How to get your family on the same page for better wealth management



There are very few families who properly prepare for the intergenerational preservation and creation of wealth. As part of your legacy it is important to structure the transition of your wealth so that both its distribution and investments continue to be optimised to benefit your family. As wealth managers we understand that in most cases, when we manage wealth pathways for our client, we are managing legacies for the long-term benefit of their family too - so over the fullness of time, their needs, thoughts and goals need to be considered as part of a family wealth plan.

Step One on the Absolute Wealth Advisers Family Wealth Pathway is to develop a clear set of values and guidelines for distribution, investment and lending of funds, which will provide all family members with a deep understanding of their own access to, and responsibilities for the family wealth pool. This process helps to create a shared sense of purpose and a collective sense of what is most important to your family.

Creating a family mission statement provides a uniquely powerful opportunity for families to come together to discuss basic, foundational questions:

  1. Who are we and what do we value most?

  2. What is our place in society and how do we want to be perceived?

  3. Where are we going together as a family?

  4. Which path shall we take and how will we know when we have arrived?

How to Define Your Family Values and Family Purpose Work as a Team

Parents often are tempted to create a first draft of a family mission statement (or even the final version) and then deliver it to their kids. Because family mission statements are not binding legal documents, they operate as a guide only to the extent that they are persuasive. In many families, the “top-down” approach of simply delivering a document to children will not create the necessary sense of participation and ownership for children to feel the document is truly theirs. As a result, families generally find that the most successful experience is one that involves all adult family members and gives them a meaningful place at the table.

Be as Inclusive as Possible

Some families instinctively want to limit the process to their own children, excluding in-laws, but it can be better to include them. They are members of the family and are, or may become, parents of future generations. The family mission statement is more about qualitative family matters than actual numbers that reveal the complete extent of family financial capital. Excluding partners and spouses of your children may generate resentment and impede buy-in.

Air Disagreements Openly and Respectfully Even close families will have differing views on some matters. The discussion necessary to create a family mission statement provides the family with a formal, structured way to explore how and why they disagree. Mistaken perceptions can be corrected and opposing viewpoints may be resolved or narrowed.

Engage a Facilitator or Mediator Most families don’t normally engage in the kind of philosophical conversations needed to create a family mission statement, so the process may feel a little weird at first. With the help of a skilled and experienced facilitator, the awkwardness fades away and the discussion becomes more honest and robust. The facilitator can also be helpful when it comes time to distill the conversation into the formal written statement. Sometimes our wealth advisers take the role of facilitator in these discussions but if the family is quite large or particularly complex we will employ a professional mediator to run the discussion.

Foster an Open-Ended Discussion We encourage open-ended, unstructured and free-flowing family discussion around the questions below:

  1. Recognizing that our family has created substantial financial capital, what does it mean to us?

  2. Why was it important to us to build it?

  3. What sacrifices did we have to make along the way?

  4. What is it all for?

  5. Is it important to us to steward our financial wealth for future generations?

  6. If so, how will we do that?

  7. What do we most hope to achieve as a family, and how do we want to be remembered?

How long does the process take?

For a two-generation family it generally takes around one and a half days to create a mission statement:

DAY ONE:

Take four to six hours for a directed discussion of the key issues and questions. Take regular breaks to keep everyone energised and focused. Your facilitator can then distill their notes into a short outline capturing the most important points raised in that day’s meeting.

DAY TWO:

Your facilitator distributes copies of the outline to the family so that they may discuss whether they captured all of the most salient points. This also gives the family the chance to determine whether everything they discussed on day one is worth including in their mission statement and gives them the opportunity to make any necessary additions or changes in emphasis. This process typically takes no more than a couple of hours.

Drafting a Document

It’s generally challenging for families to prepare the written mission statement themselves, and the facilitator or wealth manager can play a key role here by preparing a first draft. Once the first draft is ready and all the participants in the family meeting have had a chance to review it, the facilitator should arrange a conversation so that everyone can offer any thoughts and comments to be incorporated into the next draft. This is typically an iterative process, with the facilitator taking further comments and revising until the family says this is our final mission statement.

Sign the Statement

Once the family believes the mission statement accurately reflects who they are, it is time for everyone to sign the statement. By signing the statement, family members acknowledge their personal commitment to the collective mission they helped to define.

Keep Your Values Alive 

No matter how powerful the discussion that led to the creation of the mission statement, and notwithstanding how successfully the statement is drafted, families do not derive the full benefit of the process if they put it in a desk drawer and never visit it again. A mission statement only makes a real difference if it becomes woven into the fabric of your life together as a family.

Families should make the mission statement the centrepiece of an annual meeting, where they ask themselves four questions:

  1. Does the mission statement we created still reflect our foundational principles?

  2. If it doesn’t, typically because of changed family circumstances, how do we fix it?

  3. If it still reflects who we are, have we lived our lives in accordance with it?

  4. And the most important question: If we haven’t, what do we have to do to get back on track?

What are the benefits of creating a family mission statement?

The families who go through this process year in and year out, continually asking themselves these four questions, get three things most of us probably don’t have:

A destination: “Where are we going together in life?”

A flight plan: “How do we get there?”

A compass: “How do we know if we have veered off course and, if we have, how do we adjust our course to get back on our flight plan?”


We've put together an example of what your values and mission statements might look like. These are guides only. The final versions will be as different and unique as every family.


DOWNLOAD A SAMPLE FAMILY VALUES

Absolute Wealth Advisers Family Wealth P
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Download • 143KB

DOWNLOAD A SAMPLE FAMILY WEALTH MISSION STATEMENT


Absolute Wealth Advisers Family Wealth P
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Download • 124KB


by Paul Barrett. CoFounder and Director of Absolute Wealth Advisers and creator of the Family Wealth Pathway.