Family Roles and Their Interaction with Investment Goal Formation

Abstract

This article builds on a previous study that introduced the concept that family members have multiple roles, some of which may be partially hidden, that affect the formation of investment goals for the family. Inadequate knowledge and understanding of these roles can make a traditional asset allocation difficult, if not impossible. This article digs deeper, uncovering the basis for goal formation by showing how the roles family members perform identify the needs and goals of the family and of the individual members within it. The author will illustrate the impact of generational perspectives on the way family members view each others’ roles—as well as how family members view their own roles—and, thus, how these perceptions initiate a continuum of role assignment. This requires some identification through the family governance system, which significantly influences the formation of wealth management and investment goals and, ultimately, the strategic goal-based asset allocation.