5 Strategies High-Net-Worth Families Use To Build Generational Wealth

You’ve undoubtedly heard the expression, “It takes money to make money,” and this idea rings true for many high-net-worth families. Many of these families implement strategies that enable them to use the wealth they currently have to grow an even larger net worth, ensuring they can pass down wealth for generations to come.

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“For high-net-worth families, building generational wealth isn’t just about growing assets — it’s about ensuring that wealth is tax-efficient, strategically structured, and properly transferred to heirs in a way that protects and maximizes its impact,” said Bill Smith, retirement income certified professional (RICP), master registered financial consultant (MRFC) and founder of W.A. Smith Financial Group.

Here are five of the top strategies used by high-net-worth families to build generational wealth.

Educating Future Generations

High-net-worth families take the time to educate their children about what it takes to be financially successful.

“True generational wealth starts with financial education,” Smith said. “High-net-worth families prioritize teaching heirs about investments, tax efficiency and wealth stewardship so they can make informed financial decisions rather than mismanaging their inheritance.”

Disciplined Investing

Wealthy families invest consistently with a long-term perspective.

“Wealthy families don’t just invest to grow — they invest with purpose,” Smith said. “Their plans prioritize income generation, tax-efficient investing and disciplined market strategies to sustain wealth over generations.”

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Building a Collaborative Financial Team

Managing wealth can be complex, so high-net-worth families employ a whole team of professionals to make sure they are doing so effectively.

“The wealthiest families don’t rely on a single advisor,” Smith said. “They work with a team of professionals — financial planners, tax strategists, estate attorneys and investment specialists — who collaborate to ensure every decision is tax-optimized and aligned with long-term family goals.”

The team may also include insurance agents.

“Ask your fiduciary advisor if you need life insurance,” said Gerry Barrasso, certified public accountant (CPA), certified financial planner (CFP), founder and president at United Financial Planning Group. “If you do, have them recommend an insurance agent and make sure they aren’t collecting commissions off the back end. An easy way to do this is to work with a fee-only advisor.”

Utilizing Advanced Wealth Transfer Strategies

Building generational wealth effectively also means having a well-thought-out transfer strategy.

“Effective legacy planning isn’t just about passing down assets — it’s about preserving and protecting those assets from unnecessary tax burdens,” Smith said. “Many families leverage revocable and irrevocable trusts, life insurance inside trusts and strategic lifetime gifting to reduce estate taxes and maximize what heirs receive.”

Exploring Alternative Investments

Many high-net-worth families use alternative investments to generate passive income and achieve long-term growth.

“While alternative investments aren’t a core strategy, high-net-worth families often allocate a portion of their portfolio to alternatives once their core investment and retirement income needs are met,” Smith said. “This allows them to diversify, generate passive income and create additional opportunities for long-term wealth expansion.”

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