Paul Ferraresi

I constantly work with clients helping them define their goals. You need to do the same thing. If you do not have a “mission statement”, then, the driving force to your goal is missing.

This “mission statement” is a guide to preserving a family’s wealth, maintaining intergenerational family unity, and encouraging ongoing philanthropic gifts. Family mission statements are the “construction” for your family’s wealth planning. To start the “mission statement” your financial advisor will discuss what makes up your core values. Here are some questions that I use to start the process:

• Will your current plan successfully transition both family values and family wealth to the next generation?
• How are you preparing your heirs so that wealth is a force for good in their lives and not a burden?
• What should your heirs be doing to prepare for wealth and responsibility?

Centerpiecing Core Values

A family wealth mission statement outlines what the family wants to be and do, and the values and principles on which those goals are based. The statement is a testament to a family’s core values. Creating a family wealth mission statement can help a family to determine those values. Through a discussion about wealth and how to best use it, family members can learn from and about each others’ priorities and principles. It can be a “roadmap” to help identify and achieve financial goals and objectives, such as educating children and grandchildren or leaving a legacy for future generations and a charity through philanthropic gifts. It can also provide meaning and context to a family’s wealth in terms of how that wealth could be used to benefit both the family and the community.

Creating a family mission statement can open a dialogue about money and wealth among family members and, in particular, teach the younger generations the meaning of wealth and the responsibility that accompanies it. Often, parents do not know how to approach the topic of money with their children and some may be concerned that children who know about the family’s wealth may lose their ambitions or aspirations. A family mission statement created through conversations about the meaning of the wealth can provide a child with important perspective and offer a financial knowledge base. (See the www.familybusinessconsulting.com article, “Raising Healthy, Wealthy Kids: Improving Your Chances”, by Jane Hilburt-Davis, and the “Educating Your Clients…” sidebar.)

Here are a few questions you should ask yourself and family members to begin:

• What are our family’s priorities and values?
• Are there any goals that we want to achieve as a family?
• What are our family’s individual (e.g., college) and collective (e.g., wealth transfer) needs?
• How can we serve our community?
• If someone were to write an article about our family in 20, 50, or 100 years, what would we want it to say?

There are three basic sections of core values:

• Wealth Values: To what end will the family build and manage its wealth
• Philanthropic Values: What is the role of the family in the community? What should members of the family do to ensure the community remains healthy?
• Interpersonal Values: How should family members behave toward each other? How should disputes among family members be resolved?
• A fourth section may be added if your client is involved in a family business. For simplicity’s sake, this could be called “Business Values” where you would want to ask how the family business should operate, and in what industries, and for what purposes?

Put it in writing

A discussion is fine, but, putting the mission statement in writing gives it credibility and emphasizes its importance. The mission statement need not conform to one specific structure. The statements can be as short or long as the family wants. The length can range from two sentences to one full page (this could include information on the family’s history and how its wealth was created). Here are some examples of family mission statements:

• “To use our resources to strengthen our family and to support causes in which we believe;
• To strengthen our family and use its assets wisely; to enable our family and others to realize their fullest potential; to value and encourage love, work, self-sufficiency, and cooperation within the family and the larger community;
• To live with integrity and make a difference in the lives of others.”

Whatever the length and the goals of the family wealth mission statement, it is imperative that each family member be committed to the statement’s goals and purpose. You should realize that a family wealth mission statement cannot be decided by the senior generation alone if it is expected to be followed by all family members. Studies have shown that, for the mission statement to be effective, it must incorporate a joint sense of purpose versus one dictated by the patriarch or matriarch.

The statement should be reviewed regularly to ensure that the goals are still relevant. Review their mission statements every three to five years, as well as after any major family event occurs, such as the birth of a new generation, the entrance of the younger generation into the workforce or the death of a grandparent.