Generational Wealth And The Family Enterprise

What is a Family Enterprise?

As wealth management continues to trend towards giving advice across the entire spectrum of a family’s wealth beyond investing a portfolio of liquid assets, the term family enterprise has slowly seeped into the vocabulary of advisors, especially those who regularly serve families with substantial and complicated wealth – the type that consists of diverse and complex assets, large credit lines, several different types of financial accounts and legal entities for various purposes sitting on the family balance sheet.  Still, the majority of the wealth advisor community is unable to articulate succinctly what a family enterprise is and why it’s important to take this view when advising families with generational wealth.

There is no one standard definition for family enterprise though almost all that do exist embody the concept of multiple family members engaged in an economic activity such as a family controlled business.  A simple definition is an economic venture in which two or more members of a family have an interest in ownership and a commitment to the continuation of the enterprise.[1]  An economic venture is any undertaking with the goal of making money.  In layman’s terms, think of a family enterprise as all of a family’s economic generating activities conducted through shared ownership and management of assets by several family members, the undertaking of which consists of more than just the financial assets alone.