Photo by Josh Appel on UnsplashBuilding generational wealth has become an instrumental part of families’ financial planning, allowing them to lay the groundwork for a financial legacy that can be passed through the hands of younger generations. As older generations begin to step into retirement or pass away, younger constituents are left having to face rising costs, high-interest rates, and unfavorable employment opportunities against the backdrop of macroeconomic challenges. Leaving a financial legacy behind requires grandparents and parents to build an adequate long-term strategy that would see them investing in a range of diversified investment vehicles that can be passed down from one household to the next. However, leaving something behind that can help to support a family for the years to come isn’t always risk-free, and often sees many families losing the majority of their wealth due to poor financial management and bad investment decisions. In fact, one study from several years ago found that nearly 70 percent of affluent families lose their wealth by the second generation, and more than 90 percent the generation after that. Creating something memorable that would ensure the financial well-being of your family isn’t a one-size-fits-all scenario. Families now require endless generational endeavors and need to exercise increased caution as they navigate a tumultuous market.  Building Something To Last The reality is that building a financial legacy, or at least aspiring to leave something behind for your children and grandchildren isn’t a risk-free accomplishment. The truth is, that wealth doesn’t last forever, and generational wealth isn’t recession-proof or buoyant enough to withstand market volatility without proper management and financial planning. At least, that’s how Dusty and Peter McMullin, brothers and second-generation entrepreneurs think about the future of their father, Bruce McMullin’s legacy and their business that’s now steadily being passed down to the next generation of innovators. In 2004, Bruce McMullin, founded Sibu Sea Berry Therapy, a natural supplement and functional foods provider. Bruce started his business with the intent to provide consumers with wider accessibility to more natural and organic supplements and multivitamins. More than this, Bruce has been a long-standing advocate for providing transparent business practices and helping to educate consumers about the various natural ingredients used in Sibu supplements and the near-term positive improvements they can provide. Now, almost twenty years since founding his company, Bruce’s two sons and the second-entrepreneurial duo, Dusty and Peter McMullin are on a new mission to continue their father’s legacy and lay the foundations of what would one day be handed over to the next generation of bearers.  The Truth About Building A Generational Legacy Planning for your family’s financial well-being, and the generations that follow thereafter requires a robust wealth strategy that can stave off market volatility and sees a collective effort that would reinforce economic prosperity, and address critical issues to develop forward-looking solutions. Yet, aside from having to face rising costs and a slipper housing market, future generations will continue to advance under the pressure of a widening generational wealth gap. Statistics suggest that Boomers (born between 1946 and 1964) currently hold around 50% or $78.1 trillion of roughly $156 trillion U.S. assets. Generation X (born between 1965 and 1980) now has around 29% or $46 trillion in U.S. assets, while Millennials (born between 1982 and 1994) hold the smallest share of around $13.3 trillion, or just over 8.5% compared to older generations. “The wealth transfer that is set to take place over the coming decades, would require younger generations to better understand how economic inequality, driven by years of economic divide, will impact their family’s financial legacy,” says Dusty McMullin, Vice President of Operations at Sibu Sea Berry Therapy. The modest, yet prevalent economic divide between generations becomes an increasing problem for younger generations once you begin to factor in things such as retirement, emergency funds, social security, and market trends, among other things. Unequal distribution of financial resources only further drives wealth inequality, not only for families that have substantial financial leverage but more importantly for people that have limited accessibility to market liquidity such as property or other investments such as stocks or mutual funds. “Preparing the next generation would require us to learn from how our parents and their parents accumulated wealth, and how that knowledge can now be shared with young people who are looking to do the same things,” says Peter McMullin, President at Sibu. He continues to say, “Although wealth inequality is a socio-economic problem that affects a broader majority of people, these issues are much deeper, and rooted within our society than we’ve been led to believe.” By providing the next generation with the necessary tools, we’re working towards restoring balance, helping to narrow the wealth gap, and further establishing the groundwork that could build more democratized economies. Yet, building a generational legacy, and planning your family’s financial well-being requires more than monetary investment in traditional investment vehicles, but rather a focus on diversified actions that could help to lead them towards creating more equal opportunities for a wider pool of participants.  Avoid Quick Wins There’s a reason why ‘Old Money’ families are different, and that starts with having a long-term mindset for stability. Chasing after quick wins and making risky investments places your financial well-being and that of your family in the direct line of fire. By avoiding potential pitfalls, and considering how long-term decisions may influence your family’s wealth would help align your personal and financial objectives. “Nothing leading up to this point has ever been easy, especially for our father,” says Peter. “However, we’ve learned that investing in something that you care for, and want to see mature requires a lot of time, patience, and effort. Taking shortcuts will only have you ending up from the pot in the frying pan.”Prioritize money management Poor money management, including spending habits and investment decisions, is one of the biggest ways families often lose their wealth. For those families that already have a substantial financial legacy in place, prioritizing effective methods that can help teach younger generations, including children how to work with money will help pay off in the long run. Having a strategy that would ensure the safeguarding of your family’s wealth would enable your family to continue a legacy that has taken years, if not decades to put together. By creating a proactive, and highly transparent process, that would allow family younger members to learn how money is accumulated, and how to manage investments properly, without having to increase risk exposure could help establish the groundwork for long-term financial success.  Invest in financial literacy While knowing how to manage family wealth is one thing, being equipped with the tools and necessary skills to apply effective models and strategies is another important consideration each family needs to think about when planning to pass down their generational wealth. “From a business perspective, having someone who has helped us shape up to continue building on a company that innovates, and provides a high-quality service means that we have access to a wealth of knowledge that we previously wouldn’t have been able to learn somewhere else,” says Dusty. Looking at how more affluent families often handle finances, you notice that there is a strong emphasis on financial literacy. While it’s important to know how to set up a budget that allows you to cover all your expenses, and still have some money left to put towards savings, things become a lot different when there are bigger sums of money involved. Dusty feels that teaching people from a very young age how to work with money, and the importance of financial literacy is an invaluable asset any person or family needs.  Know that money doesn’t last forever The reality is that money doesn’t last forever. More importantly, money loses its value over time. Over time, various things, such as recessions, inflation, and bad investments depreciate a family’s financial legacy. Even more worrisome, bad spending habits only drain the family wallet faster as it’s passed down from one generation to the next. Having a clear objective means that a family can work towards building a legacy that can be enjoyed by others in the coming decades. Over time, as new opportunities present themselves, careful evaluation of long-term goals could indicate whether an investment in a specific vehicle would be beneficial to the entire family and their wealth. Peter says, “Building a family legacy that will be remembered requires every person to understand the effort that is needed to continue building on something that will be enjoyed by many more people in the year to come. Reminding yourself, and others of why you’re doing this will help establish a more encouraging attitude regarding the future of your family’s financial legacy.”  Running a family business is hard work Being the successor of the family business isn’t always about being in control, or having unlimited access to a seemingly endless pool of money you can use to spend on the things you and your family have always wanted. Taking the helm of the family business is about maintaining a consistent brand, and having to navigate various business-related challenges in an already volatile economy. Just because you may be next in line to take the helm of your family’s business doesn’t always guarantee you will be successful at it. Being in control requires a lot of hard work, dedication, and a consistent investment in something you believe will make a difference. Even more important to remember, things can change at the very last minute, and you could be removed as the possible heir to the family business for someone more qualified and experienced. “Being part of the family business from a very young age has been a privilege,” says Peter. “However, knowing what’s at stake, and that things can change very quickly without warning can make things even harder. Although I may have the opportunity to lead our team and business, it’s not to say that I will be doing so in the coming years, regardless of what may have led to my departure.”Peter and Dusty recently launched a new natural Omega-7 specialty supplement, that contains Sibu’s Proprietary T7 Organic Himalayan Sea Buckthorn Oil. Studies have shown that Sea Buckthorn provides anti-inflammatory, antifungal, and antibacterial medicinal properties. Additionally, Sea Buckthorn has been found to have high concentrations of Omega-7, an active component that assists with skin rejuvenation and improves cell barriers. Dusty says “While both Peter and I have been given the opportunity to continue our father’s legacy, we’re constantly reminding ourselves that without direction and innovation, the business will stagnate. Just because there’s an existing business doesn’t mean we can now relax and sit back, in fact, it’s only been the opposite for both of us and our team.” Invest in philanthropic objectives Beyond the flashy material possessions and hefty portfolios, affluent families often have a sense of social responsibility by supporting philanthropic movements and discreetly donating through a family-operated foundation or managed funds. Having a social objective allows affluent families to divert their wealth towards things that can drive change and make an impact. Things such as investing in social care, education, art and culture, climate change initiatives, or funding research for the development of new drugs and healthcare procedures can help put them on the map. By being committed to a social cause, affluent families can create a legacy that can be passed down through generations, but more importantly, allows them the opportunity to bring change in the areas they value most, and become a stewardess of leadership and social change. “We all have a social responsibility. Building a legacy means that you and your family can leave something behind that can make an impact beyond your wealth. I think teaching this to our children and grandchildren is one of the most important things we need to remember because, without it, we’re simply closing ourselves off from outsiders and the world around us,” says Peter.  Wealth can be self-made Despite what we’re told to believe, many millionaires today are self-made. Two independent studies have found that the majority of millionaires, or those with a hefty bank balance were self-made. In a 2019 Wealth-X study, around 68 percent of those with a net worth of $30 million or more managed to make it themselves. In a different study by Fidelity Investments, around 88 percent of all millionaires are said to be self-made. This only shows that going from rags to riches often doesn’t mean you receive an inheritance or some assistance from your family. Although there are those individuals who have built their wealth entirely by themselves, there are also those who have had some assistance from their family, whether this may have been through inheritance or direct investment into their business or financial strategy. All this aside, building wealth is possible, and becoming a proclaimed self-made millionaire means that through hard work, determination, and a long-term objective, a person can establish a legacy for themselves, even if their family didn’t provide them with a safety net.  The bottom line Leaving a lasting legacy that will continue for decades after you’re no longer around takes a lot of planning and consistent investment in the necessary objectives that will help you achieve this goal. “A family legacy is more than wealth or having money. We consider it to be the knowledge, skill, and expertise of those who have come before us and have allowed us to learn from them. Passing this knowledge from one generation to the next is more valuable, and more important than what a hefty trust fund can give people,” says Dusty.More By This Author:Diversifying Your Portfolio With Plant-Based Options
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