{"id":431,"date":"2023-06-05T10:00:00","date_gmt":"2023-06-05T10:00:00","guid":{"rendered":"https:\/\/iqeq.com\/ch\/insights\/family-wealth-governance-the-importance-of-the-family-mission-statement\/"},"modified":"2024-08-16T13:04:05","modified_gmt":"2024-08-16T13:04:05","slug":"family-wealth-governance-the-importance-of-the-family-mission-statement","status":"publish","type":"post","link":"https:\/\/iqeq.com\/ch\/insights\/family-wealth-governance-the-importance-of-the-family-mission-statement\/","title":{"rendered":"Family wealth governance: the importance of the family mission statement"},"content":{"rendered":"
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The topics of family succession, value creation and generational wealth transfer have been at the forefront of the minds of many wealthy and business families for decades.<\/strong><\/p>\n

Whilst some families deal with frictions and issues in a well-structured and organised manner, there are a lot of well publicised examples of family disputes between siblings after the patriarch or matriarch has passed on.<\/p>\n

The intricacies of relationships between members of super-rich families have even made for Emmy award-winning entertainment, with HBO\u2019s Succession<\/em> recently blessing us with a captivating fourth season of Roy family antics. However, it doesn\u2019t always have to be so complicated and filled with TV-worthy drama.<\/p>\n

The key ingredients of successful family wealth preservation, growth and transfer are communication, conflict resolution strategies and the right structure around the decision-making. But where to start?<\/p>\n

Key to effective family wealth governance is agreeing on the family\u2019s values, both individually and as a family unit<\/strong> \u2013 creating a family mission statement. This may be the most difficult exercise, as each family member\u2019s values and priorities may differ. In particular, what is deemed important by one party is often starkly different between generations or branches of the family.<\/p>\n

How do you achieve the creation of a meaningful family mission statement?<\/h2>\n

Usually, the first generation (G1) of the family are the wealth creators, and they perceive it to be their role and responsibility to act as the stewards of how their wealth should be managed. The key to overcoming this challenge is to work with an independent advisor<\/strong> who will be the \u201cintermediary\u201d between the family members. That intermediary\u2019s task is to stay neutral and objective and as such it is important that he or she will be a person independent of the family.<\/p>\n

The process of formulating the family mission statement can involve one or several family meetings <\/strong>whereby the family (G1 and G2) get together and discuss, in a collaborative and inclusive way, what core principles and values should bind them as a family.<\/p>\n

The product of those meetings should be a document summarising the family\u2019s vision, values and its mission statement<\/strong>, i.e. what is it that the family intends to achieve with its wealth (for themselves but also for others) and how is this going be done.<\/p>\n

When this is done properly, this should be a live and dynamic document<\/strong>. Families\u2019 circumstances naturally change over time, so the mission or key objectives may need to evolve to reflect those changes. It is also a good practice for the document to be reviewed on a regular basis by the family during a family governance meeting, allowing each family member to confirm that it continues to make sense for them.<\/p>\n

Crucially, the core principles and values outlined in the family mission statement need to be elevated above any one person\u2019s values, while also not going against the fundamental personal values of an individual family member<\/strong>. Harmony and compatibility between family and individual values is critical for the ongoing success of the family mission statement and its execution.<\/p>\n

What should a family mission statement look like?<\/h2>\n

There are no hard and fast rules on the design and content of such document but there are some key areas that ideally should be included in a meaningful family mission statement:<\/p>\n

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  1. Identification of family members<\/strong> \u2013 Start by detailing who the family members are (G1, G2, G3 if any). This is a good practice to set the scene, especially for future generations who may later gain access to such document<\/li>\n
  2. Brief summary statement<\/strong> \u2013 Outlining why this document is in place and why it is important to the family<\/li>\n
  3. Key family values<\/strong> \u2013 Describe each of them to reflect the mutual understanding of the family, thus avoiding any ambiguity and potential frictions in future<\/li>\n
  4. Key family goals<\/strong> \u2013 Describe each of the key goals that will emanate from the high-level overarching vision. Well-articulated goals will serve as a good benchmark to assess how the family is delivering on what was agreed<\/li>\n<\/ol>\n

    Goals can be divided in the following themes: <\/strong><\/p>\n