“Dad, who gets the Scout when you go to Heaven” Dilynn Henderson

Good morning,

It’s a morning with snow on the ground here in Ontario, which means it’s time to plan ahead for the cold winter months!!!

In our home, the weekend was spent starting to cover the outdoor furniture and dig out the holiday lights. This year I had my daughters helping me prepare our summer time beach truck, a 1972 International Scout II, get ready to rest for the winter.

This is when Dilynn made the comment above that surprised me……..not only do I find it wonderful that she’s making an assumption that I’m going to Heaven (thank you Dilly) but her remark reinforces the fact that it is never too early to start planning. Continuity is on minds, even at an early age….it’s never too early to start planning….and communicating our plan with our family and our loved ones is paramount.

“A good plan is like a road map: it shows the final destination and usually the best way to get there.” H. Stanely Judd

This is a unique week for my morning musings. I’m going to send a separate note tomorrow with my market commentary. Given the feedback from last week I thought it important I follow with some more context around my thoughts.

Breaking out the themes for you below is meant to provide detailed thoughts and insight for you as you begin to think about how we structure meetings. I apologize in advance for the length, it’s meant to be an example and a reference, an excellent example of themes we work through with our clients.

“Planning is bringing the future into the present so that you can do something about it now.” Alan Lakein

As mentioned last week, Communication breakdown is the primary reason for poor wealth succession. The Williams Group reports that 95% of wealth transitions within families fail for three reasons:

• 60% --- “an internal breakdown of trust and communication”
• 25% --- “failure to prepare heirs”
• 10% --- “a lack of an agreed-upon mission for the family wealth”

“The afternoon knows what the morning never suspected.” Robert Frost

Here are four thoughts for foundational family meetings

If excellent communication is the foundation for ensuring the health of a family’s wealth and relationships, what can we do to plant the seeds of success? Here are four ideas that we use with our clients and their families that help to start to implement conversations around building money management knowledge for an effective wealth transition.

In a book I’ve referenced countless times, Family Wealth: Keeping it in the Family, James Hughes lays out a framework for effective family governance and wealth preservation. In a particularly innovative approach, he recommends that families stop looking at their balance sheets as a means for tracking the wealth of family finances. Instead, he suggests focusing on the long term health of families by tracking the growth of each family member’s financial, human, intellectual, and social capital. If families can grow in these four areas, all members of the family should have more successful and fulfilling lives.

Thought #1:

Goal setting with young children As with most things, starting to develop good financial habits is easiest when children are young. However, many parents do not give their children enough credit when it comes to setting and achieving goals. Children as young as four years old can articulate goals. If you have young children in the family, try asking them this question: “If you could do anything this year, what would you do?” It is amazing what kids can develop if we give them the tools. You will almost certainly get an interesting goal that the family can work together to achieve, thereby proving the power of articulating and fulfilling goals. As children get older, this basic approach to goal setting can be transitioned to the four key areas of financial success.

Thought #2:

Instilling values One of the best suggestions in James Hughes’ Family Wealth comes under the discussion of the role of parents and grandparents in their ability to define, teach and instill values. One way this can be done is through a philanthropy or establishing a Family Foundation. In this instance, generation 1 or 2 (who are typically the original wealth creators) set aside capital to fund their charitable giving goals. However, instead of deciding which charities to fund, they bring the children and/or grandchildren on board to help with the decision-making process. This is powerful and a strategy we find extremely effective in building family unity across generations.

Thought #3:

Investment principles In discussing this topic with clients, it has become quite clear that developing clear communication habits around money and wealth-building is more difficult with children. Parents are concerned that their heirs may not be prepared to take over significant family wealth, and also do not want their children to feel they are interfering. If our children have their own lives, careers and finances, how can we ensure that they are prepared for the complexities of an inheritance? This is where our expertise comes into the process, working with Family Enterprise clients on business strategy, family strategy and ownership strategy. We work closely with our clients and the entire family system, to ensure all strategies are aligned and the communication across the family system is intentional and constructive towards the broader vision and mission statements that we create with you and your family.

Thought #4:

A bigger purpose—Family Mission Statement In Family Wealth, Hughes includes the Family Mission Statement as the very first topic in his chapter on “Family Practices” for good reason. Your family should be approached like a business, taking time (and making time) to understand your Vision, Mission and Values as a Family is of utmost importance for successful continuity planning. A Family Mission Statement takes much more time and work than our first three ideas, for families prepared to get serious about effectively employing their wealth to drive happiness across multiple generations, potentially there is no greater tool.

As with the mission statement for a well-managed business, a Family Mission Statement can be a powerful force in uniting members around the common goals of growth and happiness.

It is the act of collaborating across the generations to formalize the family’s common values that makes the Family Mission Statement so powerful. This collaborative process is lengthy and why we spend time with our client, not rushing through the process, but ensuring it’s an inclusive and evolving journey that can align the family across generations.

“As for the future, your task is not to foresee it, but to enable it.” Antoine de Saint Exupery

Indeed, the foundation for effective family relationships is communication but we all know that managing complex structures and family dynamic can be challenging. If our experience and expertise in continuity planning has taught us anything, it’s that families that are prepared to practice open communication and implement effective family governance, will serve to not only preserve the wealth that your family has created but ensure that all those in the family system are pursuing their individual happiness while ensuring that true wealth continues to evolve and flourish for future generations.

“Thinking well to be wise: planning well, wiser: doing well, wisest and best of all.” Malcom Forbes

Be well & enjoy the moments

Derek