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Legacy Planning

Our Personal Financial Planning process begins by establishing appropriate goals and objectives, identifying available assets, and creating a realistic plan to meet those goals. Since we specialize in portfolio management (stocks, bonds, mutual funds, etc.), we need to know about those assets first.

We employ disciplined quantitative and qualitative methods in defining Clients’ goals and objectives, from modern portfolio theory and cash forecasting (quantitative, tangible) methods to the introspective (qualitative, intangible) methods, such as discussing one or more of the Six Dimensions of Wealth (listed below).

Of course, not all of these concepts are applicable to every Client, which is why our reports and personal financial plans are customized to each Client’s unique situation. Our portfolio management services and periodic reviews ensure we are on track to meet each Client’s goals. This is a part of the first Dimension of Wealth, Financial Capital.

We are happy to discuss any or all of the Six Dimensions of Wealth and include them in our Clients’ long-term planning and goal setting processes.

Six Dimensions of Wealth: Leaving the Fullest Value of Your Wealth to Your Heirs

When a financial advisor discusses “wealth management” and “estate planning,’” most individuals think in terms of avoiding estate taxes, and/or transferring assets to their children, or donating to charities so that this money can be used in the most efficient way and yields the most satisfaction to the giver. We refer to this as Legacy Planning rather than Estate Planning.

For those who don’t have estate tax issues, there is the tendency to dismiss such analysis as not being worthwhile. However, nothing could be further from the truth. We have summarized Dennis Jaffe’s “Six Dimensions of Wealth,” taken from the April 2003 issue of Journal of Financial Planning below.

Financial Capital

Financial capital involves sustaining and watching over resources to invest and support a comfortable lifestyle, and the ability to manage and sustain investments productively.

What the family must do to sustain its financial capital is…

  • Create clear and realistic expectations among the heirs
  • Teach all heirs values and responsibility about managing wealth
  • Generate a sense of responsibility and capability to support the long-term strategy

Spiritual Capital

Spiritual capital means defining and keeping in touch with the deepest values that express the nature of the family; coming to terms with the deepest and most important questions in life; creating congruence between family wealth and inner values.
Spiritual capital is put in place when a family…

  • Understands the deeper meaning and purpose of wealth in their lives
  • Has a mission and values statement
  • Tells the family story to the next generation
  • Talks together about values and what is really important

Human Capital

Human capital is the heir’s development of skills, capability and character to understand how to manage wealth, to find important work and to live in a complex, difficult and demanding global environment.

A family develops human capital when it…

  • Initiates age-appropriate discussions about money with heirs
  • Builds self-esteem and identity independent of having money
  • Helps heirs develop a sense of purpose for their lives
  • Develops skills and capability to make their way independently

Family Capital

Family capital is the ability to stay connected within the extended family, compromise and work together with family and others, and create positive and productive relationships with others.

A family develops family capital when…

  • It generates respect and trust through regular communication
  • It heals past misunderstandings and hurts
  • People are able to listen and learn from each other

Structural Capital

Structural capital consists of governance structures to manage the family wealth, make decisions, get competent advice, manage family businesses or investments, and to steer them through a volatile environment.

A family develops structural capital when it has…

  • A written family constitution
  • Regular meetings of family councils, assemblies and boards
  • Accountability and clear communication to beneficiaries

Societal Capital

Societal capital involves maintaining one’s wealth with a sense of respect, compassion and connection to the concerns of others, taking a place of service within one’s community and using resources to support the future of the planet.

Families create societal capital when they…

  • Express their values in the community through action
  • Involve all family members in service and philanthropy