Family businesses are a critical contributor to the Canadian economy. The Alberta Business Family Institute has found that family businesses employ six million workers, create 70% of jobs in North America and provide 55% of all charitable donations. It’s estimated that family businesses are responsible for 60% of the Canadian GDP.

Values and a clear vision are key governance strategies for the success of any business, family owned or not. Today, values play an important role in how businesses conduct themselves and invest their resources. No major enterprise today creates a plan without a statement of values, a corporate vision that embodies those values, and a set of guidelines for allocating and investing capital, both financial and human, in accordance with them. Why, then, should families that find themselves stewards of substantial wealth do any less than responsible businesses? Indeed, the imperative to incorporate a family’s values into the structure of a family office is even more compelling than it is in business. Values give enduring meaning everything a family does. Even more than financial wealth, values are the family’s legacy.

With respect to financial management, one of the chief functions of the family office is to create, consolidate, coordinate, and align a strategic financial plan, both as it applies in the long term and to day-to-day operations. A family office serves an analogous function when it comes to values, a term than includes and encompasses the family’s vision of its place in the world, its future, and its as understanding of its mission. The family office serves as a forum to define and articulate values, vision, and mission and, going forward, to align the family in terms of these. Mere financial legacy has as much potential for dividing a family as for uniting it. Creating a shared set of values, a vision, and a mission positions the family to be inspired now and through generations to come. Money is certainly a reason for staying together into the future. Compared to deeply shared values, however, it is a remarkably weak basis.

A Step Too Often Missed

Whether the family establishes a single-family office (SFO) or a joins a multi-family office (MFO), no advisor is going to force upon them a consideration of values in addition to the financial and other services a family office may offer. For this reason, articulating shared values is a step often overlooked in creating a comprehensive plan for stewardship of the family’s wealth. If a family business is at the core of the family office, it is all too easy to take values for granted and to assume that the mission of the family business will automatically cover the matter of family values. This, however, is not the case. There is—and should be—linkage between the values of the family business and of the family itself, but the two need to be fully understood both together and separately. By taking the time to articulate the family’s values and, with them, its vision and mission, everything else the family office does will be given more specific and meaningful direction. Cohesiveness of purpose will become stronger, and cause for family dissension diminished.

What, Exactly, Are Values?

Ask someone if they have values, and the question will like be taken as an insult: “Values! What a question! Of course, I have values!”

Yet press that mildly outraged individual to mention some of those values, and the response will likely turn from anger to stumbling search for words. Defining your values can be a bit like Supreme Court justice Potter Stewart’s famous 1964 response when asked, in the context of a First Amendment freedom of speech case, to define obscenity. “I know it when I see it,” he said.

Values are usually held at a deep level as a reflection of our most basic beliefs. For that reason, we “know” them when we act according to them. Typically, we don’t think through some well-formulated system of values before we make a decision or undertake a course of action. Instead, we make most moral and ethical choices reflexively, even unconsciously, based on our values. What is more, we tend to assume that our values, at least most of them, are shared by all other “right-thinking” people.

The trouble is, assumptions are not facts, and assuming that a decision we make unilaterally is shared by others in the family is a dangerous assumption indeed. When it comes to making key decisions concerning the future of the family and its present and future finances, acting on assumptions is likely to bring unintended consequences, ranging from suboptimal results to potentially family-breaking events.

But what about the assumption that members of the same family, especially members of the immediate family, brought up in the same household by the same set of parents, naturally share the same basic values—the so-called formative values?

It is true that formative values often influence us lifelong. But it is also true that dramatic changes in one’s life can disrupt even the most basic of formative values. As we have seen, for many families, the very decision to establish a family office is motivated by dramatic change, often in the form of a liquidity event or other instances of sudden wealth. We all have heard stories of how unexpectedly realizing a great fortune radically transforms individual values and tears families apart.

Nor do families who have been wealthy for several generations, and are thus accustomed to wealth, necessarily escape values-based conflicts or a failure to ensure that the values of all family members are aligned when it comes to a making major financial decisions. The danger of growing up in an environment of great material wealth is the likelihood of defining yourself by what you possess rather than what you are, believe, and do. Born into very substantial wealth, the future president Franklin D. Roosevelt was sent as a boy to Groton School, where Headmaster Endicott Peabody preached to his affluent student body the duty incumbent on those with substantial wealth. “For unto whomsoever much is given,” he quoted from the Gospel According to Luke, “of him shall much be required …”

Wealth has a monetary value, to be sure, but its even greater value reflects the deeper values of the family and their approach to creating, spending, investing, and growing a productive and meaningful legacy that unites rather than divides the family through generation after generation.

Wealth is itself a value. But it is a variable value, which can rise gradually or rapidly or be diminished in an instant. The moral and ethical values at the core of a family, held deeply by its members, provide far more enduring stability. They are the foundation of legacy.

Exploring Values and Developing a Shared Vision

Among Sigmund Freud’s greatest breakthroughs in psychotherapy was his development of the so-called “talking cure.” It was aimed at bringing to the surface the subconscious mental constructs that drive healthy as well as unhealthy behavior. The “talking cure” was often very effective but Freud’s patients found it hard work and often painful work. During the course of therapy, patients often pushed back with evasive or non-compliant behavior Freud termed “resistance.” I am not suggesting that the family should undergo the equivalent of formal psychotherapy, but the family has to be aware that there are similarities, including the likelihood of resistance. Many families are surprised by how uncomfortable some members feel in talking about values when they have been, lifelong, operating from them yet unconsciously so. A family office can employ a psychologist, a life coach, a family therapist, or some other trained professional to facilitate family discussion of values.

Because a values-based framework plays a valuable role in the management of all the family’s assets and resources, it is worth the effort to overcome resistance which threatens to disrupt or even derail the family values conversation. If the family gives up in its attempt to explore and question the values from which it operates—reinforcing some, transforming others, and discarding yet others—it diminishes the prospects for successful planning. To be sure, change can be uncomfortable and sometimes profoundly upsetting, even if it ultimately brings improvement in the family’s interpersonal dynamics. The presence of a sensitive professional in values discussions can help guide the family to a positive result: the expression of a set of values on which everyone can come together as they move forward.

An effective facilitator of the family values conversation will:

1. Invite and encourage members’ participation rather than coerce, cajole, or demand it.
2. Make clear that the reason the family has come together is to develop a set of shared purposes around shared values.
3. Encourage members to tell stories in which they relate personal experiences associated with values they hold.
4. Respond to any abstract expression of value—for instance, “I believe in charitable giving”—by inviting a personal story about it. The objective is for family members to relate to each other as equals among equals, speaking from their experience rather than simply laying down rules.
5. Encourage both old and young to share their experiences and the values associated with them. This kind of cross-generational storytelling strengthens the family bonds between generations, creating a sense of legacy while defining that legacy in terms of values held in common. This can prove invaluable in bridging the generation gaps that exist in many extended families.
6. Interpret for the family, gently but insistently reminding participants in the conversation that their common task is to develop a set of shared value-driven purposes that will keep the family together from one generation to the next. This is the power of a positive legacy.

But is a professional facilitator really necessary?

The answer is deceptively simple: It depends on the family.

Some families readily come together to discuss “family matters,” including the values, mission, and vision they wish to share. Such families can use the family office to host a family meeting convened for the purpose of identifying and agreeing on values and then composing a statement of those values to guide all future planning. While no professional facilitator may be required, someone in the family must take a leadership role in guiding the discussion. It is useful for the leader to engage other family members is drawing up an agenda in advance of the meeting. As with a professionally facilitated meeting, encouraging family members to tell stories based on their experiences is an effective way to move the conversation forward. Keep it as interactive as possible by deliberately asking each storyteller to explain to the group just what personal value the experience he or she relates demonstrates or challenges.

Remember, if the family is not forthcoming on its own, a facilitator can help—and the values discussion is so important that engaging such a professional will almost certainly prove worthwhile.

Writing a Values Statement

As with any experiment, enduring meaning is provided by recording results and interpreting them. Whether the family meeting is professionally facilitated or is conducted by the family members themselves, someone should be tasked with analyzing the outcome and producing from it a concise values statement, a memorandum that summarizes the values and ethical standards that have emerged from the conversation as clear family priorities. After it is written, the memorandum should be presented to the family, whose members should be invited to review it, comment on it, and revise it. In a separate meeting or meetings, the comments and revisions should be considered until a document emerges that represents a true family consensus.

Commonly expressed values include a high priority on truth telling, integrity, and transparency; on ethical conduct; on accountability and responsibility; on kindness and caring; and on family unity. Most families, however, will add to this list, often incorporating values of special or unique importance to the family, values that may relate to specifics of faith, philanthropy, education, service to the community, and other matters.

Moving from Values to Mission

The values statement is the foundation of a family mission statement. Whereas values are guiding principles, the mission is focused on specific goals, intentions, and aspirations. Think of the mission statement as answering two salient questions:

• hat is this family’s reason for staying together?
• What does this family want to achieve—together?

Some family offices engage either an outside consultant or a member of the office staff to act as a facilitator who translates and transforms the values statement into a mission statement. Others assign this task to a family committee or even to one individual family member. Together, the values and missions statements are meant to set out principles to guide and govern the leadership, advice, and management of operations the family office provides day to day, year to year, even generation to generation. Think of the mission statement as a guide to implementing, through behavior, action, and allocation of family assets, the family’s shared values.

Writing the Vision Statement

Another document that may be derived from the values statement is the family vision statement. Its purpose is to present the family’s current state and its desired future state. Thus, it may be written after completion of both the values and the mission statements, or it may be drawn up in parallel with the mission statement. The vision statement is aspirational, and it is thus an exercise of imagination. By its nature, it is less absolute than a mission statement, but it informs that statement even as it is informed by it. The very act of creating a vision statement affirms both faith in and commitment to the continuity of the family far into the future. It thus ratifies the priority of family unity. In contrast to both the values and mission statements, the vision statement should boldly encourage “blue sky” thinking by asking such questions as—

• What should life be like—for the family, for the family business, and for the larger community—in the future?
• What family values are likely to prove most valuable and most enduring?
• What aspects of the family’s mission statement are likely to be most fully and productively realized?
• Will the family remain unified into the future?
• What will the future of this family’s family office look and feel like?
• What about the family, its values, and its goals will change in the future?
• What about the family, its values, and its goals will be unchanged in the future?

Some families or individual family members will likely resist “blue sky” exercises, finding them frivolous rather than inspiring. One way to win over such resisters is to talk about how vision bolsters the family’s stewardship of its resources. That is, connect vision directly with the preservation and growth of legacy. If, however, substantial resistance continues to be encountered, the family office may choose to engage outside consultants who specialize in creating strategic visions. There is ample evidence to suggest that vision statements are of great benefit to the planning activities of corporate enterprises. Why should such statements not also be of benefit to high-net-worth and very-high-net-worth families, especially those whose wealth is generated by a family business or businesses?

Moving from values statement, to mission statement, to vision creates a virtuous cycle by running every aspects of the family’s strategic plan through a vision of a preferred—or better yet, an earnestly desired—collective future. The ultimate purpose of this blue-sky exercise is not to claim a piece of that blue sky, but to keep the family together, pursuing into the future objectives thoughtfully and ethically arrived at together.

Nicole Garton is president and co-founder of Heritage Trust.

Recognized by Best Lawyers in Canada for trusts and estates, she previously chaired the Canadian Bar Association Wills and Trusts Subsection (Vancouver).

Contact Nicole by email or phone at (778) 742-5005 x216.

Heritage Trust is a leading non-deposit taking financial institution, regulated by the BC Financial Services Authority (BCFSA), a government agency of the Province of British Columbia. Heritage Trust offers caring and professional executor, trustee, power of attorney, committee, escrow and family office services to BC resident clients.

We welcome you to contact us for any reason.