Family Stewardship

James B. Stockdale stated in a speech in 1981 that from his horrific eight-year experience as a prisoner of war—extreme conditions of internment, torture, and endless, intense interrogations that he and his fellow prisoners endured—he distilled one all-purpose, unoriginal idea: “It’s a simple idea, an idea as old as the scriptures, an idea that is the epitome of high-mindedness, an idea that naturally and spontaneously comes to men under pressure. If the pressure is intense enough or of long enough duration, this idea spreads without even the need for its enunciation. That idea is: “You are your brother’s keeper.” He added one of his favorite quotes by Francis Bacon: “Adversity doth best induce virtue, while luxury doth best induce vice.”

“That’s the flip side of What’s in it for me,” Stockdale concluded.

An epiphany resulting from torture or tragedy shouldn’t be necessary to remind us of our duty to others and to bring clarity to our important priorities and family values. But many families overlook this simple precept in the midst of financial planning, often from lack of attention, misplaced priorities, or disharmony among family members. Bacon’s eloquent observation should not be a foregone conclusion—adversity and luxury do not necessarily need be in opposition when it comes to instilling virtue.

Exercising wise family stewardship under the guidance of a professional team may in fact foster the virtue of looking beyond “What’s in it for me?” as well as fostering comprehensive financial planning, estate planning, and heritage planning. Collaborating as a family and with professionals to achieve the shared goals of both multi-generational financial security and looking after one another is not only virtuous, but it is also an efficient guide to effective long-term wealth management.

The question is: Where does a family begin to apply fundamental principles toward the goal of optimum family stewardship? Experienced heritage-planning financial advisors begin by helping the family define its core values. Second, they define specific goals and objectives. Next, they encourage professional collaboration focused on five crucial areas: investment management, administrative structure, tax efficiency, wealth transfer, and family stewardship (family meetings, mentoring, education, core values, philanthropy, and multi-generational planning). A professional investment-management team cannot build a sound investment plan without knowing the tax consequences, wealth-transfer goals, liquidity needs, core values, and retirement needs of the client family. Each of the five categories of the family responsibilities relies on collaboration with professionals most knowledgeable in a given subject.

Since it is impractical for most families to provide staff to support every possible need, cooperation between family members and professionals is vital. Willingness to participate in a cohesive working team, rather than outsourcing responsibility, brings us back to Jim Stockdale’s basic principle—it can’t just be about “What’s in it for me?” Since the benefits of collaboration are significant when implementing a family stewardship plan, remembering our responsibility to be our brother’s keeper is practical common sense—as well as its own reward. And finally, of utmost importance is leadership by a family member and a financial advisor specializing in heritage planning, to bring about an unselfish and a harmonious family stewardship plan.

MD Wealth Partners, Inc.: A personal wealth enhancement boutique for select clients. mark@mdwealthpartners.com. mdwealthpartners.com. 805.402.8642. Copyright © Mark Wendell 2022. All rights reserved.