The family wealth mission statement is a great opportunity for affluent clients to begin a dialogue on family priorities, determine their family’s core values, and create a wealth management plan for future generations. Helping your clients develop such mission statements is an innovative way to differentiate your practice, deliver
personalized service, and build client satisfaction.
The family wealth mission statement has been a planning tool for the ultra-wealthy since the early 1900s. Used to guide the preservation of the family fortune, maintain intergenerational family unity, and encourage ongoing philanthropic gifts, family mission statements have been the “constitution” for wealth planning for many of America’s high-net-worth families. Hearst family matriarch Phoebe Hearst created financial structures that would support family businesses after her death and encourage philanthropic gifts to the community, while John D. Rockefeller, Sr., established foundations to encourage future generations to renew business and philanthropic goals.
Wealth planning trends that began with the ultra-wealthy, such as separate accounts, alternative investments like hedge funds, and even private foundations have been adopted by the merely affluent. Because history has shown that many affluent families have been unsuccessful at preserving wealth, the family wealth mission statement is another financial planning tool that can help your clients manage their assets and establish a legacy for future generations.
Affluent families often seek innovative alternatives for managing their financial capital. They are also concerned with both family unity and ensuring continued success for their children and grandchildren. Because the next 20 years promise to bring a huge transfer of wealth from the baby boomers to their children and grandchildren, wealthy families will want to have systems in place to help younger generations both manage and plan for the transfer of these assets to their own children.
A Direct Line to the Heart
Research tells us that the affluent client will choose an advisor based not only on the execution of day-to-day tactics, such as selecting suitable and well-performing investment products, but also on the comfort level the client has with the advisor. An advisor’s ability to discuss product performance as well as more intimate topics, such as long-term family goals and values, can determine a client’s satisfaction. Given the desire for personalized service, if you can discuss core values with your clients–and find ways to help clients identify those values–then you will be at a distinct advantage in differentiating yourself from your competition. With the upcoming baby boomer retirement, and the $5 trillion in retirement assets that will be rolled over into IRAs by 2010, according to Financial Research Corporation’s 2004 study, The New Landscape of IRA Rollover Marketing, now is a great time to set yourself apart through innovative and personalized service.
The subject of a family mission statement will rarely come up on its own. There are, however, a variety of opportunities to broach the topic with your clients and not feel awkward. For example, you can discuss it within the context of a particular family financial goal, such as retirement planning or college funding. You also can also provide a framework to discuss personal and financial goals in quarterly or annual meetings when you review portfolios with your affluent clients. Such portfolio reviews can lead to larger discussions on values, philanthropy, children, wealth management, and wealth planning. Why not add the topic of a family mission statement to help them focus on an overall financial plan?
Here are some questions that may help to begin the conversation with clients:
- Will your current plan successfully transition both family values and family wealth to the next generation?
- How are you preparing your heirs so that wealth is a force for good in their lives and not a burden?
- What should your heirs be doing to prepare for wealth and responsibility?
If you feel that these questions–and the answers–are somewhat personal, keep in mind that the key to a successful conversation is asking the questions respectfully, listening carefully, and giving clients the chance to openly discuss these issues, perhaps for the first time.
Centerpiecing Core Values