While having your personal finances in order is vital for any business owner, it’s important to look beyond just the money. How you approach your money, your family and your own life decisions can have a big impact on your kids and on the legacy you will leave behind, says Norman M. Boone, founder and president of Mosaic Financial Partners Inc.
“The more money you have, the more complex your life is, but, at the same time, money creates opportunities,” says Boone. “Most of us don’t learn how to be thoughtful, purposeful and intentional about the choices that we make about money and, as a result, most of us miss opportunities to make a difference. For example, we want to pass money to our children, but if we haven’t taught them how to make good money decisions or to have the discipline in their lives that we ourselves needed to get where we are today, the money can do more harm than good to our kids.”
Smart Business spoke with Boone about how to effectively deal with wealth and be purposeful and intentional, not only for today but for future generations.
How does a family start with the financial planning process?
Usually a family begins by asking how much money they need so that ‘work can become optional.’ That forms the basis of retirement planning. The basics also include tax and estate planning, insurance, philanthropy considerations, investment management and a few other things. However, that isn’t where most families fail. For families with money, the more frequent failure comes in not being purposeful and intentional about establishing and carrying on the family’s values, history, vision, stories and principles.
It’s these intangibles that are important because it’s around them that a family is created and continues. Each family needs to consider what is important to them as a family, where their challenges exist, what they value and what their priorities are. Those things create the foundation for the decisions you make with regard to the family business, philanthropy, how you spend your money and how you choose to pass it on to your children and grandchildren.
An adviser can help families discover themselves. As each family member begins to appreciate how the family is important to them, those insights become the basis to help the family members communicate with one another and to build truly valued relationships.
How does this process assist in financial planning?
It’s critical to take care of the foundational financial details — having a good investment program, a well-thought-out estate plan, effective insurance, steps to keep our taxes low and purposefulness about taking advantage of attractive opportunities. Effective families and their advisers take it to the next level.
Family members need a forum to think about the issues that are important to them. Their adviser should be able to help them communicate and explore their real concerns and needs. That process often clarifies the values and stories that families hope will get passed down to children and grandchildren. Part of being a family is about practicing and experiencing together so that those values and guidelines become a part of the kids as they grow up.
How can an adviser help through this process?
The adviser can be a facilitator. It starts with good questions and good listening. Every family and every business owner is different. What are their issues? What do they want to see and feel and experience that they aren’t now? More often than not, they know their own solutions, but most of us need help to get them out in the open so we can apply them.
It’s amazing how little thought most people have given to their own future. Most people take what happens and react to that and do their best. But evidence suggests that as people create goals for themselves, as they write down their visions and create their goals, they are more likely to have gratifying lives. A good adviser can help you through this process, both on an individual and a family level.
Is this an ongoing process?
Creating a strong family and a strong foundation for the future is typically a multiple-year process. It starts with a discovery phase while the adviser gets to know each individual, their stage in life, their motivations and priorities. Helping families record their histories and to begin to learn to enjoy one another’s company are critical early steps.
Strong families have regular meetings. They learn to talk about the family, how they are doing, whether they’re being inclusive and having fun together, learning to truly appreciate each other’s strengths and personalities.
For families of wealth, philanthropy can be an important tool to teach family and personal values to younger family members. For adult children, philanthropy can be an opportunity to experience their parents as equals, as they decide together which causes to support. Philanthropy can be a very effective way for the business owner to teach kids critical life skills like investments, decision-making, research and due diligence and how to prioritize multiple options.
How can a financial adviser work with other advisers to help a family accomplish its goals?
All families need good advisers: one or more lawyers, a CPA, an insurance person, a financial person and perhaps a rabbi or minister. To best serve the family, the advisers need to be involved not just with the family, but also with one another. They should work together to integrate their different skills and perspectives so the family is well served in an aligned way.
It’s basic human nature to want to pass on not just what we have, but also who we are — our stories, our values, our experiences, life lessons and traditions. By developing your family, you have the opportunity to pass along those things to your children and grandchildren and to help them be more successful and more involved in the world in ways that are meaningful to them, helping them feel good about themselves.
Norman M. Boone is founder and president of Mosaic Financial Partners Inc. Reach him at (415) 788-1951 or firstname.lastname@example.org.