100-Year Thinking: Families Strategically Helping Each Other Through the Generations

It takes a long time to get what we want. Most successful people will tell you that they started experiencing success in their mid-40s or early 50s. Even 99% of Warren Buffett’s net worth compounded after age 50.  Knowing this, why do we stop working in our 50s and 60s? Why not keep trying to grow assets for the use of our families, like the Rockefellers or our own Minneapolis-based Pohlad family (owners of the Minnesota Twins)? Doing this doesn’t mean you need to do something you dislike; sometimes a bad job is worth not having. But it does mean changing your mind-set and continually trying to grow, both assets and human capital.

I have been changing my opinion on “long-term.” Most financial advisors (me included) will say that long-term investing starts with at least a five- to 10-year time frame. While we say that is how long someone should invest as a minimum, we never talk about a maximum.  We imply several decades as a maximum because someone’s life expectancy might be 20 or 30 years of retirement. But even 20 or 30 years isn’t very long. My new number for long-term is 100 years (note, not age 100); the planning implications for well-informed families become more interesting with that time frame in mind.

The impetus for the 100-year time frame comes from James E. Hughes Jr.’s book Family Wealth—Keeping It in the Family—How Family Members and Their Advisers Preserve Human, Intellectual, and Financial Assets for Generations.  Hughes points out that enlightened families recognize that financial wealth is often squandered by the third generation, so they think of wealth as having to last four, five, or six generations. This longer-term thinking (and thus the 100 years) will create interesting planning opportunities.


Adopting a 100-year time frame will change the way you invest. Instead of grandparents thinking about only their risk tolerance, they will also consider the risk-taking ability of their children, grandchildren, or great-grandchildren. This multi-generational wealth mind-set will stretch out the time frame of when investments are needed (assuming grandparents have enough to live on), so they can increase their risk knowing that they have the life expectancy of several generations to spend the money.

Practically speaking, grandparents can begin thinking about their assets as being in buckets. The bucket with the riskiest assets could be designated as the children’s or grandchildren’s, whereas the bucket with the least risky investments will be targeted for the grandparents’ spending. This means that when a new investment comes along, the family will need to consider whose bucket that investment fits into and analyze the investment based on that bucket’s time horizon.

Where this perspective comes into play for families is in setting up estate and gifting plans. For example, if grandparents wanted to start gifting some assets to a trust for their children or grandchildren, it could make sense to pick growth-oriented mutual funds instead of bonds or a cabin. Spend time with your attorney and financial advisor discussing this point.

Inherent in this investment discussion is investing with a tax perspective in mind. Like money compounds when invested, tax bills compound as well. With a 100-year mind-set, it is more important than ever to understand asset location. For example, it might make more sense to have dividend-paying investments in tax-deferred or tax-free accounts, allowing lower taxed investments to stay in the more taxable accounts.

Estate Planning

If 100 years, or more, is the time frame that assets may be around, families need to consider the vehicles (trusts) and people (trustees or other advisors) used to carry out the goals and wishes of the family.  This consideration becomes important because as money moves down several generations, it becomes difficult for everyone involved to know what the first generation went through to build that wealth. In the worst case, generations can become dependent on money, and this takes away from true happiness (which comes from building their own life).

As Hughes points out in his book, the trustee needs to become much more of an educator for future generations instead of a rubber stamp (or naysayer, as the case may be). This role is also true with other advisors the family might use.  Thus families will want to build a governance structure to create as much cohesion as possible. This is about more than money; 100-year planning becomes more about how to pass on the value system and heritage (stories) of the founding family members. This needs to start while the first generation is around to share the stories; often families wait too long and then scramble as health begins to fail.

It is also as important for the first generation to listen to the second, third, and fourth generations. The next generations might have different wants and needs. If they don’t feel heard, they will not be good stewards of the money. One of the bigger mistakes I see is when the first generation does not take this step. Assuming that everyone needs to fall in line because you earned the money usually does not end with generational wealth lasting many generations.

What 100 Years Is Not

It might seem that I am advocating a cushy ride for future generations; I am not. This kind of thinking is not about making sure future generations don’t have to work or can buy whatever they want.  In fact, if you want money to last many generations, the opposite is true. You need to think about what a family will and will not pay for. Thinking about what you will help with (e.g., education, health care, a business start-up), versus what you will not, will aid you in refining your vision for your family. This can help make future generations more successful without making them dependent. It is important never to steal the impetus to work and find meaning in life.

100-year thinking brings more strategy into the discussion of how families use money to help each other. And that is what being family is all about—helping each other.

If you have questions or would like to learn more about long-term investing, contact Jon Meyer at

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