This is the definition of wealth. That was the first message that James (Jay) Hughes shared with the audience at a special event on Tuesday, October 25, at Platform Calgary. Sponsored by Viridian Family Office, Alberta Business Family Institute, Family Enterprise Canada, and Karma & Cents, Mr. Hughes imparted many important learnings about preserving family wealth to an engaged in-person audience as well as online participants.
“Close your eyes and think of your favorite place. Think about what you see, what you feel and smell. Invite all the people you love to join you in that place.”
What is Wealth?
“Wealth is not defined by a dollar value,” he shared via zoom from his home in the United States. “Wealth, by definition, is a state of well being.”
That state of well being includes five types of capital. Using the analogy of a hand with your thumb being financial capital and the four fingers representing intellectual, human, social and spiritual capital. When the thumb is pointed upwards and moved around, your fingers tend to naturally curl inwards to your hand. When the focus is only on the presence and movement of financial capital, we tend to lose sight of the four other types of capital. With only financial capital, or the F up, there is a lack of purpose.
Building wealth in your family takes more than financial capital. The ability to foster an environment of lifelong learning and sharing (intellectual), spiritual (purpose), social (ability to make joint decisions), and personal growth (human) is the key to creating a family where everyone thrives. “When all boats are rising,” as Jay noted, “there is a purpose and legacy that is bigger than financial capital to pass down.”
Building Family Wealth
Jay is a 6th generation lawyer who specialized in family governance and wealth preservation for five decades. His personal website summarizes the mission he has been on throughout his career:
“Shaping the way exceptional families pursue fulfillment and equip multiple generations to flourish in addition to managing their resources.” – James E. Hughes, Jr.
A family starts with 2 people. Two people, two names, two sets of dreams and aspirations. The continuity of those aspirations becomes a lifelong goal, and the second generation helps to shape the purpose and legacy of the family. The task of the second generation is to grow both family and opportunity.
When it comes to the shirtsleeves-to-shirtsleeves adage, a scenario where the third generation is unable to manage the financial capital passed down to them from grandparents and parents, the definition of family and purpose becomes critical. Growth of financial capital without supporting the growth of spiritual, human, social, and intellectual capital, a family can be at risk of the ‘shirtsleeves to shirtsleeves’ effect that many families have struggled with. When that happens, the destruction of wealth encompasses all forms of capital.
Using the financial capital to prop up, or support, the other forms of capital, will help ensure that the succession of intergenerational wealth is approached with a qualitative approach to planning and trust. Back to the hand analogy, turn the hand upside down.
In other words, don’t F it up. Keep the F down and listen to build wealth.
Wealth, Family and Society
When talking about a subject he is clearly passionate about, Jay’s advice is grandfatherly without being patronizing. Moderated by Karma & Cents’ Gena Rotstein, Jay answered questions about gender and economic inequality in families, bringing in new family members through marriage, work versus play, and general advice about helping your family flourish, his approach draws on extensive experience and his wisdom is thoughtfully delivered.
Looking back to that image in your mind of being with your favorite people in your favorite place – are you wealthy? If not, what capital do you need to grow to realize your wealth and make your family flourish?
“Families of affinity, not families of blood, will be those who flourish five generations into the future, and can imagine going on from there in an unending upward spiral of new flourishing generations.” – James E. Hughes, Jr.