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Five Stages to Family Wealth: From Accumulating to Inheriting

Who said every generation has to start over again to build wealth? Working with families over the years, we’ve identified five stages along the path to family wealth: Accumulator, Harvester, Steward, Survivor & Heir. Seeing our roles in this way makes it easier to successfully pass on wealth to our kids, at which point, they can navigate their own wealth journey through these same stages and build upon our efforts.

Stage One: Accumulator


Most of us start as Accumulators. This is an extremely busy time in our lives as we are immersed in work, instilling the values of love and wisdom in our family, managing precious cash flow, and building capital for the future. 

It’s also a time of growth and developing trusting relationships with a team of advisors.We’re concerned with balancing family time with earning income and accumulating assets. We’re conscious of cash flow, credit lines, income taxes, the possibility of things going wrong, and always looking for a better way to get things done. But like a butterfly in the cocoon, we find strength in the struggle.

So, we persist – caring for those we love, investing what we don’t spend, and making and losing progress along the way. During this time, we place our focus on recognizing that we’re not perfect while having fun working on what really matters most as there are no shortcuts to true family wealth.

Stage Two: Harvester

The second stage in the journey to build family wealth involves the crucial step of harvesting the fruits of our labor. It's an exciting time as we revel in a sense of accomplishment and lay out plans for a financially independent future.

Wealth and the ability to control our schedules bring new freedom, opportunities, complexities, taxes, and sometimes challenges to our core values.
Family dynamics naturally shift as our focus transitions from business to our new way of life.
Our updated investment policy emphasizes the shift from asset accumulation to a strategic combination of asset protection and income deployment.

In a cautionary tale, a family we know sold their company in an all-stock deal to another whose stock continued to rise. Their inability to shift their mindset from Accumulator to Harvester resulted in a missed opportunity to cash out before the market and their stock crashed.
As harvesters, our focus shifts to generating income, effective risk management, tax reduction, and addressing the evolving needs of our family.

Stage Three: Steward

The third stage in the journey toward building family wealth centers around stewardship.
Many families shy away from this stage due to its perceived complexity and a lack of a long-term vision for future generations. However, some families possess a far-sighted perspective and feel compelled to embrace stewardship for the sustained success of the family.

My father retired at the age of 62, not from life but with a heightened focus on his family. Committed to this new phase, he later remarked, "I don't know when I had time to work!" With this attitude, he lived to the age of 97.

A recent study in England underscores that retirement can negatively impact health and, in some cases, lead to adverse outcomes. Conversely, a study conducted at the University of Florida suggests that "working actively gives a way to structure life," thereby contributing to an extended lifespan.

In the words of Dan Sullivan, the expansiveness of our future as we age depends on it being more about others than ourselves. Stewards actively engage on behalf of others, assuming responsibility for protecting, nurturing, and fostering the growth of those under their care.
It's a manifestation of love, wisdom, and the practical application of financial resources.

Stage Four: Survivor 

The fourth stage on the path to true family wealth is transition survivorship. Psychologists label the death of a spouse as one of the most stressful life events. During this challenging time, grief and confusion are heightened by numerous responsibilities, including settling the estate, managing cash flow, overseeing investments, and guiding the family through emotional waters.

Amidst the family wealth management advice pouring in from all directions, complications arise, especially when those we trust the most may lack the competencies needed to guide us forward.

In our research, widows we interviewed expressed three primary fears:
  • The loss of personal independence, fearing emotional suffocation.
  • The loss of financial independence, dreading becoming a financial burden to others.
  • The fear of being unable to assist family members in need.

Survivors must navigate the delicate balance between the grief of the past and the opportunities of the future, guiding their families through a healthy transition.

Stage Five: Heir

The fifth stage in the journey to family wealth, the transfer between generations, is often recognized as the most formidable challenge. Individual heirs typically harbor their own perspectives on how financial assets should be distributed and utilized within the family.

Sharing an inheritance among family members carries the potential to foster misunderstanding and resentment, and in more severe instances, can escalate into protracted and acrimonious battles capable of tearing a family apart.

This period is undeniably tough for everyone involved. It encompasses the grief of losing a parent, the unfamiliar and prolonged estate settlement process, and the uncertainty of how to collectively move forward as a family.

During this challenging time, some families successfully navigate the obstacles, while others falter. There are those who engage in disputes over nearly every aspect, expending valuable time and resources, ultimately jeopardizing precious relationships. On the other hand, there are families that approach the situation with consideration, mutual respect, and a collaborative effort to grieve and honor their parents while preserving the family legacy.

Recognizing that no family is perfect and acknowledging that challenges rarely unfold seamlessly, the infusion of love and wisdom becomes pivotal, offering the potential to save a significant amount of money amidst the complexities of this intricate process.

Schedule a complimentary, virtual Meet & Greet today to learn more Superior Planning & Family Office can help increase the value and impact of your client services.