CHAPTER 1 Complete Wealth

      In the late 20th century, when Family Wealth was published, its subtitle was Keeping It in the Family.

      Many readers assumed that the “it” referred to money. After all, doesn't the proverb—“shirtsleeves to shirtsleeves in three generations”—refer to a family's economic condition?

      From this assumption, an entire industry has grown, an industry aimed at helping families correct their family dynamics to preserve and grow their financial capital.

      Likewise, many readers, family leaders, and advisers have concluded that the most important thing is to seek to beat the proverb and do what it takes to keep their financial capital in the family.

Right Understanding

      But this conclusion is wrong.

      The “it” is not money. It is the family's well-being. That is its true wealth. We encompass this well-being by speaking about “qualitative wealth”—the family's human, legacy, family relationship, structural, and social capital. This wealth as well-being is the goal, which the family's quantitative wealth, its financial capital, rightly serves.

Beating the proverb is not a matter of simply using various tools and techniques—family meetings, values clarification, communication ground rules, and so on and so forth—to make family members better stewards of their money. Keeping your money in your family is not necessarily a bad thing. But it is not the main thing. It is only one-fifth of the task. And it is the least important fifth, when it comes to happiness.

      The goal of Complete Family Wealth is to help you identify, inventory, and grow your true, or complete, wealth as a family. This complete wealth far transcends money. Growing complete wealth also meets the criticisms of those—from Andrew Carnegie to proponents of social justice—who denounce inherited financial capital as bad for families and for society. Complete family wealth improves the lives of family members and benefits the communities of which they are a part.

      One family leader captured the distinction for us by quoting her grandmother. This wise woman, she said, would often say, “Our family has always been rich, and we've sometimes had money.” There is the distinction between qualitative and quantitative capital in a nutshell.

      As with any important undertaking, it is crucial to begin with right understanding. To that end, as you read this book and think about wealth, notice when you automatically identify that term with financial capital. That is the identification we are seeking to challenge and to substitute with wealth as well-being. If you choose to pursue the journey of family wealth, be clear just what kinds of wealth you are trying to keep in the family.

Complete Wealth

      We have said that complete family wealth comprises five aspects of qualitative capital––human, legacy, family relationship, structural, and social—and the family's quantitative assets, its financial capital. The goals of the rest of this chapter are to define these forms of capital, outline ways of growing them, and suggest a method for measuring the growth of qualitative capital.

      Rarely do families measure their qualitative capital. That's because they often do not even recognize that they own this type of capital. But can you imagine any enterprise being successful if it didn't track most of its capital?

      The failure to acknowledge, measure, and grow the qualitative capital of a family is the principal cause for the failure of family flourishing.

      In contrast, investing in the family's qualitative capital—investing time, energy, and financial wealth—is perhaps the greatest “impact investment” a family can make.

As you read, you will likely notice overlaps among the five aspects of qualitative capital. That is because each one captures an aspect of the same thing: the family's true flourishing.

The Five Types of Qualitative Capital

      Human Capital

      The Human Capital of a family consists of the individuals who make up the family. Their human capital includes their physical and emotional well-being as well as each member's ability to find meaningful work, establish a positive sense of identity, and pursue his or her own happiness.