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09.12.2020

Centro LAW Guest Series: THRIVE - a wellbeing framework for family governance

While it can be a wonderful thing, a family is a complex constellation of relationships held together by trust and communication. One challenge many families face is how they can create and preserve a legacy over generations? Family governance provides a structured framework for shared family values, vision, and the family's purpose of wealth. There's no standard governance model, and we believe in empowering family members rather than defining rigid rulesets. Valerie Remoquillo-Jenni, an independent family governance advisor based in Zurich, shares her insights on building family governance on individual needs and family wellbeing. So, no matter the size or scale of your family and wealth, read on for ways to help preserve yours for generations to come.

Thanks, Valerie, for taking the time to have a chat with Centro LAW. What is your field of expertise?

I've worked closely with global families of wealth for nearly a decade, and together with my experience and professional training, I specialize in family governance. I am particularly excited about engaging families to approach their wealth decisions with the lens of family wellbeing. For many clients, the happiness and wellbeing of their family members are most important.

Can you tell us more about the objectives of family governance in wealth planning?

Family governance is a family-driven process to create formal and informal mechanisms that articulate and act upon shared goals. These are centered around the family, their family business, and the overall wealth. As such, family governance is an essential tool for wealth planning. Some of the biggest challenges (and opportunities) of preserving and transferring wealth lie outside even the most competent wealth planners' technical advice. Instead, they stem from the family's collective readiness and commitment to the family governance process. Family communication and trust really do make or break wealth solutions. 

At Centro LAW, we believe that the human element in family wealth planning deserves the most attention to create a lasting legacy and best results. How can family governance build on the human part?

I agree. To me, family governance is the beating heart of wealth planning, where we support clients to make sound wealth decisions while acknowledging the complex challenges families face. The best wealth planning considers the intricate dynamics among family members and their individual and collective needs. Family governance is often perceived as setting formal rules for the family. Still, much of it is a very human-centered dialog and trust-building process among family members. 

Can you tell us more about the dimensions of family wellbeing and their benefits?

To put it simply, wellbeing is characterized by health, happiness, and prosperity. It may seem like an abstract "feel-good" concept, but it can be translated into tangible characteristics. The THRIVE framework I've developed stands for six dimensions of family wellbeing (Treasure, Health, Relationships, Identity, Values, and Empowerment) that are uniquely adapted for families of wealth. A family can observe, measure, and, best of all, act upon them.

Treasure is about financial wellbeing. Having sufficient financial means may be key to wellbeing, but what has significant effects are responsible money behaviors like saving, spending restraint, discipline with credit, and budgeting. Family members who have a healthy relationship with money and grasp its basic management concepts can greatly enhance their personal wellbeing.

Health, or physical and mental wellbeing. Wealth allows for many comforts, yet health in mind and body is ultimately priceless. Unfortunately, some health conditions have a genetic nature and run in families, so taking intentional steps to understand one's genetic history, implement health screenings, and make lifestyle adaptations may mitigate those risks. As a society, we are becoming more aware and open about mental health, an area where scientific research shows affluent families particularly struggle. While there are no quick fixes to these psycho-social challenges, acknowledging the importance of mental wellbeing is a powerful way of supporting family members.

Relationships are about social wellbeing and the impact of healthy family relationships cannot be overstated. They are a source of meaning and influence. Family relationships provide confidence-boosting social support yet also behavior-regulating social control. But friendships beyond the family are just as crucial to wellbeing, especially in older age. Wealth sometimes isolates individuals or families, locking them in a golden bubble where trust and deep personal connections are limited. So the social wellbeing dimension is crucial for all family members.

Identity relates to the rituals and traditions, manifested visually, verbally, or experientially, forming the fiber of a family's collective being. Studies show that family moments, both grand and mundane, enable members to pass along information between generations and that this storytelling process builds greater resilience and self-efficacy. For prominent families, the notion of identity is heightened when a business or charity bears the family name. Identity is an essential dimension of family wellbeing. It declares who the family is and what it stands for, internally, to its members, and externally, to its community.

Values, as they are referred to in the THRIVE framework, are not just about lofty, overarching family aspirations or virtues. We know it is not enough to simply spell out a family's "common denominator" values. Values are powerful only to the extent that they are lived out in action, and to do so, these have to be connected to our character strengths. Each individual has a unique set of character strengths, which, when applied, makes one more enthusiastic, satisfied, and effective. For example, how can one's strength of "creativity" contribute to our family's value of "excellence"? How about someone's strengths of "humor" or "curiosity"? The alignment between family values and individual character strengths is what makes a significant difference in family wellbeing.   

Finally, Empowerment is about the tools that enable family members to thrive with wealth, both as benefactors and stewards. This can involve education opportunities, where individuals gain money and life competencies, as well as real-world learning experiences with the family and in the community. Money knowledge, either through informal, family-led sessions or through structured financial literacy programs, builds confidence among inheritors, mainly when initiated early. Part of this wellbeing dimension is fostering an empowering environment where family members feel psychologically safe to express themselves authentically, take risks, and make mistakes without fear of being punished.

How can families encourage a wellbeing dialog? And which steps lead to concrete governance?

Wellbeing can initially seem nebulous and vague. Many families care deeply about their wellbeing but may struggle to define it for their context. They need a definition and a guiding framework, similar to what THRIVE offers with six wellbeing dimensions that are tangible, observable, and, most importantly, actionable.

With a common base, the family can have a meaningful conversation about how they are faring in each of these six aspects. They can then decide on activities to address wellbeing deficits or on ways to enhance already positive behaviors. Wellbeing can be on the agenda of various family forums, such as at a family council meeting, an annual retreat, or even at the dinner table. Once priorities are set, the family can commit resources to specific wellbeing measures.

Translating findings on family wellbeing into governance actions can take different forms. For example, on financial wellbeing, it could be about implementing financial literacy and basic money management training. It could be about investing in annual health checks and wellness retreats or supporting next-gens to grow networks outside the family. It could come in the form of a family wellbeing committee that organizes activities and provides guidance for the rest of the clan. It's all about making wellbeing an intentional project of the family.

Trusted advisors have a role to play in family wellbeing. The best wealth planners are holistic thinkers who can recognize fairly quickly when their clients' challenges are not just about technical, legal, or financial solutions. Using a wellbeing framework like THRIVE, such an advisor can engage in a structured and objective conversation with the client to examine potential risks and opportunities.

In general, what advice would you have for wealthy families that want to plan for generations? Where should they start?

Securing the family and preserving its wealth for generations are aspirations shared by many families. The best place to start is a reflection on these two questions: "Who are we as a family?" and "What is the purpose of wealth to us?"

A family first needs to take stock of its unifying beliefs, the vision, and values that bind them together. A family grounded in a shared history and a common understanding of what it stands for today will have a stronger drive to stay together for the future.

Tied closely to the first question is examining the purpose of wealth for the family. Wealth can mean different things to each family member, who may derive from it various benefits but also responsibilities or burdens. This impacts how they make decisions, for example, about ownership in a family business or investments. Reaching a consensus on the purpose of wealth will enable cohesive and sustainable wealth planning.

About Valerie Remoquillo-Jenni

Valerie is an independent advisor based in Zurich. Her consulting work focuses on four areas of specialization: family governance, family wellbeing, family communication & branding, and next-generation mentoring. Most recently, she was the COO and head of family advisory for a Swiss multi-family office. Valerie holds an Advanced Certificate in Family Wealth Advising (ACFWA) from the Family Firm Institute.

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