Capital is Not the Seat of Government and Money is Not True Wealth

Business, Lifestyle
Reading Time: 7 minutes

By Kip Kolson, Special for USADT  


America is considered a country founded on capitalism and a free-market system. This has allowed many individuals and families to amass significant wealth. I imagine you naturally interpreted the words capital, capitalism, free-market, and wealth in monetary terms. These are credited with making America the productive country and world leader it is today, and rightly so.

Unfortunately, many people think the geographical definition of Capital, interpreted as government, is the answer to all our problems. It is not, so ignoring the political connotations, capital is defined as, “Capital, especially in the form of financial or physical assets, used in the production or accumulation of more wealth.” Net worth is defined, ‘An individual or company’s assets minus liabilities in which assets exceed liabilities.” Wealth is, “an abundance of valuable material possessions or resources; riches.” Finally, asset is defined as, “(1) a valuable item that is owned, (2) a useful or valuable quality, person, or thing; an advantage or resource.” It is my intent to underscore how the world puts the emphasis on the monetary definitions, when I believe that last definition, “a useful or valuable quality, person, or thing” is what really allowed capitalism and a free-market system to create the exceptional lifestyle we enjoy in this country.

Other forms of capital are more important and responsible for the wealth of our nation and citizens. In addition to Financial Capital, there is Intellectual Capital, Social Capital, Human Capital, and Spiritual Capital. Without the last four, the Financial Capital is irrelevant.

At Family Wealth Leadership we strive to achieve Significance for our clients and families. To do so requires the family and every individual to define what significance would look like for them, but it must be grounded in Service. If you cannot define and create a mission statement around the service you bring to the world, you will never achieve significance. If no one finds the service you provide valuable to them, although you may enjoy what you do, it is a hobby, not a service.

The American economy runs on Human Capital. It requires humans to buy what other humans invent, manufacture, distribute, and sell. Our current situation related to the Coronavirus is a perfect example of what happens when a large portion of Human Capital is shuttered and unable to conduct a normal and productive lifestyle. Business revenues sharply decline, unemployment skyrockets, rents are not collected, non-payment of mortgages raises the possibility of foreclosures, store shelves are empty of needed items, some businesses close, never to reopen and bankruptcies rise, savings and retirement accounts are depleted. Financial Capital dries up.

Similarly, Social Capital suffers. We cannot shake hands, hug, or kiss. Gathering in one place for dinner, a movie, or sporting event is prohibited. If we go outside or to the store, we must keep at least six feet between us. Communications is reduced to texting, maybe a phone call, and Zoom or Skype virtual meetings. It is almost impossible for businesses to sell products, obtain new clients, and create trusted relationships with the clients they are supposed to serve. Relationships require interaction and personal contact with other human beings. Financial and Human Capital take the hit when Social Capital is non-existent.

Intellectual Capital drives innovation and production. It trains people to be successful at whatever job or career they choose. The plumber, carpenter, fire fighter, police officer, farmer, scientist, doctor, educator, entrepreneur, business executive, retailer, barber and stylist all need some form of education and experience to accomplish their work. Today schools and universities have closed their campuses, so students are required to take online courses. That helps, but it not the same as being in a classroom with a live instructor and other students. And how does one get experience if they cannot go beyond the walls of their home to a job, interact with people, have a trainer and mentor, try new things and have successes and failures? People need people who are trained and educated at what they do best and serves others. Intellectual Capital is a significant contributor to Human and Social Capital, and all are necessary to produce Financial Capital.

Finally, Spiritual Capital is the foundation on which everything rests. Whether you believe in God, are involved in another form of religion, or consider yourself to be an agnostic or atheist; the truth is everyone puts their faith in something. Again, our current economic and health situation with the Coronavirus demonstrates why faith is critical. Without faith, we have no hope, and people who do not have hope experience depression, and in extreme cases, suicide. Without hope, people give up. They have no reason to try or to succeed. Without hope we do not need to learn, we do not need to socialize, and we do not need help from other people. Spiritual Capital also directs people into philanthropic endeavors. When people have hope, they want to use their capital to give other people hope. Without some form of Spiritual Capital, there is no need for Human, Intellectual, Social, or Financial Capital.

My purpose for reviewing the types of capital is to draw the comparison between societies and families. Every family has Spiritual, Human, Social, Intellectual, and Financial Capital. The problem is the emphasis in too many families and their advisors is on the least important form, Financial Capital, especially since it is a product of the effective application of the other four rather than the initiator. Whether a family or individual has little or substantial Financial Capital can be directly tied to how they use their Spiritual, Social, Human, and Intellectual Capital. That said, they are all interrelated and dependent on each other. How the Financial Capital is acquired and used can have a positive or negative effect on the other four, and vice versa. Our differentiator at Family Wealth Leadership is to first focus on the Spiritual, Human, Social, and Intellectual Capital in the family because we know if those four are performing well, the Financial Capital will take care of itself. When those four are not working well together, fights and battles over and for the Financial Capital will be the end result.

Once we have helped the family gain clarity on the Service they offer the world, the next requirement is good Stewardship of their True Wealth if they hope to become Significant. The formula is Service + Stewardship > Significance and that is always our objective. We added the word “True” to Wealth because most people think of wealth only in financial terms. We actually use the phrase “the Four Ts of True Wealth.” They are Time, Talent, Training, and Treasures; the last being the financial. However, as with the forms of capital, we believe Time, Talent, and Training to be of greater importance.

If I told you from this day forward, you can only keep three of the four Ts, which would you be willing to give up? You can reacquire the one you give up, but you must start over for that one. Most people agonize over this decision when asked, but eventually settle on giving up the Treasures. If that was your decision, why are you willing to temporarily give up the Treasures. The answer becomes evident, it is because you can always acquire Treasures if you have the Time, Talent, and Training needed to do so. Here again is the paradox in the financial industry. Financial advisors, accountants, attorneys, bankers, insurance professionals, and clients focus only on the one thing everyone is willing to give up, which makes no sense.

This is especially important when there is a family business involved and it and the wealth will transfer to future generations. The Financial Capital takes precedence over the family’s Human, Spiritual, Intellectual, and Human Capital. Isn’t it better to use the five forms of capital to help the next generation learn how to use Time effectively, get the proper Training to develop their Talents, and then use those Talents to preserve and grow the Treasures (Financial Capital)? Legal documents are still necessary but should allow, not restrict, a family to make decisions and act using their Time, Talent, Training, and Treasures to constantly improve the entire family’s five forms of capital so all generations benefit.

Traditional estate planning attempts to solve with legal documents problems that are unforeseen and yet to occur. Ultimately, it fails and leads to family conflicts and battles over the family business and wealth. That is not to say wills and trusts are not necessary, they are, especially if the wealth and family are relatively small.

No legal document can anticipate all the issues that can arise or the personalities, needs and desires of all family members, and economic conditions. An autopilot may work in a plane or sailboat during good weather, but when storms, lightning, and headwinds come up; there needs to be away to change course and adapt to new and varied circumstances. Legal documents are paper autopilots.

We believe the best entities for helping families navigate successfully through the storms of life are a family foundation and family office. A family office effectively converts a group of individuals into an ongoing for-profit operation that benefits everyone in the family. The family foundation is similar but in a non-profit format. The family office is a team of individuals with different skills, talents, and training that come together to win the game of life. It provides the resources for all members to get the training, experience, and leadership they need to be successful and self-sufficient. Like all teams, it needs a coach. Family Wealth Leadership provide the services, coaching, advisors, trainers, and administrators to create, operate and prosper both entities, but the family members still play the game.

The financial industry has developed the abbreviation HNW, which stands for High Net Worth individuals and families. The question is what is HNW? Is it a net worth of $1 million, $10 million, $100 million, or $1 billion? The answer is it depends. The $1 billion family may think $10 million is pocket change.

Creating and operating a family office and family foundation may not be right for every family, but are often the best solution for HNW families. It depends on their objectives and desires to preserve and grow the family capital through multiple generations, build a legacy, and become significant. A $10 million family can achieve significance whereas the $1 billion family may not if the goal of the latter is just to accumulate more and more wealth. Remember, Significance is achieved through Service and Stewardship. If Service is not the driving force, significance will elude that family. As we put it, Significance is bestowed; it cannot be bought, acquired, or inherited; “a man’s life does not consist in the abundance of his possessions.”[i] Significance can only be achieved when all five forms of capital and True Wealth are used to serve other people rather than only yourself.

Our current health crisis has given us countless examples of people and institutions who have achieved significance. Yes, sometimes it is Financial Capital, but the medical professionals, fire fighters and police officers, the Salvation Army and Samaritans Purse and their volunteers, the grocery-store checker and persons replenishing empty shelves, the retailers and corporations who donate face masks, the brewery that converts from making beer to making sanitizer,  and neighbors who pick up groceries and deliver them to elderly persons who cannot leave their home; it is their Human, Social, Intellectual, and Spiritual Capital that provides hope for the future of our country and its people and that is what will restore our Financial Capital.

Finally, let me leave you with a great example of a man who did not use Financial Capital, but used his Human, Spiritual, Intellectual, and Social Capital in a small way to achieve significance for others and in doing so, himself. Watch the video



Kip Kolson is the president of Family Wealth Leadership, a multi-family office and family coaching firm, and author of You Can Have It All; Wealth, Wisdom, and Purpose—Strategies for Creating a Lasting Legacy and Strong Family. You can order your copy at Amazon, the FWL website below, or email


[i] Luke 12:15 (NIV)


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