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The vocabulary, without the sales pitch
Plain definitions of the terms that come up around family wealth. No advice, no product, no email required — just what each thing actually is and how it works.
Governance
Family governance
Family governance is the structure a family uses to make shared decisions about wealth. It usually produces three artifacts: a documented family narrative, a mission statement drawn from the family's values, and a written family constitution. Assets transfer automatically at death; judgment and values do not. Governance is the mechanism that carries them.
Family constitution
A family constitution is a written document setting out how a family makes decisions about shared wealth: who participates, how disagreements are resolved, what the money is intended for, and what happens when circumstances change. It is not legally binding. Its force comes from having been written together rather than imposed.
Family mission statement
A family mission statement is a short written expression of what a family's wealth is for, drawn from the values that generated it. It is typically one or two paragraphs, produced through interviews with family members, and used as the reference point when larger financial decisions are contested.
Next-generation education
Next-generation education is structured financial preparation for the family members who will eventually inherit. It covers financial literacy, the mechanics of the family's own plan, and the reasoning behind it — so that an inheritance arrives with the context to handle it rather than only a balance.
Giving
Donor-advised fund
A donor-advised fund is a charitable account held at a sponsoring public charity. The donor contributes assets, takes the tax deduction in the year of the contribution, and then recommends grants to charities over time. The sponsor handles administration, recordkeeping, and grant processing.
Private foundation
A private foundation is a separate legal entity created to make charitable grants, typically funded by one family. It has its own board, files its own annual return, and must distribute roughly five percent of assets each year. It offers more control than a donor-advised fund and costs considerably more to operate.
Proactive philanthropy
Proactive philanthropy means planning charitable giving during your lifetime rather than leaving it to your estate. It treats giving as a discipline with structure, timing, and intent behind it, rather than as a year-end transaction or a line in a will.
Investing
Sustainable investing
Sustainable investing evaluates environmental, social, and governance factors alongside traditional financial analysis. It ranges from excluding particular industries to actively selecting companies on environmental or social criteria, and increasingly extends into infrastructure and real assets.
Socially responsible investing (SRI)
Socially responsible investing applies ethical criteria to portfolio construction, most often by excluding industries a family does not wish to hold — commonly tobacco, weapons, or fossil fuels. SRI is generally the older, exclusion-based practice that sustainable investing later built on.
Impact investing
Impact investing seeks a measurable social or environmental outcome alongside a financial return. It differs from sustainable investing and SRI in that the outcome is the objective and is tracked directly, rather than being a screen applied to an otherwise conventional portfolio.
Investment policy statement
An investment policy statement is a written document setting out how a portfolio will be managed: its objectives, time horizon, risk tolerance, target allocation, rebalancing rules, and any constraints such as values-based screens. It is the reference point that decisions get checked against when markets are moving.
Concentrated position
A concentrated position is a single holding large enough that its performance materially drives a household's overall outcome — commonly stock in a company the owner founded or worked for. It is the dominant risk in many first-generation portfolios and often the hardest to reduce, for tax and emotional reasons alike.
Planning
Liquidity event
A liquidity event is a transaction that converts an illiquid holding into cash — most often the sale of a business, but also a recapitalization, an IPO, or a large property sale. The planning decisions that matter most are generally made in the months before it closes, not after.
Generational wealth transfer
Generational wealth transfer is the movement of assets from one generation to the next, through lifetime gifts, trusts, or an estate. The mechanics are a legal and tax question; whether the transfer succeeds in the way the family intended is largely a governance question.
The industry
Fiduciary
A fiduciary is legally obligated to act in a client's best interest, disclose conflicts of interest, and put the client's interests ahead of their own. Registered investment advisers are held to a fiduciary standard. Not every financial professional is a fiduciary, and the distinction affects how advice is given.
Registered investment adviser (RIA)
A registered investment adviser is a firm registered with the SEC or with state securities regulators to provide investment advice. RIAs are held to a fiduciary standard and must file a Form ADV disclosing services, fees, conflicts of interest, and disciplinary history. Registration does not imply a particular level of skill.
Form ADV
Form ADV is the disclosure document every registered investment adviser must file and keep current. Part 1 covers the firm's business and ownership; Part 2 is a plain-language brochure describing services, fees, conflicts of interest, and disciplinary history. It is publicly available and free to read.
Fee-only
A fee-only adviser is compensated solely by client fees and receives no commissions, referral payments, or third-party compensation from product providers. It differs from fee-based, which describes a professional who charges fees and may also earn commissions.
Family office
A family office is an organization that manages the financial and personal affairs of a wealthy family. A single-family office serves one family and generally requires very substantial assets to justify its cost. A multi-family office serves several families and spreads that overhead across them.
Multi-family office
A multi-family office provides family-office services — investment management, tax and estate coordination, governance, philanthropy, and reporting — to several families at once, sharing the cost of specialist staff across them. Minimums are typically far lower than a single-family office requires.