Strategic planning is usually associated with businesses, not with high net worth families or individuals. Families with generational wealth can begin to resemble businesses, with a team of professionals handling various aspects of the family’s financial, legal, and business affairs. Some families go as far as having their own family office. There is no shortage of qualified professionals to advise high net worth families and provide ideas about how these families should organize their financial life.
What is often missing is a bigger picture perspective of how the family defines “wealth” and the values that surround their wealth – the soul of their wealth. Professionals solve particular complex issues – reducing income or estate taxes, managing portfolio risk, charitable giving, etc. The complexity can leave a family thankful that these issues are being addressed but unsure about what is being done and why. Most business people do not want their lawyers, brokers, insurance agents, and accountants running their businesses, but feel unprepared to control the agenda regarding their personal wealth. This is where we come in.
At Soul of Wealth, we believe that the family needs to control this agenda and that the essence of strategic planning is to create a big picture framework in which important decisions can be made. A family should determine what they deem a wealthy life and that should drive their planning. To this end, we have use a similar three stage process in family planning to that we use in organizational planning.
Awareness is about understanding where you are and where you want to be. Obtaining awareness involves reviewing the history of the family, financial data, estate plans, charitable giving patterns and similar documents. The most effective way to obtain awareness is through a Family Values Discussion. This discussion can include as many or as few members of your family as you deem appropriate. In this stage of the process, we discuss what is important to your family, what are the values that the family lives by, in what ways the lives they lead reflect or deviate from those values, how the family defines wealth, success and happiness, what are the dreams and aspirations for future generations and other subjects that come out of this conversation. Finally, we will look at whether the existing documentation and plans are in alignment with your family’s goals.
Clarity is about articulating exactly what your family stands for and how your family wants use its wealth. It is at this stage that we work together to craft a values statement and a vision statement for the family. The family may also decide to prepare a “Trust Letter” addressed to future trustees and heirs that sets forth pertinent family history and aspirations for the future. The values and vision statements of your family must address all key areas of concern (e.g., inheritance, family business, charity, marriage) in a clear and simple manner. The goal is that your family have a framework within which they can determine whether the advice they receive meet their goals.
To align your family’s financial affairs with its values, we need to take the vision and compare it to reality. This involves your family and your advisers looking at each step that needs to happen to realize your vision and determine whether the family has the capacity to make that step. In this stage we look at specific issues facing the family that present opportunities for actualizing values or threats to the family structure. We start to build annual family goals necessary to implement the vision. For example, we might assist your family in designing a program to educate the next generation about the responsibility the family attaches to wealth and the potential issues significant wealth can bring to young adults and teenagers.
Just as with the Clarity stage, the Alignment stage requires simplicity. A small number of clear and measurable goals that are achievable, allow your family to remain focused.
What does all this have to do with Soul?
When a family defines what wealth means to them and starts to view that wealth as a tool to realize their higher aspirations in life, they start to make decisions from a place of clarity - their collective souls.