Family Education: Why Aligning on Values is Critical to Sustaining Generational Wealth

Family values. It sounds like an ‘80s sitcom, doesn’t it? But for families who are seeking to build or sustain generational wealth, while simultaneously preserving family harmony and connectedness, establishing family values is no laughing matter. They are in fact core to securing an enduring legacy, one that not only accomplishes the desired purpose of the family’s wealth, but that also brings the different generations closer together.

We recently connected with Liz De Nitto, Vice President, Wealth Advisor with Sequoia Sentinel, to further explore the importance of shared family values, how they are developed, and how they are kept “alive” for the long run:

Liz, please expand on the importance of identifying and aligning on family values. What is the risk for families who don’t bother to do so?

Having worked with many families with multi-generational wealth (or those who aspire to multi-generational wealth), I can’t overstate the importance of aligning the family around a set of shared values. Without those values to serve as a foundation for who a family is and what it stands for, the wealth means very little. It becomes hollow, divisive even, and can tear families apart. Values serve as a “north star” and help to ensure a family not only stays cohesive and functional, but makes an enduring, meaningful impact with their wealth. When it comes down to it, that is what most successful families really want.

When families work together toward common goals that they’ve mutually agreed upon, they are more successful and family decisions become easier. Believe me, without that agreed-upon perspective, discussions around money and the purpose of it can get very ugly and too often results in the “rags to rags in three generations” phenomenon.

For those families who don’t align around shared values, it comes down to this: when you stand for nothing, you fall for everything.

What are some examples of values that families gravitate toward? How specific are they / should they be?

The reality is values within a family are as unique as the family itself and are defined in many ways: education, faith, service, kindness, passion, compassion, family, integrity, humility, etc. The list goes on. The key is to identify those values that are most meaningful to your family and that represent all members of the family, not just the patriarch or matriarch. That is how you achieve alignment and enthusiasm among all members of the family and get them excited about how the values can be brought to life.

When family values are particularly well constructed and thought out, they can live on for many generations, which is precisely the intent of many multi-generational families – to create a long lineage of purpose. However, it’s important to appreciate that values can and should evolve over time, so it’s wise to provide children, grandchildren and future generations with the flexibility to further refine what values are important to them.

How does a family get started? How do you broach the topic and get family members excited about “talking about values”?

Developing a family mission statement is a fun and engaging way to get everyone involved. And I mean everyone, especially the younger generations for age-appropriate conversations. The holidays can be the ideal time to foster these talks, as many family members come together and are thinking (hopefully!) altruistically. At first blush, a “discussion about values” can sound awkward and stiff. Don’t let it be. Make it fun, comfortable, and be sure the setting is conducive to an open dialogue. Order or make a favorite meal and let the kids have that big bowl of ice cream. Explain the goal to everyone and help them understand why having shared values is so important. Let everyone brainstorm. Encourage all ideas and assure everyone that there are no wrong answers. Have some guiding questions ready in case the discussion gets off track, but often the conversation will take on a life of its own in wonderfully unexpected ways.

Perhaps most importantly, document and keep a record of everyone’s ideas, concerns and areas of consensus. Then give them time to digest it all and reflect deeply on what was shared. Finally, establish a date for the family to reconvene and hopefully agree upon a clear and compelling list of shared values and overall vision. Try to do it within a few weeks so the initial conversation is still fresh in everyone’s mind.

Understand that this is not a “one-and-done” exercise. As referenced above, values can and should evolve over time. That being the case, this is a discussion that should be revisited annually. Doing so will also offer the opportunity to explore how the family is acting upon and bringing those values to life, such as through philanthropy, education, impact investing, etc.

Who should be involved? How young is too young? Should these conversations be exclusively between family members, or should advisors / facilitators be involved?

The whole family! Even with children as young as 2 – 5 years old, you can start to instill what is important to you/the family through age-appropriate conversations. Topics such as delayed gratification (lead by example), right and wrong, how we treat people (family and others), appreciation, etc.

Once a child is around age 5 or 6, you can start to involve them in the creation of something like a family mission statement. They will begin to develop their own ideas of what is important around that age and are better equipped to articulate those thoughts. It may be different for different families though, so trust your own judgement.

And, yes, oftentimes an objective outside facilitator can help get the family talking in an unbiased, “safe” way, helping prepare an agenda and guiding questions, for example. As the family grows and becomes more accustomed to these types of conversations, an advisor can bring a fresh perspective, which can be energizing for everyone involved.

Tell us about the role of an “ethical will” or “letter of wishes” in sharing and passing down values? What does that involve?

An ethical will, or letter of wishes, can be a powerful way to share your hopes and dreams with future generation(s), both today and long after you are gone. These are typically written documents, videos, or recordings that capture your voice and share your personal story for the benefit of heirs you may never meet in person. Think of your great, great grandchildren. This is a way for them to get to know you on a very intimate level.

An ethical will can also be helpful if you have minor children or grandchildren who may be too young to fully appreciate the values you hold dear and all that went into building the family’s wealth and legacy. This is a way for them to one day fully appreciate who you are and what you care about.

An ethical will can also be useful in explaining the final disposition of your estate, particularly if your heirs receive unequal shares and may want to know why, or if one is named as executor or trustee over another.

Undoubtedly, differing points of view arise among families about the vision for the family’s wealth and the values to align around. How do you deal with opposing viewpoints and resolve them? Does one person take on the responsibility of making the final decision when it comes to family values and vision?

Every family is different. Some may be open to varying viewpoints, while in other families, the patriarch or matriarch may have a clear vision of the family’s mission and values that they hope to communicate and build excitement around. In either instance, it’s important to ensure that everyone in the family still feels like they have a voice. If you give unequal weighting to different opinions, it will create friction.

Again, an outside advisor can help by providing unbiased guidance when there are likely to be different – perhaps opposing – viewpoints. They can help find common ground when it doesn’t seem like there is any.

For those who have a firm belief in the values they want to align the family around, it might make the most sense to have a family mission statement already prepared and share it with the family in a collaborative setting. In this scenario, it is more important than ever to ensure the rest of the family feels empowered to “make their stamp” on the family vision and values, such as by asking everyone to share their ideas on how they can bring those values to life. That’s what really matters in the end anyhow: how a family “lives its values,” such as through philanthropic activities. Otherwise, it’s just a piece of paper with some words on it.

Once the values are identified and agreed upon, then what? How does a family bring those values to life?

This is the most rewarding and fun part! As a family, be clear and concrete in establishing a roadmap to bring your values to life through experiences and real-world engagement. Track your successes and impact. Encourage everyone to participate in ways that bring their strengths and passions to the forefront. Lead by example. Acknowledge and celebrate the younger generations when they do something that demonstrates how they are living out the family values (or if they are not!) In the end, values that are lived and that are manifested in the real world are values that have meaning and last for generations.

Contact us to explore how we can help align your family around a set of shared values.

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