Businesses have mission statements, why not families?

This has been the thinking for a long time among many of those who serve wealthy families. While families of all income levels could benefit from devising a mission statement, this is often more critical when a family’s wealth significantly exceeds its needs. In some cases “no one will be able to spend all this money in their lifetimes, so they need some guidance as to how to use this money in other ways,” says Keith Whitaker, a counselor at Wells Fargo Family Wealth. “The family mission statement focuses on the purpose of the wealth, what the family wants to accomplish and how to accomplish it.”

There’s a darker reason for families to devise a mission statement for their wealth: “To make sure the children don’t sue each other,” says Vic Preissure, chief executive at the Institute for Preparing Heirs. “We’ve interviewed over 3,000 families and the only thing the children agree upon universally is that they’ll share the expenses to break the will.”

To avoid that, family wealth counselors advocate getting family members to sit down and hammer out a mission statement while the patriarchs and matriarchs are still alive. The mission statement not only gives the family wealth a purpose, but also helps unite the family around objective goals instead of subjective resentments.

The key to a successful mission statement is including all family members, says Preisser. “Family includes spouses and of age children who are 18 and up. If you don’t have the entire family there developing the mission statement, then it’s only mom and dad’s mission or the immediate family’s mission.”

You have to be sure to define the terms of the mission statement so the family’s professional advisors can interpret it correctly, says Preisser. “Without a definition, how can trustees and managers know what’s payable or not?” He recently helped a family write a mission statement about education that was only 23 words long. The definition of the word “education,” however, is 1550 words long, defining that educational institutions had to be accredited, included technical schools and that the wealth would support mom if she wanted to go to grad school or dad if he wanted to attend a culinary institution as well thr children’s education.

Finally this process requires an objective counselor or facilitator. “Without a facilitator, mom and dad drive the agenda and the children don’t engage in true open and honest participation,” says Preisser. “Family leaders tend to focus on their own issues and priorities and control the meetings. To the heirs, that feels like lecture time instead of participation time.”
The process involves interviewing each family member alone and in some cases giving them a questionnaire to help them express or explore their issues and feelings. Then bringing the family members back together with a clearer insight into each one’s feelings and hopes. The Institute for Preparing Heirs, for example, gives each member of the family a 50-question assessment to help them think about their values and positions and so the facilitator can help everyone participate.

Daniel J. Gardner, senior family governance advisor at Wilmington Trust, takes each family member through a self-assessment process using standard tests such as the Myers-Briggs personality test to help them assess their aptitudes, interests and temperaments. “Initially we do that individually and then bring the family members together to share their unique profiles,” says Gardner.  “We then begin a family conversation around what type of shared vision they can come to.”
While this can be time-consuming and hard work, it’s usually worth it. “When you facilitate a discussion that leads to a shared vision, it makes the goals much clearer the family gets excited to move forward together,” says Gardner. “The best way to move family members away from conflict is to move them toward a shared mission.” Every family already has some kind of mission and purpose, he says. It really comes down to being able to carve out the time to think it through and commit it to paper.

“A big part of what I’ll do is point out what the children are trying to say which is not being heard,” says Joel Judenfreud, a family business advisor at Citi Private Bank.

But the parents have to be open to listening to and incorporating that information into the family’s mission. “To some people it’s just a fad they heard about at the golf course,” he says. “Parents really have to share with the next generation what the wealth and values are. It doesn’t work if people are not willing to think it through and aren’t able to give up total control.”

Often when parents don’t want to deal with family strife, they put their desires for the money into documents that children see for the first time when they’re gone, Judenfreud says. The problem is that when parents try to force children into a family foundation for example after death, it usually devolves into a family feud. “Trying to get people to communicate after parents are gone almost never works,” says Judenfreud. “The best time is to start now. I know so many people where millions are going into a family foundation and the kids have no idea.”



Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access