Familosophy v6#10 - October 2023

Family Wealth Priorities

Where we spend our time and energy is a reflection of our priorities. In a wealthy family, whether or not they have a formal family office, we can think about three types of activity:

* money: investment or operating business aimed at growing the family's financial capital

* legal: regulatory obligations, estate planning, tax, insurance, and other risk management

* family: maintaining and improving the physical, mental, emotional, and spiritual health and well-being of the family

It is thought that in many family offices, the split between these activities is about 60/30/10. Some say that even the 10% allocation to "family" is generous.

What does this say about a family's priorities? How does family wealth differ from corporate wealth? Companies have human resources departments whose purpose includes managing the wellbeing of team members. Notwithstanding that recruitment and performance management are not quite needed within families, managing the well-being of the family, both individually and collectively, is surely a function to which family resources should be allocated.

Jay Hughes developed the notion of multiple forms of family capital: human, intellectual, social, legacy (or spiritual) and financial. He illustrates this with a hand where the thumb represents the financial capital, and the four fingers are the "non-financial", and holds his hand with four fingers out and the thumb pointing down. The purpose of financial capital is to underwrite and enable the development of the other forms of family capital. It is the means, not the end. A family's greatest asset is its members, not its financial balance sheet.

Consider This:?What resources does your family allocate to maintain and improve the well-being of family members? What does it do (proactively and reactively) in support of this well-being? How is the saying "family comes first" reflected in practical terms?

Further reading: https://ffipractitioner.org/the-family-focused-office/ , https://www.morningstar.com/news/marketwatch/20230823369/not-just-for-rich-people-6-ways-were-messing-up-inheritances , https://www.morningstar.in/posts/74723/what-wealth-cant-buy.aspx , https://www.fa-mag.com/news/for-family-wealth-conversations--focus-on-the-why-74090.html , https://www.businessinsider.com/family-offices-no-inheritance-plans-wealth-transfer-strategy-2023-6 , https://ceoworld.biz/2023/03/16/the-importance-of-having-the-talk-concerning-family-wealth/ , https://www.chase.com/personal/investments/learning-and-insights/article/we-need-to-talk-communicating-your-estate-plan-with-your-family

#FamilyWealth #FamilyCapital #FamilyWellbeing

Win-Win Family Philanthropy

Philanthropy, in simplistic terms, is often manifested as the flow of funds from a grant-maker to a beneficiary, and as such can be considered one-directional. Yet so many people who do this (whether they are giving of their time, talent or treasure) have expressed the rewarding feeling of giving. I can attest to this personally, particularly in respect of several non-profit board and committee positions.

Family philanthropy, when done well, can be "win-win". It can deliver immense value to the family.

Like many things, doing it well means doing it with a plan. For a family, that means asking "why should we give?", "what are our (collective) values?", "what impact do we want to leave on the world?" and other such questions. These questions don't have simple answers, and just discussing them as a group can be an enlightening and bonding experience for the family.

While asking these questions can lead to better quality and more strategic philanthropy, they have the additional benefit to the family in providing a focal point to broader family questions such as "what does it mean to be wealthy?" and "what does my life mean given I never need to work?". It can also be a great way to engage younger and rising generation family members who may not want (nor may be ready) to discuss financial matters.

In some families, philanthropy can be a source of conflict, of competing interests and ego. It doesn't have to be, provided the family is prepared to put in the effort to do it well. It can be win-win for both the beneficiaries of their generosity and the family.

Consider This: What discussions have your family had?about philanthropy? Have those discussions been helpful? Who is involved in vision and strategy? To what extent are the rising generation involved?

Further reading: https://www.imd.org/ibyimd/leadership/happy-families-the-unifying-force-of-philanthropy/ , https://www.wealthprofessional.ca/news/industry-news/why-family-philanthropy-isnt-just-about-writing-a-check/375734 , https://www.opalesque.com/industry-updates/7089/increasing-wealth-drives-family-office-focus-on-philanthropy.html , https://www.insidephilanthropy.com/home/2023/3/7/evolving-family-models-alter-the-ways-a-new-generation-gives-back , https://cfi.co/menu/corporate/2022/11/strategy-structure-shared-purpose-there-are-rules-to-protecting-family-wealth/ , https://www.barrons.com/advisor/articles/ultrawealthy-financial-advisors-family-meetings-51650484720

#FamilyPhilanthropy #GivingWithPurpose #PhilanthropyPlanning