Brett Anderson & Thomas Kostigen
12/01/2003
The following article is an excerpt from The 100 Year Plan series from the December, January, February and March editions of Robb Report Worth. To subscribe or to order back issues, please call (800) 777-1851 or order online now.
Who We Are
To its human characters there is salvation in nothing else in the universe," wrote Baroness Karen Blixen in the 1950s. "For within our whole universe the story only has the authority to answer that cry of the heart of its characters, that one cry of the heart of each them: Who am I?"
For Blixen, the story was indeed her salvation. The author of Out of Africa, daughter of an aristocratic family, found her true vocation, after the failure of her coffee farm in Kenya, writing tales inspired by the adventures of her grandfather—a soldier and landowner who knew Hans Christian Andersen—and her father, Wilhelm Dinesen, who, under the nom de plume "Boganis," wrote of his travels in 19th-century French Canada and the American Far West. Intensely proud of her father and conscious of her heritage, she listened at her father’s knee to accounts of his exploits, and this identification with the Dinesen legend would manifest itself in the name under which she published her writings, Isak Dinesen.The past can be a powerful resource for meeting challenges. Franklin Delano Roosevelt often remarked on the qualities he shared with the risk takers, entrepreneurs, and deal makers of the Delano clan. He loved to hear his grandfather, Warren Delano II, who made his fortune in the China trade, talk of seafaring ancestors, such as Amasa Delano, who circled the globe three times and who was the first to copy down an account from the mutinous survivors of the Bounty. Roosevelt’s fascination with this history influenced his later decision to seek the post of Assistant Secretary of the Navy (one his cousin, Theodore, had held decades before); but more importantly, the values and traditions he carried with him from these sagas gave him the strength of character, the moral fortitude, to stand his ground during the most difficult hours of his presidency.
The stories of our families—the aggregate of ours and our predecessors’ experiences, knowledge, beliefs, and accomplishments—are the raw materials from which our own identities are hewn. The family mission statement is at once the expression of this identity and a means of fulfilling the common goals that will enable us, as a group, to prosper and learn. The term derives from the often-employed metaphor of the family as a business; yet the analogy continues to be a useful one, for the object of the family mission, in most cases, runs parallel to that of the well-managed enterprise: to organize our financial, intellectual, and human assets for the purpose of preserving and enhancing each of these in succeeding generations.
| Bill Gates on Stewardship "I am the steward of a share of society’s resources," says Bill Gates, chairman of Microsoft Corp. "Eventually, I’ll return most of it as contributions to causes I believe in, such as education and population stability.... Giving away money effectively is almost as hard as earning it in the first place. I’m many years away from wanting to divert a lot of my attention in that direction—and I don’t want to presuppose today what my thinking will be then.... One thing is for sure. I won’t leave a lot of money to my heirs, because I don’t think it would be good for them. So my children...can dream of being rich. But if their dreams come true, it won’t be because dad gave them a lot of money." |
How our families accomplish this goal is predicated on our values and history—who we are. The process we follow will depend, too, on the stage our family is at in its development—its complexity, the number of generations represented, and their relationship to the businesses or structures that comprise our finances. A family with young children just starting out has as much need of a mission statement as a family five generations old, yet the missions themselves and methods for executing them will necessarily differ. A couple in their 30s with toddlers will elaborate their mission themselves, involving the children at different stages of participation; a very large extended family will require more formal processes to engage its members.
Amy Braden of the Family Wealth Center at JP Morgan Private Bank cites the example of the Mogis of Japan, whose family has owned Kikkoman since the 17th century. "This family has flourished for hundreds of years, not just 100," she says. "Their assets are very diversified at this point, and there are many, many family members and branches of the family. The more complex and larger the family and the assets become, the more the vision and mission come to be very simple. Three key principles the family keeps coming back to are peace within the family, prosperity for the family, and progress in the business."
As Braden notes, our missions adjust to our needs, becoming either more complex or streamlined as our situations change. Still, when honing them, all of us should clarify three key points:
• Our families’ shared values
• The quality of communication
• Rules and procedures for interacting.
A Value Shared Is Value Earned
A common history presupposes certain common values in all of our families, and—as with individual fingerprints—no two sets are identical. But discovering those common values within our family group (even if it consists only of husband and wife) sometimes takes effort. "Before you can even do a mission statement, you have to be able to be aware of what your value system is," observes Judith Stern Peck, director of the Family Wealth and Family Life program at the Ackerman Institute for the Family in New York City. "We work with people to help them become more aware of what their values are."
One of the exercises that Peck employs with her clients involves prioritizing "thought" cards that enumerate ethical, relational, philanthropic, and economic values, such as honesty, justice, and fairness, family, friends, work
associates, and so on. Once the client has done this, she then asks a series of questions designed to highlight discrepancies between values and behavior. A person who prioritizes family in the exercise, but who is constantly absent from home, has not necessarily internalized that value. "The greater the discrepancy between what one says and what one does, in terms of the family business, the greater the dysfunction." What is important, Peck says, is that the family initiate a constructive conversation on these topics in order to find their commonality and resolve tensions.
This resolution is critical in that all generations of our families need to buy into these values. While the head of the family is often the one to articulate its mission, each individual must internalize these ideas if they are to be acted upon, and so there must be agreement among members. Another useful practice in framing a mission statement is to ask individual members to write their own life missions—to describe, in other words, their own personal and financial goals; these can then be used as talking points in developing an overarching document for the larger group.
Brower divides assets into four categories, which he calls quadrants: Financial assets, human assets, intellectual assets (life’s experiences, good and bad), and civic (philanthropic) assets. These four quadrants become a point for all the family’s planning and decision making, right down to a family vacation. Brower encourages families to record their values and intentions in documents to be shared with each other. An ethical will, he suggests, should be created, and a family-empowered bank be devised in which all human, financial, and intellectual assets can be accounted. Ceremonies and traditions in families are also important. Some of the families he works with have ceremonies wherein, at the age of 17, a member will get a seal-crested ring, designed and passed down to new members of the family, including in-laws. One family he works with has carried on this ceremony for centuries. Games too are important. "Anything that is unifying and encouraging of communication, we suggest," he says.
Forging Connections
In both apprehending our mission and carrying it out, good communication is essential. While this may seem obvious, sharing information in the context of our family finances can be especially challenging, since we must do so with the aim of building long-term cohesion and each member’s sense that they are part of a team.
"Two parents with adult children—how they communicate and what they need to communicate—is very different than a fourth- or fifth-generation family with multiple family branches spread all around the world," says Braden. "A third- generation cousin who is asked to play a key management role in a family holding company quickly realizes that, unless there is communication among the other cousins, it’s very difficult to get very clear directions and decisions made."
In first-generation families, Braden says, farsighted parents recognize that children, as they assume greater responsibilities, will have difficulty reaching consensus without some form of connection among themselves. This connectedness can begin with simple conversation around the dinner table, or it can take the form of family retreats, at which the entire group engages in team-building projects, much like an executive retreat strengthens dialogue and forges bonds between managers. The form of communication is as important as the specifics of what is being shared, he says. "We’ve found that family members who feel that their opinions are heard are more likely to support the group’s decision, even if it’s not their own position."
Resources Next month, in Part Two of our series on "Building Your Family’s 100-Year Plan," we explore in detail how financial institutions and advisers support our long-term missions and the family structures that oversee them: » 100 Year Plan Part II: An Industry in Flux
Rules of Engagement
Family meetings, formal or informal, are obligatory tools for defining and implementing our families’ missions; but these meetings need to be governed by rules that establish how information is shared and decisions are made. These rules are a byproduct of the family’s structure of governance, which varies widely. A first generation family is usually headed by one or both parents; a larger multigenerational family, however, will need to have governing structures that enable its members to choose representatives from among their ranks to interface with the numerous institutions and financial entities that manage their resources—everything from the family office and private bank to charitable trusts—all the while maintaining the integrity of the group’s mission. Because the participation of individuals is so crucial to team building, not to mention to the individuals’ long-term contributions to the family wealth, most of us choose a representative system of family government, the family council. The procedures surrounding these councils should include:
• Timetables for family meetings—when and where they take place
• Guidelines for how issues are presented and decisions are made
• Divisions of responsibility with procedures for assigning each family member’s role
• Accountability—methods by which members report back to the group on their activities.
Like our mission statements themselves, these systems must be flexible. Circumstances change, however only as a result of major shifts in the underlying values of the current generation, not just as a matter of convenience.
"You want to have clearly defined roles and balances of power," explains Braden, "but you also have to have the flexibility to adapt as needs change. If the family dynamics change, but you have exactly the same structures in place, then communication can break down. Conflicts break out, and family members don’t speak to each other. The chances are that those conflicts will then be resolved by lots of lawyers."
Additional Information
Family History: Tell It
On Land and Legacy
Fear and the Family Meeting
Ackerman Institute
for the Family,
212.879.4900,
www.ackerman.org
Bessemer Trust,
212.708.9295,
www.bessemer.com
Empowered Wealth,
801.397.3300,
www.empoweredwealth.com
Goldman Sachs,
Private Wealth Management,
877.GOLDMAN,
www.gs.com
Handler, Thayer & Duggan, LLC,
Attorneys and Estate Planners, 312.641.2100,
www.htdlaw.com
JP Morgan Private Bank,
877.576.6616,
www.jpmorgan.com
Illustration by Jonathan Barkat
» 100 Year Plan Part II: Are You Being Served?
» 100 Year Plan Part II: How to Say Goodbye