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GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines<\/a> and our products and services review methodology<\/a>.<\/p>\n 20 Years Trusted by You\u2019ve undoubtedly heard the expression, \u201cIt takes money to make money,\u201d and this idea rings true for many high-net-worth individuals (HNWIs), as well as their families. Many implement strategies that enable them to use\u00a0the wealth\u00a0they already have to grow an even larger net worth, ensuring they can\u00a0pass it down to future generations.<\/p>\n \u201cFor high-net-worth families, building generational wealth isn\u2019t just about growing assets,\u201d said Bill Smith, retirement income certified professional (RICP), master registered financial consultant (MRFC) and founder of W.A. Smith Financial Group<\/a>. \u201cIt\u2019s about ensuring that wealth is tax-efficient, strategically structured and properly transferred to heirs in a way that protects and maximizes its impact.\u201d<\/p>\n Here are five top strategies employed by high-net-worth families to build generational wealth<\/a>.<\/p>\n 1. Educating Future Generations<\/p>\n Many wealth managers would tell their high-net-worth clients that the foundation for any fortune is financial literacy.\u00a0In an effort to maintain their wealth, high-net-worth families take the time to educate their children about what it takes to be financially successful. <\/p>\n \u201cTrue generational wealth starts with financial education,\u201d Smith said. \u201cHigh-net-worth families<\/a> prioritize teaching heirs about investments, tax efficiency and wealth stewardship, so they can make informed financial decisions rather than mismanaging their inheritance.\u201d<\/p>\n 2. Disciplined Investing<\/p>\n Financial advisors and investment managers alike will tell you that having a strategy for your money is important. Wealthy families invest their money consistently with a long-term perspective<\/a>.<\/p>\n \u201cWealthy families don\u2019t just invest to grow \u2014 they invest with purpose,\u201d said Smith. \u201cTheir plans prioritize income generation, tax-efficient investing and disciplined market strategies to sustain wealth over generations.\u201d<\/p>\n No matter if you decide on mutual funds, stocks or bonds, you should make sure you put your money to use within your level of risk tolerance. <\/p>\n 3. Building a Collaborative Financial Team<\/p>\n Managing wealth can be complex, so ultra-high-net-worth families tend to employ a whole team of professionals<\/a> to make sure they are doing so effectively.<\/p>\n \u201cThe wealthiest families don\u2019t rely on a single advisor,\u201d Smith said. \u201cThey work with a team of professionals \u2014 financial planners, tax strategists, estate attorneys and investment specialists \u2014 who collaborate to ensure every decision is tax-optimized and aligned with long-term family goals.\u201d<\/p>\n This professional team may also include insurance agents.<\/p>\n \u201cAsk your fiduciary advisor if you need life insurance,\u201d said Gerry Barrasso, certified public accountant (CPA), certified financial planner (CFP), founder and president at United Financial Planning Group<\/a>. \u201cIf you do, have them recommend an insurance agent, and make sure they aren\u2019t collecting commissions off the back end. An easy way to do this is to work with a fee-only advisor.\u201d<\/p>\n 4. Utilizing Advanced Wealth Transfer Strategies<\/p>\n Building generational wealth effectively also means having a well-thought-out transfer strategy<\/a>.<\/p>\n \u201cEffective legacy planning isn\u2019t just about passing down assets \u2014 it\u2019s about preserving and protecting those assets from unnecessary tax burdens,\u201d Smith said. \u201cMany families leverage revocable and irrevocable trusts, life insurance inside trusts and strategic lifetime gifting to reduce estate taxes and maximize what heirs receive.\u201d<\/p>\n 5. Exploring Alternative Investments<\/p>\n![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-20.svg?webp=1&quality=75\"){kind=icon}
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