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Values are the foundation of our lives

Values are the foundation of our lives

Why understanding values is important

Values shape our purpose, influence our behaviour and guide our decision making. Our values form the basis of our attraction to certain people, to certain types of work, where we choose to live and how we spend our time. Values are the foundation of our lives.

Understanding our values helps us understand who we are. ‘Without knowing who we are, we tend to have particular trouble coping with either denigration or adulation. If others decide that we are worthless or bad, there will be nothing inside us to prevent us from swallowing their verdicts in their entirety, however wrong-headed, extreme or unkind they may be.’ School of Life

Consideration of our values builds self-awareness. The purposeful act of identifying our values surfaces our feelings, reactions and preferences. When we discuss our values with the people closest to us, we form a greater understanding of why we act the way we do. In a family setting, a conversation about values is a powerful way of understanding each other and the dynamics within the family. This process builds empathy and compassion. When family members take the time to identify and talk about their values, it often re-affirms how much they all have in common.

Challenges

There are significant benefits from identifying our personal values and triangulating those values with our family. However, the process must navigate some challenges. The challenges we encounter most often are:

  1. Complexity of our values
  2. Motherhood and apple pie
  3. Fear of judgement

Let’s look at these in more detail.

Complexity of our values

Complexity emerges in two ways. First of all, not all values are equal. There are often a handful of values that form our true North. These core values motivate us and guide us. They are the last thing to compromise when we make tough decisions. Some may be higher order values such as serving others. These are aspirational values we believe are important and want to evolve towards. Some values simply bring us joy. The challenge is it is not immediately obvious which values are which. Working it out takes time and reflection. It takes the assistance of those who love us and a guiding hand from those less emotionally involved to draw out examples and help us answer these tricky questions.

Secondly, it’s often challenging to distinguish our personal values from the umbrella values of our family, our peers and the society we live in. We internalise the values our family pass to us. Often parents will communicate values directly (and repetitively) – ‘clean your teeth’, ‘eat your vegetables’ (physical health) – ‘stop fighting with your sibling’ (peace). Values are communicated deeply through the stories parents tell. When they say ‘there are children in the world who don’t have a home to sleep in / food to eat’ they are encouraging their children to demonstrate empathy, gratitude and compassion. Values are inherited through the actions parents take, their habits and routines (exercising, socialising, reading, meditating, praying). Actions reflect our values, because actions don’t lie.

More critical are the things that are rewarded. The celebrations, the praise and punishments cut through to the values that are truly important. Parents are hard-wired to pass on their values to their children. We see this in the way that parents critique:

  • appearance
  • manners
  • grades
  • ideas
  • independence
  • religious engagement
  • sporting achievement
  • wealth

 

Children inherently sense which values really matter to their parents. They know what gets rewarded and what gets ignored.

Outside of the family, the societal norms we are exposed to – schools and social peer groups, the generation we belong to, are a strong influence. It is the reason 2nd and 3rd generation immigrants often act differently to their parents and grandparents. It accounts for millennials placing a greater value on acceptance, diversity, nature and sustainability.

More subtly, we are influenced by the cultural backdrop of the place and culture we grow up in. As an example, consider the values that are most commonly associated with Australia:

  • Democracy
  • Enjoyment of life
  • Fairness
  • Friendship
  • Humour
  • Resilience
  • Outdoor recreation
  • Tolerance

 

If you grow up in Australia, these values may or may not resonate with you, but in some they will have an influence. These ‘Australian values’ are positive, but society can equally reinforce values that cause life dissatisfaction. Status, appearance, conspicuous consumption may not be the values we want to aspire to, but they are reinforced daily though the media, in advertising and on our social media feeds.

When we consider this myriad of influences, it is challenging to then sit with a blank piece of paper and quickly write down ‘my values’. To land upon the values that makes us unique. It is equally hard to know which values sustain us and where we are reverting to values from an inherited or socialised sense of duty and conformity.

Motherhood and apple pie

Consider the following list of values:

  • Love
  • Connection
  • Purpose
  • Acceptance

 

It’s hard to argue with a list like this. It is compelling because love, connection, purpose and acceptance are fundamental human desires. The challenge is that, however true the list might be, it doesn’t give us much to work with in understanding our decision-making processes. We need to know what sets us apart, what makes a family function in a particular way. In our experience, once we start to dig a little deeper, we tend to find that even though there are consistent themes, no individual or family has exactly the same set of values.

Fear of judgement

We want to fit in, to be accepted. So, when it comes to discussing our values, it is sometimes easier to tell people what we think they want to hear. We pick the values that we think represents us well, that makes us look nice, rather than being honest about what is important to us. Our values are so connected to the values of our parents and our friends, we think we know what is important to them. This often can be what gets reflected in our responses.

This is particularly acute where there is a lack of trust or the purpose behind a values discussion is not transparent. When people are defensive, they tend to play it safe. They don’t go high or low on any one cluster of values, so they don’t stick out in the group.

Approach

In our experience, there are a few ways to overcome these challenges:

1. Framing

As with most sensitive conversations, it is fundamental to establish ‘why’ we are looking at values at all. What is the purpose? What do we hope to get out of it? How will we use the information? Is it anonymous? This framing needs to come from multiple sources; from any 3rd party facilitation and from family leaders.

Ideally, the identification of values is framed amongst a broader set of objectives. If the process is done well, it should form the centre of family decision making processes. We typically see families use their values to guide philanthropy and investment decisions, governance frameworks and conflict management protocols.

Whilst it is not possible to fully de-construct our values from those of our family, friends and society, it is useful to frame the question about our values from different angles. So, what values do our parents hold? What do we have in common? and where the differences? How do we react to the values attributed to our country?

We need to reflect on what personally makes us happy. What brings us joy may not be the same as what we think is important. Framing the conversation in different ways helps us to approach the topic from different angles.

2. Space and time

When we consider our values, we need to trust our intuition. At the same time, we need to give ourselves some space and set aside time to reflect. We encourage people to clear their minds through meditation, prayer or exercise. It is important to eliminate distractions; phone, email, social media.

As you consider which values resonate, think about how you spend your time and why you prioritise certain things in your life. How you act and what you celebrate will give you the greatest indication of your underlying values. We ask people to reflect on the values of their parents, but also their mentors and role models.

We have found these questions bring greater clarity to the process and form the basis for a richer discussion.

3. Conversation

The process of identifying values without discussion and debate becomes an academic exercise. It is the conversation to draw out what our values mean and how they influence us that brings meaning.

The identification of values is therefore simply a starting point for a coaching conversation, a team workshop or a family meeting. The purpose of these conversations is always focused on personal growth and self-awareness. Whilst our values shift over time and adapt to different life situations, it is unrealistic to assume that we can convince our family to adopt or shift their personal values. Our core values are strong. Attempting to influence values, inevitably creates conflict. If we lead the process with care, we can better understand why the members of our family act the way they do. This is a huge benefit that can build significant self-awareness and transform the dynamics within any family.

 
In summary, values are incredibly powerful and understanding them has huge benefits individually, as a collective family or team. There are some important challenges to be aware of that can de-rail the process. These challenges can be managed effectively with the right intent, a good structure and built around a transparent, supportive conversation.




Are you ready to turn uncertainty into growth?

It may seem strange to be talking about growth in these uncertain times. In fact, now is the perfect time.

Amongst the havoc wreaked by COVID, it’s been heartening to see some positives emerge from the pandemic: a strive for greater connection; a surge in community spirit and solidarity.

The crisis has given us cause to stop and reflect on how we live; to examine what really matters to us as individuals and families; to question whether we’re living by our values. As we face increased uncertainty, now is the time to shift our focus to growth and building a confident future for ourselves and our families.

Are you ready to turn uncertainty into growth?

 




The Rockefellers: A Model for Family Stewardship

“If the values weren’t lived, the words wouldn’t have had an impact,” David Rockefeller Jr. said. “So I think the family has tried its best to live those values, to whom much is given, much is expected.”

The Rockefeller family is one of the oldest and most prominent family dynasties in the US. It is also one of the most discreet. By many measures the family has been incredibly successful. The Rockefeller foundation has celebrated 100 years and the family has stewarded a fortune of over $11Billion.

Now entering into its seventh generation, the descendants from the original wealth creator, John Davison Rockefeller (JDR), come together at least twice a year. The family has stayed together and feels like a family. It has done so without the scars of family feuds or lawsuits.

The writings, anecdotes and stories of JDR’s life provide many clues as to how such a strong legacy was built. Like all successful families, the legacy comes from clear purpose and a strong set of values. So, how might the purpose and values chapters of the Rockefeller Family Charter read?

Using many of JDR’s original ideas, we’ve attempted to piece them together.

‘Singleness of purpose is essential for success in life’, JDR

For many successful individuals, philanthropy denotes a level of success, the culmination of a lifetimes work. The idea that once there is enough wealth to share around, it is time to consider how to contribution to something greater. For JDR, it was a core belief long before there was any wealth to speak of. When he started out at 18, earning $3.50 a week as a clerk in Cleveland, he gave around 6%, sometimes more, of his income to charity. By time he was 20, he was consistently giving over 10%. David Rockefeller Jnr recalled giving to charity with his very first allowance, aged 10.

Whilst he was driven to succeed, the purpose for JDR was not the accumulation wealth and he said so explicitly. ‘The man who starts out simply with the idea of getting rich won’t succeed; you must have a larger ambition.’ This larger ambition remains central to the family today. The Rockefeller Foundation’s mission, unchanged since 1913, is to promote the well-being of humanity throughout the world. This mission aligns JDR’s essential belief that, ‘having been endowed with the gift I possess, I believe it is my duty to make money and still more money, and to use the money I make for the good of my fellow man according to the dictates of my conscience.’

The mission drives many of the family’s ventures and its decision making. The Rockefeller Brothers Fund is an example of pioneering impact investment. The strength of the family mission and the extraordinary family tradition of putting family wealth to work in service of improving the world, made the process of implementing a mission-aligned impact investing program that much easier. It is the same mission that has driven the divestment of all stocks related to oil and gas.

 ‘They have not only conveyed wealth in their family, but they have conveyed values, and that is a real achievement.’ Mort Zuckerman

Purpose is clearly a key element to the success of the family. However, when you look at the challenges experienced by the Carnegies, the Vanderbilt’s (dynasties born out of the same era as JDR) there must be more to the story than ‘purpose’ or ‘mission’.

To understand this, we need to look at values. ‘If the values weren’t lived, the words wouldn’t have had an impact. I think the family has tried its best to live those values, to whom much is given, much is expected.’ David Rockefeller Jr.

Here is a guess at what values JDR may have espoused:

1. Practice discipline and ritual

JDR was a bookkeeper by trade and paid meticulous attention to the detail of his accounts throughout his life. JDR tracked all of his spending and saving. He kept a strict account of his finances in a small notebook he dubbed ‘Ledger A.’ Even as an old man, he kept it in a safety deposit vault like a sacred relic. Discipline and ritual mattered a lot to JDR and it is important to the family today.

They meet as a family twice a year for the family forum. In June, at the Playhouse on the grounds of the historic family estate in New York’s Hudson Valley or in New York City over Christmas. At Christmas there are often more than 100 in the same room for a Christmas lunch. Ritual is built into the process as well. When you are 21, you get invited to the forum where you get tell a little about yourself and get welcomed in. The idea is to say you are part of the family.

Not having an operating business to either run or divest has helped to create a stable foundation for the family to work from. However, there are a number of informal arrangements to maintain harmony. The non-solicitation rule for example, that ­prohibits family members from tapping each other for their personal charities.

 

2. Live within your means

‘I have never known a playboy Rockefeller.’ Henry Kissinger.

Even after accumulated massive wealth JDR continued to live frugally relative to his peers. He bought and built large houses, but they were always modest compared to what he could have afforded.

The family never flaunted its wealth. JDR Jnr was squeamish about putting his name on Rockefeller Center as he thought it ‘flamboyant and distasteful’.

Today, the Rockefellers make a conscious effort to teach their children to preserve their money and use it to improve the world. The key lesson is that ‘touching capital is a cardinal sin and you should try to live on your income’.

 

3. Continue to learn and grow

JDR was passionate about learning through his everyday conversation and taking insights from those around him. As the head of Standard Oil ‘he conversed not only with those overseeing the operation, but with the rough wildcatters who were actually doing the drilling.’ He was famous for saying very little, preferring to listen to others than dominant the conversation. ‘It is very important to remember what other people tell you, not so much what you yourself already know.’ JDR

Education is synonymous with the Rockefeller’s. JDR founded University of Chicago and Rockefeller University. The Rockefeller Foundation continues to support education as a backer of the London School of Hygiene and Tropical Medicine, and the New School in New York. In 2008, David M. Rockefeller made the largest gift by an alumnus in the history of Harvard University, giving $100 Million.

In 1911 Standard Oil was divided into multiple publicly listed entities which allowed the financial assets to be easily passed on to future generations by way of a series of comprehensive trusts. In addition to the trusts, there are a series of committees and other structures that provide a means to connect and educate a family that spans a massive 242 descendants.

A close colleague who once sat in investment meetings with David and Laurence Rockefeller recalls an important ritual where each trustee writes a letter to the family board outlining how they put their distributions to use. Using the principle ‘invest, save, spend, give’ helped each Rockefeller be an effective philanthropist and steward of their personal wealth.

 

Further reading

Despite their longevity and significant impact, there are limited resources or case studies on the governance and structure of the Rockefeller family. The resources below provide some further context on the family, the Rockefeller Brothers Fund, including several articles on the values and beliefs that shaped JDR.

https://www.ft.com/content/1abecaa8-1867-11dd-8c92-0000779fd2ac

http://theimpact.org/wp-content/uploads/2016/09/TheImPact_RBFCaseStudy_2016lowres.pdf

https://www.economist.com/business/2008/05/22/a-family-affair

https://www.artofmanliness.com/articles/john-rockefellers-keys-to-success/

https://www.cnbc.com/2018/03/26/david-rockefeller-jr-shares-4-secrets-to-wealth-and-family.html

 




Lead with Confidence

When I coach business leaders, I am often asked to inject some confidence into the person I am coaching. It is not uncommon for a new Executive to have a broad goal of ‘confidence’ as they transition and find their feet.

Of course, confidence is not limited to how you carry yourself in the workplace. Quite often our role guiding the conversation in a family is to give specific family members the space and room to voice their opinions when they otherwise lack the confidence to make their point of view heard. The philosophy that shapes our work with families is that we want to create confident stewards.

So, what does confidence look like and how can you be more confident in the interactions with your family? Here are three important places to start.

Consider how you prepare and carry yourself

  • Be mindful. Take time out before an important family meeting or engagement to create a positive state of mind. It can be hard to rush between our different mental modes – between work and family. What are your triggers to transition yourself from your current focus to the time you are going to spend with your family?
  • Focus your attention on what you can learn from the upcoming interaction and bring that focus with you. If you are genuinely open to learning something new from your family, it dissipates a feeling of being tested or judged.
  • Consider your posture and how you hold yourself.
  • Fake it till you make it. Everyone holds a certain level of imposter syndrome as mother, father, successor or family leader.
  • Be light. Don’t bring a heavy focus on the setbacks you will invariably suffer. Every journey has ups and downs. Focus on the long term gains (an essential mindset within a family).

Harness your strengths and unique experience

  • What is the unique strength or perspective that you bring to your family?
    There are many different roles within a family. You may not be the wealth creator or a financial investor, but you may excel in building governance or guiding the values in the family.
  • Build from your strengths and grow your area of expertise incrementally. Don’t stretch yourself by trying to be across everything at once. For example, you may not be an expert in the family finances but you have the social skills to keep people engaged.
  • Harness momentum. If you’ve experienced a win, use that positive energy to initiate a tough conversation you’ve been putting off.

Be open and lean on your family

  • Ask questions and ask for help. Don’t put pressure on yourself with an expectation that you should know everything.
  • Get other family members on side by asking them to share their expertise. While at times it may not seem this way, your family wants to see you succeed.
  • Look for mentors across your extended family or outside the family with the specific goal of building your confidence in a particular topic or area within the family business or family entities.
  • Be specific on what you want to achieve. Articulating your goals and making your family aware of them makes it more likely you will achieve them. Your family can help you with their time or resources to make your goals a reality. See our article on goal setting for consideration when shaping your goals.

Confident people do these three things instinctively. They know their unique strengths, but rather than trying to prove them, they enter conversations to see what more they can learn. This is the single most important tactic for confidence.




Holistic Model for Stewardship

We are often asked how a focus on family and the non-financials integrates with traditional wealth advisory roles. Put simply, it is all about the human and intellectual capital. We see these elements as the essence of the family office and the basis for all the subsequent activities a family pursues.

For many people this still raises a series of questions, in particular what problems this family component is trying to solve and how it fits with the existing advisers supporting the family. As a way of clarifying the relationships with traditional wealth, legal and accounting roles, we developed the following model:

 

Figure 1: A holistic model for stewardship

In many respects, the process of engaging advisers would be smoother if a family started by defining its values, purpose and strategy, then focused on creating a foundation of strong governance and clear protocols with an empowered, harmonious, educated family unit. This of course assumes a level of organisation that most families may not know how to get started, even with a picture of the future in mind. Instead, let’s consider the organic development of a family and how the support of advisers follows a natural cycle of challenges and priorities.

At the start, families are often faced with transactional safeguards and structural problems to solve, for example, to complete a complex tax return, draw up a Will or create an ownership agreement.

In response, families often engage an accountant or a lawyer. As resources grow they may seek wealth advice, which could include experts in philanthropy, financial planning or asset protection. As a result, alongside hard work and good fortune, the first phase in the cycle emerges – prosperity.

1. Prosperity

The wealth created within a family is typically structured with the goal of sustaining a level of prosperity. Often, this will be aligned to the needs of the existing family leaders; to the interests and ambitions of the original wealth creator. As a result, it is rare for existing advisers to have significant contact with the broader family or the next generation. Communication is focused on the family patriarch or matriarch.

Significant life or liquidity events often compel families to think more deeply about what it means to be wealthy and the impact of the prosperity they have created.

Life Events Liquidity Events
Retirement Wills
Marriage / Divorce Estate Planning
Ageing / Mortality Succession Planning
Lifestyle / Poor health Sale of a Business
Birth / Death IPO

Figure 2: Life and Liquidity Triggers

These triggers bring a focus on estate planning, portfolio management and asset protection through trusts and other vehicles. In turn, this can force a family to consider the dynamics and relationships, raising important questions:

  • What can I do to help my family make well-informed decisions?
  • How do I determine what is too much to inherit?
  • How can I avoid entitlement?
  • Am I confident that my children have the capability to sustain the family resources?

Answering these questions regularly shines a light on family dynamics, the readiness of the next generation and the risk of potential conflict in the family.

2. Harmony

The immediate goal in this phase is harmony. Supporting the family to re-balance and re-align to the new reality of additional wealth or transitional wealth between generations. This is where the family dynamics in the top circle emerge as a central theme.

Our role therefore starts by addressing a need for family harmony, something that can only be achieved through open, honest communication. Creating shared values, purpose and strategy helps families become more stable and aligned. Some families need to have the tough conversations about conflict, entitlement or successors.

Conversations back around the kitchen table provide an opportunity for family members to share their hopes, ambitions and goals, to impart wisdom and build a shared family story. These discussions can be used to help build a respectful and productive governance model; a guidebook that shapes interactions and protocols for the future.

Deeper conversations about wealth, what it means and how the resources can be utilised move the family towards an additional goal: new opportunities.

3. Opportunity

Once the intent of family leaders to put existing family resources to use for future generations becomes clear, the conversation shifts towards what can be achieved. This is an exciting, hopeful conversation. What are the driving goals and ambitions of future generations, and how can the resources within the family be used to support these goals? How can future leaders impact business and society?

To deliver these opportunities, family members have to address their individual education needs and gaps. This is where traditional family advisers can play an important role; for example, educating and guiding the broader family in the structure of the family assets and decision-making processes.

4. Stewardship

The final challenge is for family members to look beyond themselves and focus on stewarding resources for future generations. To do this successfully, all three parts of the model need to work together. The family needs to grow and sustain its wealth and resources. It needs to be structured appropriately with the growth and development of human and intellectual capital.

To facilitate stewardship, advisers need to work together, to share information and bring that transparency to the family. Communication models change in this regard. Strategy is driven by the family and owned by future generations. Advisers are brought in to solve specific technical challenges, individually and in an open forum.

5. Family Patterns

Not every family will follow a path in the order described here, nor will they need every element within the three circles. Each family will have different objectives and timelines. Generally though, it is hard to achieve stewardship without a combination of the three circles and without advisers across these three areas working together. The model also assumes the family has a progressive view of wealth. And it is dependent on a desire to maximise the human and intellectual capital in the family. You can read more about this shift in the article From Ownership to Stewardship

We believe in using specialist advisers for specialist activities, targeting advice to specific problems. Our advice around the non-financials integrates with traditional wealth advisory roles. It is a complement to the existing advisers that may be supporting a family.




From Ownership to Stewardship

Unprepared children can erode family resources far quicker than poor wealth management. Yet we continue to value traditional measures of asset protection over the readiness of our children to lead our families and steward the wealth.

Over the past few years, we’ve begun to see a shift. This old model of ownership is being replaced by a new model of stewardship. The table below captures this transition:

Old Model – Ownership New Model – Stewardship
Protecting the assets Putting assets to use
Financial capital Human and intellectual capital
External governance Self governance
Limited information sharing Transparency of information
Limited decision making Collaborative decision making
Education by external institution Education tailored to each individual
Profits Profit with purpose
Assets transferred after death Assets shared when alive

Figure 1: From Ownership to Stewardship

This new model is central to our philosophy. As a result, I’ve been examining these ideas with different families and family advisers and have recorded some of these conversations in the podcast series ‘At the Kitchen Table’. A good example of the difference between the old way and the new way was in my first interview, with my father.

My family story goes back six generations, and our history links to the Lousiana purchase. I picked up the story with Dad when he became the executor of my grandmother’s estate. What I learned through this conversation was that the strategy and overriding focus passed down from his father was tax effectiveness. The purpose for my father was to split the assets (which included businesses, trailer parks in Washington and land in Louisiana) and give each sibling their own share as efficiently as possible. There was no consideration given to the enduring legacy of the wealth into future generations.

Imagine what could have been achieved if my family had worked together and stewarded that wealth. My Uncles and Aunts are all pilots and teachers, yet the potential conflict and the tax implications won over. My Dad believed the worst outcome was to attempt to make decisions by committee.

As a juxtaposition to this story, the new way appreciates the human and intellectual capital and the rewards that come from putting assets to use as a family. It takes some work: a commitment to push through tough situations and a structure that respects everyone’s unique strengths and ambitions. If this can be achieved, it sets up a self-governing process that can be richly rewarding for the family members involved. It can sustain the values of the family, bring the family together and encourage collaboration.

There is also a growing movement amongst the new generation on social consciousness. This is manifested in a shift from family responsibility (providing for my family) to social responsibility (giving back to society).

The new way focuses on putting wisdom and wealth to use in order to maximise the human and intellectual capital in the family. It also acknowledges that while institutional learning has its merits, there are certain elements of leadership development and financial literacy that need to be personalised in the context of the family and the individual. The best corporate learning programs integrate coaching with traditional learning mechanisms.

The new way accepts the past as it is and shifts the family’s focus to the present and future generations. It is about creating situations that allow families to work together right away rather than wait for the loss of a loved one, a familly crisis or some other life event. It encourages families to look at the resources within the family and examine how they can be used now. It asks wealth creators to experience and guide the transition of assets so they are able to enjoy the process and contribute in a meaningful way.

Which way is your family going?