As our society reluctantly adopts various measures designed to limit the spread of Covid-19, I’ve noticed more articles offering suggestions for how people can adjust to the challenges of social distancing, and in particular, how families can handle the stress of everyone being at home for a prolonged period of time. No doubt, certain aspects of the current pandemic are truly stressful, such as caring for an ill family member, a sudden and unexpected employment dismissal, or the unprecedented financial market volatility. But spending more time with family should not be one of them. In fact, spending time with family is one of the greatest gifts that Covid-19 is giving to us right now. It’s also an opportunity for me to highlight a broader, more comprehensive perspective of wealth, one that we continually try to reinforce with our clients.
The term “family wealth” is almost universally construed as “financial capital”, but in fact, a family’s wealth is much more than that. In his book, Family Wealth – Keeping it in the Family, James Hughes Jr. proposes a comprehensive framework by which a family can define its wealth, comprised of Human, Intellectual, and Financial capital.
Financial capital is relatively easy to understand since it’s what most families immediately think of. But what are Human and Intellectual capital? Human capital is comprised of the members of your family, who, by virtue of their existence and familial ties, make the family possible. Their individual characteristics, personality traits, desires, passions, skills and talents contribute to the identity of the family, imbuing it with a uniqueness that is infinitely valuable.
Intellectual capital is the knowledge each family member themselves, as well as the family as a whole, has acquired over generations. This can be thought of as formal education, but each family member also learns a tremendous amount outside of school: how to change a tire, how to throw a baseball, how to cook grandma’s special lasagna. Moreover, Intellectual capital has an intrinsically external element, since with it, each family member individually, and the family as whole can have a positive impact on their community.
Without dismissing the importance of a family’s Financial capital, it has value only in so much as it supports the development and advancement of the family’s Human and Intellectual capital. These, in turn, should be used to replenish the family’s Financial capital, as depicted in this graphic we often use with clients.
So with this opportunity to spend more time together as families, let’s look for and be amazed at the Human and Intellectual wealth we all possess. Let’s not fret over the financial stresses, especially those that may arise from financial market volatility – this too shall pass. Let’s capitalize on this time with our family members, enjoying fun, enriching, and enlightening activities together. Let’s talk, play, learn, and even work (spring cleaning anyone?) together as a family, recognizing that Covid-19, with all the true stresses that come with it, has also brought a tremendous gift, an opportunity to unplug from life’s hectic pace and insatiable obligations, to simply revel in the true wealth we all have. Though we all hope to return to our normal routine soon, and that all those affected by Covid-19 will make a full recovery, I hope that this perspective on family wealth will bring tremendous joy and peace during these unusual and potentially traumatic days, weeks, and months.
