The client
Sisters Kendra and Paula*, the third-generation owners of a successful, decades-old family business, are not involved in running the business. The siblings, both in their 20s, enjoyed comfortable lives but not great wealth, because the business founder had consistently reinvested the company’s earnings. Soon, though, they anticipated a meaningful distribution, so Kendra and Paula sought guidance on handling their newfound wealth.
The challenge of being comfortable with new wealth
Becoming wealthy is many people’s dream, but Kendra and Paula were not accustomed to great wealth and were concerned about managing it. Because they had not helped build their newfound wealth, they also had some qualms about accepting the money. Above all, they were eager to learn how to be responsible stewards of the wealth they were coming into.
They knew they needed professional guidance, so they initiated a round-robin series of meetings with potential financial advisors to determine which would best suit their needs. Ascent Private Capital Management of U.S. Bank, which other family members had a previous relationship with, was one of the candidates.
The approach of becoming comfortable with new wealth
At an initial meeting, Ascent learned that Kendra and Paula were new to the concept of wealth management. They also sensed that the siblings had ethical concerns about receiving money they had not earned. Kendra and Paula had been raised to treat everyone with respect and to give back to the community, and they felt a strong need to embrace those values as they learned how to manage their new wealth.
With those factors in mind, Ascent built a team of advisors who could help the new generation with their transition to wealth. The team included two investment managers and a consultant with Ascent’s Leadership and Legacy program. The team members, trained in the psychological dynamics of money and wealth, understood the siblings’ desire for guidance in managing their money and helping them understand their relationship with money.
Another aspect of the Ascent approach that appealed to Kendra and Paula was that Ascent advisors are fiduciaries. They do not receive commissions or referral fees, and they’re not compensated based on the types of investments they recommend. Nor does Ascent have proprietary investment products that advisors are encouraged to promote. In short, Ascent advisors recommend investments solely based on what’s best for their clients.
After the round-robin meetings, Kendra and Paula chose the Ascent team as their advisors and made a relatively small initial investment. The team met with them quarterly to discuss their investments and develop a rapport. Over the next five years, the team built a solid relationship with them and gained a deep understanding of what mattered most to them. The importance of stewardship came to the fore – the sisters made it clear that they had to “do good” with the money they were inheriting.
Eventually, the family sold the business, and the younger generation received a major distribution. At that point, the Ascent team, all of whom have backgrounds in education or counseling, implemented a Leadership and Legacy offering that had been designed specifically for Kendra and Paula. The eight-session program focused on stewardship, family dynamics, communication and financial management. The program, which consisted of individual meetings and household-level meetings, included conversations about responsibility and stewardship as well as money issues, such as trusts, distributions and investments.
The sessions were spread over the course of a year. The young families embraced the program and learned to be more financially comfortable with the profound transition the new wealth brought to their lives.
The outcome of becoming comfortable with new wealth
Today, Kendra and Paula use Ascent’s full suite of personalized financial services, including investment management, banking, family office services and trustee and trust administration. Their investments have been carefully diversified and positioned for growth.
Equally important, their relationship to that wealth is healthy. They are doing things they love to do and they make financial decisions based on the impact they want to have on the world. And, to top it off, they’ve begun sharing their experiences and knowledge with other young adults in their position.
Learn how Ascent Private Capital Management can work closely with you and your family to lay the groundwork for a successful transition of wealth.
* Names have been changed.
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