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The Brief

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In this series I have deliberately avoided any of the rules around trading and short term investing. Whilst this can be both fun and potentially profitable, it is also much riskier and requires a different range of key disciplines. I have focused on longer term wealth creation for individuals and especially families to foster and grow the value of their wealth over the decades. Here one of the key lines to remember with investment is that in reality you can very rarely time the market – it is the time you spend in the market that counts.

The Seventh Rule, therefore, is the discipline and control that you must exercise over both the assets and liabilities of the family. From your financial planning, asset allocation, investment research, taxation and costs, you then need to pull all the issues together into a co-ordinated structure so that you have as much control and understanding over your financial affairs as if you were running your own business.

As such I would expect to see a “Family Balance Sheet” and a “Cashflow” exactly as you would in a business. It is astonishing that in most peoples’ worlds, the only thing they normally get round to planning is their holiday – not their lives, nor their finances. Let me be clear though, this is not a call for the dull control of finances, but rather the liberation of families to be able to enjoy their finances far more than they currently do.

Multi-generational financing allows for greater flexibility of housing finance and investment, tax mitigation, cost reduction, but above all a far greater level of predictability as to the financial strength of the family. There is after all a very good reason why so many of the “uber-wealthy” continental Europeans manage their families as a family office.

There is then one key issue that arises from the management of the family funds in this way – there is one single word that controls the success of an economy, of a company and come to that each of us – confidence. If we are confident that our family has a plan looking ahead several decades, taking account of those things we know about such as education, housing and retirement, also taking into account potential issues such as age and health care, then we will be a lot more confident in our attitude and frankly have a far more comfortable way of life rather than having to worry about what might be happening and where our money really is.

We can’t make it entertaining as that would be too flippant, but we can at the very least make it interesting so that everyone can understand what is happening and why. Thus you will need to ensure that there is a regular watching of the progress of the plan and I would suggest using the professional assistance of a financial planner to regularly guide you almost as a business consultant. They will keep you up to date with all the relevant areas from all the professions, from legal and accounting issues through to investment and banking. I would look upon this as your annual audit and servicing just to validate that all is running to plan and to make whatever adjustments need to be made with, say, new family members and social changes.

There is of course nothing certain other than “death and taxes” as the phrase goes, but we can go a long way in trying to improve the safety and predictability of our financial welfare for our family. And with judicious planning no family need ever play the lottery, but rather just make the lottery without the risk – and then enjoy it!


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