What are the family’s issues?
The groundwork for family governance needs to be established by encouraging the family to discuss very general topics. What are the issues the family faces today? Whether a book, video or a speaker at a community foundation event initiates this discussion, the family is introduced to the concept of family governance.
Identifying Communication Styles
Families may not be aware that individual communication styles can have a negative effect on the success of family discussions about wealth, or any important topic. One way to learn about these communications styles is to have a family wealth expert administer the Stratton Interpersonal Leadership Styles Test. Created by the Stratton Consulting Group, this test takes under 10 minutes to complete and helps each family member to determine his or her style of communication and how to use it as a strength instead of an impediment. By participating, each family member’s style of communicating in a group setting rises to the surface. The Stratton test helps families understand how to communicate with each other in a way that makes each person want to be part of and contribute to family discussions.
What are our family values?
What do we talk about? How do we talk about family values? Family values sounds warm and fuzzy but it can be much more difficult to begin at the dinner table than it sounds, “Let’s talk about family values – kids, you start.”
So where do you start?
One very helpful tool is to take the family through a values test, such as the 2164 group deck of cards. Each card in the deck has a different value listed on it and everyone in the family starts with a deck of these cards and puts them in order according to which is most important. In most cases, certain words will have risen to almost everyone’s top of the deck and certain words will be down at the bottom. But there are outliers that come up too and it’s enlightening to discuss where certain values came from and why they were put at the top.
How can philanthropy help demonstrate our values?
Once the family generally understands what the issues are as a group, and agrees on shared values , it is time to bring in family philanthropy. How would we – emphasis on we, not me – give some of the money in our donor advice fund, for example, to the charities we care about? For philanthropy to succeed, this is the best place to start discussing it and ensure that the children are a part of the decision making.
Many wealthy individuals think of their financial wealth in different categories: investment management, estate planning and lastly preparing their family for the money they may inherit. When it comes to concerns about readiness, most parents have just an informal discussion or miss the opportunity to have a discussion at all. They might have heard about ideas such as creating a family mission statement but in practise didn’t take action on them. By thinking of these areas as separate, not only do they sub-optimise what they could do in each one them, they usually build mental barriers between those areas.
I recommend pulling these areas together. First, protect and grow your money. Second, prepare the money for your family. And, third, link these together.
Remember: It’s not just estate planning and investment management that make wealth planning successful. It’s the communication, family values and the philanthropy piece – linked to the financial capital – that can make a significant difference.
