What Matters Most to You?

by Tracy Conlan Director Tracy is an experienced strategy and financial services professional. She has over 20 years of experience in consulting and industry, with a focus on corporate and business strategy. Tracy was the leading practitioner in Purpose Led Transformation in Asia-Pacific for Ernst and Young and was part of the strategy, customer and innovation practice. Tracy has held EGM roles at Commonwealth Bank in the areas of Corporate Strategy, and then as EGM of Brand, Marketing and Analytics for the Retail Bank. Prior to this, she was at McKinsey and Company for 5 years. Tracy has an MBA from London Business School and a Bachelor of Economics (Hons 1st) from the University of Sydney. Contact Tracy

There is no doubt that wealth matters. It is a measure of business and financial success, resulting from insightful people exercising commercial acumen.

Yet commercial acumen is not enough to preserve wealth within a family for generations. We find that the most problematic challenge faced by families of significant wealth is not how to make more money, but how to ensure that it lasts. To do this requires focusing on something other than money.

In our experience, families whose wealth lasts for many generations follow 5 key practices, they:

1. Have a shared purpose

A family purpose is a clear articulation of why the family exists. It’s a deep-seated reason for being, a cause, or belief that is the source of a family’s collective passion, fulfilment and inspiration. It is underpinned by a set of well-practised values. The individual purpose of each family member must sit comfortably within the family’s shared purpose.

Our process at Mutual Trust is to help families identify their purpose, vision and values. Once we understand what matters most to the family, we help them structure an approach and to guide them accordingly. By directing the family wealth and activities towards fulfilling the purpose, a greater focus is achieved and greater impact. Having a shared purpose also makes decision-making easier. Fulfilling the purpose allows the family to achieve its vision and for individuals to feel that they are making a meaningful contribution.

2. Build family capital, not just financial capital

We often find that many families we work with spend more time on their financial capital and less time on the family capital than they should. Family capital represents the extent to which each family member has meaningful work, establishes a positive sense of identity and can pursue their own happiness within a family that is supportive and trusting of each other.

Normally an individual development plan would be the solution to help each family member develop into roles external and within family. The development plan needs to address their passions as this is vital for success.

Without a focus on family capital, family wealth can erode through mistrust, poor understanding and antipathy.

The development of family capital requires a process of introspection and self-actualisation for individuals within the family context, and as contributors to the family purpose.

It also requires the systematic development of communication, empathy and conflict resolution skills that are deployed through both formal governance structures and less formal, but equally structured, family sessions. This is not trivial, however, it is often overlooked. Consider this, many of the families we look after have more assets employed than many public listed companies. Those listed companies will have a board in place, risk and remuneration committees, a management team, formal reporting, regular strategic and operational reviews. Many families try to do this themselves or neglect it completely. We help the families with this issue through:

  • Family communication workshops
  • Individual communication and emotional self-awareness programs
  • Family governance meetings chaired by an independent counsel.
3. Develop family expertise

Knowledge gained through the life experiences of each family member and their collaborations with independent experts develops family expertise. That expertise is a shared asset that families can draw on to successfully pursue what matters most. It’s not only expertise that’s important, it’s also an ability to teach and learn from each other, a two-way exchange between the experts and families, in a way that nourishes the family’s creative energies.

Access to pre-eminent, independent advice is crucial to augment what the family can learn by itself. For families of significant wealth, this means deep expertise in domains such as succession planning, trustee services, investment management, tax, accounting, superannuation philanthropy, property, family governance and business advice. In our experience, it’s easier for families if this expertise is available from one provider who then understands the full extent of the family situation.

4. Nourish the next generations

Each family member has different needs, aspirations and talents. Taking time to help them identify their individual purpose is only the starting point. Deploying their talents to help direct and grow the family wealth, in service of what matters most to the family, requires a systematic program of development. It’s not something that happens by itself, nor can it be left to the marginal time of senior family members busy with their own affairs.

For families to prosper over time in today’s rapidly changing world requires the development of a growth mindset. This is a state of mind that constantly seeks out new knowledge, networks and opportunities, often facilitated through referrals to new people and new thinking. Finding organisations that can feed this growth mindset is important to nourish the next generation. At Mutual Trust, our Rising Generation Program develops the skills, networks and understanding of younger members of the family so that they are well equipped to contribute to the family’s future success.

5. Enrich the family narrative

Families who have a strong sense of their history, and the contributions family members have made over time, along with the outcomes they’ve achieved, are more invested in their collective future. Articulating this history by writing it down or sharing it builds an emotional investment in continuing the narrative.

Enriching the family narrative is more than working towards family outcomes, it also means having a positive impact beyond the family, into the community and potentially, the nation. Our greatest source of purpose is when we’re involved in something greater than ourselves, where we can have a positive impact on the lives of others. Families of significant wealth are uniquely placed to do this through philanthropy. By enriching the lives of others, they enrich their family narrative.

Mutual Trust Pty Ltd ACN 004 285 330 (AFSL 234590). Liability limited by a scheme approved under Professional Standards Legislation. For participating members (other than for the acts or omissions of Australian Financial Services Licensees). This information is general in nature and subject to change. It does not constitute tax, legal or financialadvice. We recommend you seek advice specific to your circumstances before taking any action. Copyright © 2014 Mutual Trust Pty Ltd.
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