The Family Bank Pt. 3 – Earning a Voice

Today we are going to continue our family bank series by discussing how a member of the younger generation can earn a voice in the family bank.

Having a voice in the family bank is a huge responsibility. Therefore, it is important that you choose who earns one, wisely. There are many factors which may justify a voice in the bank, but the most important one is maturity. You will know when a family member is ready when they can clearly demonstrate that they can let go of their own selfish desires for the betterment of the family.

Of course, bank members can do what they want with their personal assets. That’s not what this means. It is critical that they make wise decisions for the investment of the family bank assets. Due to the shared nature of these assets, things can easily become complex.

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The Family Bank Series – Recap

The average entrepreneur spends approximately eighty thousand hours building their business, and then only eight hours on succession planning. As a result, it is no shock to hear that the failure rate for wealth-transition plans is 70% today. That is to say, only 30% of successions are deemed successful after the first generation. Of the 30% successful transitions, only 30% will be successful during their succession to the second generation. Consequently, leaving a record of only 1/10 successful succession plans by the third generation.

“Rich people plan for three generations. Poor people plan for Saturday night.”

Gloria Steinem

By adding a simple practice called ‘the family bank approach’ to your succession and estate planning, you can ensure that future generations have the direction and values required to maintain and pass wealth on for generations to come.

What Does it Mean to ‘Earn a Voice’

Having a voice in the family bank will allow a member to make important decisions about the financial well being of the family. These choices may include philanthropy decisions, lending decisions, investment decisions, and advisor decisions, to name a few.

Most family banks would hold a weekly/monthly/quarterly board meeting. During which, only those members who have earned a voice are allowed to vote on the agenda items.

Note, that one of the most important issues concerning the family bank, is the financial literacy training for members. This means that there may be members sitting around the table who do not have a right to voice their opinions at the meeting. One instance of this would be a young person who is there to learn and internalize the processes of the bank before they earn their voice. This training aspect is essential for most family banks, and should start young.

All Shapes and Sizes

Families come in all shapes and sizes. One of the things that your family bank will have to establish is a governance to determine who will be welcomed into the bank. For example, will spouses be accepted into the bank, or no? If so, what if there is a divorce in the family? – Will both spouses remain members to support the next generation? Or, will the non-related spouse have to sign a clause saying that they will respectfully exit the family bank in a situation of marriage break-down.

Additionally there is a possibility of a bank member marrying someone who has kids from a previous relationship. In this situation will the bank accept the non-blood child(ren) into the bank, or will ‘by blood’ be the necessary ticket in. If you establish a ‘by-blood’ only governance, how does this effect a bank member and their spouse who choose to adopt a child? Will the adopted child be withheld from the family bank due to a technicality?

Perhaps you might develop a clear difference between a ‘member’ and a ‘managing member’. This may allow the bank to extend membership to all individuals in the above situations, however limiting who is allowed to earn a voice (manage) in the bank.

These are all things to consider when developing your bank structure.

Earning a voice in the Family Bank

So, how do you earn a voice? Well, sadly we can’t really answer that for you. Each individual bank will have to establish their own to list of qualifications to earning a voice. However, two points are critical.

  1. The qualification requirements must be agreed upon by all members of the family bank.
  2. The qualifications must be open to alteration if the need arises.

Some qualifications that a family might set forth include, as mentioned before, maturity of the member. A family bank may also require that the individual must be able to disagree or agree without emotion during family discussions. Additionally, respect towards all members, a positive attitude, working towards good financial stewardship, independence, and putting the families needs first, may be considered.

General Attitude

As mentioned in our last blog post, The Family Bank Approach, in order for the family bank to be successful, the members must share the same values and visions. They must also have a long-term commitment to one another and the family bank. They must encourage each other to learn, grow, and make mistakes.

The older generations must be committed to the education of the younger generation. This means that they have to be especially forgiving and gracious.


We hope that you have been enjoying the family bank series so far. I know we have really enjoyed learning more about this uncommon, yet seemingly simple and successful concept and sharing it with you.

If you would like more information about how this tool could improve your succession plan, feel free to give us a call. We offer complimentary consultations. Tell your friends.

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Disclaimer: This Forbes Wealth Blog is for informational purposes only and does not constitute financial, legal, or tax advice of any kind. Please consult your legal, accounting, tax, investment, banking, and life insurance professionals to get precise advice relating to your particular situation before acting upon any strategy