A family doesn’t need a surname like Vanderbilt to benefit from a family mission statement. A mission statement is a collaborative document created by one or more generations of family so standards and goals can be set for the handling of all family assets, including businesses and philanthropy in particular.

While mission statements are not legal documents – in fact, many are done both in written form and on videotape as a companion to legal wills and directives -- their purpose is to make a record of the family’s values, goals and aspirations and how those sentiments should drive future decisions about family wealth management, business succession plans and charitable pursuits.

Multi-national companies have mission statements. Non-profit corporations have mission statements. A mission statement for your family, helps identify and clarify specific values and goals, facilitates group decisions, instills confidence and encourages unity.

IIt should also identify family leadership who will work with other relatives in implementing those goals.

While the end product should produce a document built from discussion, argument and consensus, it’s not so much about the piece of paper as the process. Many families start the process as a way to build consensus about long-term financial, business, estate and philanthropic goals, but the conversation can take twists and turns that don’t directly involve the family money. In this process, a family can identify the strengths, weaknesses and unearthed priorities of all family members and might reveal leadership few had expected.

Trained financial advisors including financial planners, tax experts and estate attorneys, can help explain the process and set an agenda for families to follow in creating the mission statement. While some extended families may elect to bring in a facilitator to guide their process, there are generally four components to a family mission statement – estate issues, philanthropy, business planning and family dynamics in general.

It also helps to start with some questions that can guide the discussion.  Many experts start with questions that first get family members talking about their relationships and how their dynamics work, and then move into business and money matters.

1. What’s most important about our family?
    
2. What do you think our goals should be?
    
3. When do you feel most connected to the rest of us?
    
4. How should we relate to one another?
    
5. What are our strengths as a family?
    
6. Where do you think we’ll be as individuals in 5, 10 and 15 years?
    
7. In order, what are the five things you value most in life?
    
8. How should we behave toward each other?
    
9. How should we take care of relatives who are or become sick or disabled?
    
10. How should we resolve our disputes?
     
11. How important is the family business to you?
     
12. What should we be doing differently with our family money as well as our  assets inside the business?
     
13. What professionals or structures should we bring in to help us manage  our wealth?
     
14. What’s the best way for us to be building our wealth?
     
15. What do you think the role of our family should be in helping the community?
     
16. What should we be doing individually and as a family with regard to philanthropy?

Structurally, the written mission statement can be whatever you agree it should be – most experts say it should be no more than a paragraph long, but that’s a guideline, not a rule. It is also very important to focus on the positive, meaning what you want to accomplish and achieve as a family, as opposed to want you want to avoid. And it needn’t be set in stone – a family should have a meeting every year or two to revise or approve its mission.

The family mission statement helps a family establish its identity and the variety of voices within, and those voices may be subject to change over time. The family mission statement is a living, breathing document that can evolve over time. In today’s fast paced world, it is easy to get caught up in the here and now; a family mission statement can help you stay true to your family’s values. As a result, families may not feel the pressure to keep up with the Joneses because their mission statement helps achieve balance. It is also very important to focus on the positive, meaning what we want to accomplish and achieve as a family, as opposed to want we want to avoid.

The right mission statement can help reset goals and diffuse tensions later. It can also be used to moderate discussions that inevitably happen after major changes within the family – death, divorce or happily, an increase in the number of heirs and participants.

As for the age of the participants, it can start in very basic form with younger children and the process can mature as they age. It’s actually a good idea to bring young members into a customized version of the process for youngsters so they can comfortably adjust to working as adults with the older members of the family.

For additional resources on how to create a family mission statement, please consider utilizing any of these websites:

1. http://www.nightingale.com/mission_select.aspx?from=homepage&element=missiontitle
   
   
2. http://www.ehow.com/how_2043790_write-family-mission-statement.html
   
   
3. http://www.franklincovey.com/msb/

How Personality Traits Affect Financial Planning

The ancient Greek expression “Know thyself” carries a lot of weight when it comes to investing. Indeed, an investor’s personality can speak volumes to their ability to spot opportunities and avoid risk. If more people truly “knew themselves” when it came to money over the last decade, it’s arguable we would not have seen many of the individual excesses and mistakes that marked the recent economic slowdown.

Many companies and experts have attempted to label various money personalities over the years. And while there is no definitive set of definitions, taking a look at these efforts can at least get you thinking about where you are on the spectrum and how that’s affected your decision-making. One of the most recent high-profile efforts came from financial services firm TransAmerica in 2008 with its study revealing four basic investing personalities, including:

Now even if you have a handle on your money personality, what do you do with that information? It might make sense to seek advice from a trained financial professional to review the plans you’ve made and take you in a direction that not only suits your comfort level, but your future financial success.

If you’ve never worked with a financial planner or advisor before, one of the first steps in the process will be reviewing or completing a risk analysis profile.

Why is risk analysis important before you make decisions with your money? Risk tolerance is an important part of investing – everyone knows that. But the real value of answering a lot of questions about your risk tolerance is to tell you what you don’t know.

Here are some of the questions you might be asked before you start working with an advisor:

1.  What’s important to me about money?
2. What do you do with your money?
3. If money was absolutely not an issue, what would you do with your life?
4. Has the way I’ve made my money – through work, marriage or inheritance – affected the way I think about it in a particular way?
5. How much debt do I have and how do I feel about it?
6. Am I more concerned about maintaining the value of my initial investment or making a profit from it?
7. Am I willing to give up that stability for the chance at long-term growth?
8.  What am I most likely to enjoy spending money on?
9. How would I feel if the value of my investment dropped for several months or several years?
10. How would I feel if the value of my investment dropped 10% or 20% or more?
11. If I had to list three things I really wanted to do with my money, what would they be?
12. What does retirement mean to me? Does it mean quitting work entirely and doing whatever I want to do or working in a new career full- or part-time?
13. Do I want kids? Do I understand the financial commitment?
14. If I have kids, do I expect them to pay their own way through college or will I pay all or part of it? What kind of shape am I in to afford their college education?
15. How’s my health and my health insurance coverage?
16. What kind of physical and financial shape are my parents in?

One of the toughest aspects of getting a financial plan going is recognizing how your personal style, mindset, and life situation might affect your investment decisions. A financial professional will understand this challenge and can help you think through your choices. Your resulting portfolio should feel like a perfect fit for you.

However, your Capital Advantage, Inc. advisor can help you do much more than control risk on the investment side. He or she can help develop an emergency fund that will support you in case you lose a job or go through a protracted leave of absence due to health or caregiving issues. Your advisor can also make sure you have a disaster plan in place in case you’re disabled or your home is hit by a natural disaster.

Financial risk can take many forms, and your Capital Advantage, Inc. advisor can help you work through those issues key to your lifestyle.

Please call our office at (925) 299-1500 or toll free (888) 299-1500 if you are interested in scheduling a review of your investment strategy and/or financial plan. If you are not a client of Capital Advantage, Inc., we offer free, no obligation consultations. We also have excellent referrals to a variety of professionals; you are welcome to contact John Hayman, Donna Zinman or Gary Clarke for a list of these professionals.