Where do you keep your house rules? Are they hanging on the fridge, framed in your study or simply preserved through an unspoken mutual understanding? The fourth installment of our True Family Wealth series is about intellectual capital, which includes the framework for making decisions in wealthy families. The intellectual capital topic often sits untouched and unarticulated. Here’s how it can help you.
In many families, the rules – also called family governance – boil down to something like: “Grandpa makes all those decisions.” That may work well as long as Grandpa remains healthy, focused and in synch with the rest of the family. But a truly wealthy family retains the benefits and responsibilities of wealth for many generations.
Think about the world’s great organizations that have outlasted any single founder or visionary leader. How are they able to do this when great leaders retire or pass away? One crucial answer is smart governance. Rules, goals, philosophies and strategies are discussed, recorded and followed, no matter who is at the helm at any given moment.
Our advice is to get a discussion started, with the goal of eventually capturing key thoughts in writing. Your house rules should be a living document based on core family values, evolving over time to recognize changes in your family and the world around you.
Try transcribing your informal conversations and ideas onto paper. You can include the following:
This may sound like a lot of work. And yes, it may be some work to get everyone involved. But the completed written plan will give everyone a sense of familial pride, a sense of empowerment even, and act as a compass for where the family goes in the future. If you would definitely do this at the billion dollar level, why not give yourself the same treatment at the $10 million dollar level?
The reality is that with wealth comes responsibility, not just for the head of the household, but for all members of the family. Helping your family establish good practices related to that responsibility means that your insight, training, advice, and habits are shared and amplified over many generations. It’s one way to ensure that your tried and true insight, training, advice, and habits get passed on to future generations when you are no longer the one in control.
Max Osbon – firstname.lastname@example.org