Generational Wealth: The Four Kinds of Family Capital
Originally published . Updated .
Generational wealth is more than money. It is the well-being of a family, preserved and grown across generations. In South Africa, where economic inequality and history create particular challenges, the principles behind it matter all the more. Here are the four kinds of capital a lasting family legacy is built on.
Human capital
Human capital is the foundation of generational wealth: the members of your family, its culture and its traditions. A strong family bond and a shared culture give everyone a sense of belonging and a part in the family's legacy. Your family's values, traditions and the environment you create are the key assets.
Practical steps:
Hold regular family meetings to discuss values, goals and financial literacy.
Encourage each family member to keep developing, through education or personal interests.
Write a family mission statement that sets out your shared values and goals.
Intellectual capital
Intellectual capital is the knowledge, education and skills within a family. It goes beyond academic achievement to a culture of lifelong learning and curiosity. Industry experience, trade knowledge and specialised expertise all add to it.
Practical steps:
Invest in ongoing education for family members, including workshops and seminars relevant to your business or interests.
Encourage mentorship and knowledge sharing within the family.
Build a family library of books and documentaries on building and managing wealth.
Social capital
Social capital is the relationships and reputation you build inside and outside the family: business connections, advisers and partnerships that offer support and opportunities. A strong network gives access to resources and knowledge the family does not have on its own.
Practical steps:
Build connections in your community and industry.
Teach family members to build and maintain personal and professional relationships.
Take part in community service as a family, which also strengthens your reputation and social impact.
Financial capital
Financial capital is the best-known part of generational wealth: the money and assets a family owns, such as property, shares, bonds and businesses. Managing these assets well is what sustains wealth across generations.
Practical steps:
Build a diversified investment portfolio that matches your family's risk tolerance and long-term goals.
Review and adjust your financial plan as circumstances and goals change.
Teach family members the principles of financial management and investing.
Bringing the four together
Human, intellectual, social and financial capital together build a lasting family legacy. Financial capital usually gets the most attention, but lasting generational wealth comes from developing all four.
How we help
We work with families on every part of their financial capital: wealth creation and preservation, retirement planning, tax and estate planning, insurance to protect what they own, and investment portfolios matched to their risk profile. Each plan is built around the family's circumstances and reviewed regularly as they change.