What is a “Concern” in the context of Stewardship of Family Wealth

Jason ShrenskyFamily Wealth, Stewardship

When we discuss stewardship of family wealth, the question often arises “so, this is all about tracking investments?” The answer is emphatically “no!” Rather, stewardship involves tracking the important legal and financial relationships that impact (or have the potential to impact) the family. When we boil down “important legal and financial relationship” to one word, the word we arrive at is concern. While in certain contexts the word “concern” connotes worry, in the context of family wealth it signifies responsibility. Stewardship is the practice of keeping a watchful eye over the concerns of the family.

Examples of ‘Concerns’

Generally, assets of the family are concerns. Does it then follow that every family investment is a concern? It depends on the level of specificity that is important to the family. If the family is a passive investor in a local pizza chain, that is very much a concern of the family. At minimum, without conscientious management over the investment documents, the investment could be forgotten about or disputed in a transition from one generation to the next.  However, if the family owns stock in YUM! Brands (the parent company of Pizza Hut) in addition to stock in 60 other public companies all held within a Fidelity securities account, it is more likely that the family would consider the Fidelity securities account a concern as opposed to the specific pizza investment inside the account.

Not only does specificity matter as to what to classify as a concern, but significance matters as well. Thus, a can of tomato soup in mom’s pantry is likely not a concern, but the Andy Warhol painting of a tomato soup can hanging in mom’s foyer most definitely would be a concern.

Just as assets of the family are generally concerns, so are the liabilities or obligations of the family. A family trust or family business is the borrower on a loan; it is a concern. The family home is subject to a mortgage; it is a concern. A family member is a personal guarantor on an obligation; it is a concern.

But the term “concern” expands far beyond assets and liabilities, as financial and legal relationships are not so limited. Thus, people are concerns. For example, family members often find themselves as beneficiaries (of family trusts, life insurance policies, and retirement accounts), trustees, or agents named in documents that are pertinent to the family. A key aspect of stewardship is the ability to understand and be able to explain these interrelationships; they are of concern to the family.

In sum, stewardship of family wealth is an undertaking far greater than simply managing a financial statement. Rather, it is the management of the “everything that can legally or financially impact the family” statement. Or, said more simply, it is the management of concerns. While in everyday use a concern can mean multiple things, in the context of family wealth management a concern succinctly represents something the family cares about.

If your family has many concerns that need to be managed, you will want to learn more about Complex Interests software.