family leaders have a responsibility to help boost the financial acumen of future generations as they transfer family capital to them.

“This is table stakes for wealthy families given the complexity of their financial structures and the size of their assets,” he says. “Without some kind of financial education, you’re missing an opportunity to help future generations understand and engage in their financial responsibilities.”

“There are so many more investment options today than there were 50 years ago,” says Haggard. “Imagine what it will be like 50 years from now. Family members have to continue growing their financial IQ as investment strategies and options evolve over time.”

Families can use philanthropy as a tool to preserve family capital across generations, says Ashlee Woods, managing director of philanthropic impact with Ascent. “Values and a shared sense of mission and purpose are brought to the next generation through philanthropy. For example, families can develop transgenerational governance structures for their family foundations where family members can mentor, model behavior, and even delegate certain aspects of their philanthropy.”

How Ascent can help you build family capital

Ascent has helped many wealthy families invest in family capital to support the next generation of family leaders. Offering an integrated approach to wealth management, Ascent simplifies services for wealthy families, helping them save time and avoid frustration that often arises from the traditional siloed, product-focused service model that ignores family dynamics.

Learn how Ascent works closely with families to lay the groundwork for a successful transition of wealth.

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Four reasons values are important in maintaining generational wealth

Establishing shared family values is essential to your family’s long-term financial wellness.


Bridging the gap between values and generational family wealth

The best place to start engaging and educating family members of all ages and attitudes toward money is with what matters most: values.

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