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Stewardship is a responsibility, not an accounting degree

In this month’s edition of Family Office Perspective, I’m translating a soapbox thought into a coherent perspective.

Sometimes I find myself developing a ‘soapbox’ thought. Something will come up in my life and all of a sudden I’m in full lecture-mode explaining myself. Well today, dear Reader, you get my soapbox on ‘financial literacy’.

I am just off of a webinar where Jay Hughes was at it once again. The most important figure in family wealth advice, Jay still somehow brings fresh new perspectives which is quite remarkable. Consider that one book alone, Family: the Compact Amongst Generations, contains at least a couple hundred wealth philosophies derived from historical cultures!

Jay stated that family wealth strategy is the key to effective ownership. Strategy is far more broad than financial literacy. Family wealth strategy, what might often be called effective stewardship, requires many skills.

In a recent article for Family Wealth Magazine, Josh Baron describes the ten competencies of an effective owner.**

Of the ten competencies, two or three broadly fit within the term “financial literacy”. Therefore, more than half of the skills of an effective family wealth steward are not financial-related.

I found myself soapboxing on this topic recently when I had heard for the second time in a week that stewardship training is about financial literacy.

Effective stewards have additional priorities! Below I have divided Josh’s competencies into three tiers, all important to a steward’s developing ownership literacy. I do not describe the competencies in any detail so if they are not obvious from the label, please do check out the article.

The Must Haves:
Personal Finance. History and Values. Communication. Negotiation.

Two of these must-haves relate to key qualitative skills. A clear understanding of your values and what actions from your family’s past have followed (or not followed) your values. These are truly a must-have for effective long term family legacies. Basic personal financial competency is also a must-have. An understanding of budgets, spending, seeing the difference between “must-haves” and “nice-to-haves” in lifestyle design and my personal favourite personal finance topic: understanding the importance of investing in yourself.

The Must Grows:
Ownership Strategy. Family Governance. Corporate Governance.

Generally speaking, healthy functioning families are going to make mistakes, we all do, and there is always room to know more and grow more. These competencies stand out to me because they require a minimum base level of knowledge but more importantly, humility and growth are critical. Applying a beginner’s mindset to these topics and seeing them as continuing growth areas within families is really the key to their role in ownership competency (and strong family cultures).

The Must Adopts:
Corporate Structure. Estate Planning. Corporate Finance.

The theme here is that these are quantitative skill sets. They are certainly helpful to have in the family but they are also professional skill sets and therefore the key to effective ownership competency as they relate to these topics is the ability of the family to “adopt” the competency. To integrate your advisors’ competencies.

Are you willing and able to ask the right questions questions of your advisors so that you can fully integrate and appreciate their advice in your family wealth strategy?

I broadly describe the relationship between these quantitative skill sets and family wealth strategy as the health of your family office ecosystem. In this case your advisor ecosystem. This is the main topic of my new newsletter!

I am very likely making this new Newsletter a paid newsletter so sign up now to be governed in free forever.

The Wealth Equation:
FW = R (HC + RC)

Applying your Resources to improving your Human Capital (your intellectual, social, emotional and spiritual personal attributes) is certainly the key perspective of this Newsletter. So, I’m excited to announce:

I have recently completed my Tamarind Learning Canada accreditation

Although I do not see myself as a classic educator, I have found great fulfillment in helping stewards with their development journeys. So now I can provide an excellent and tailored wealth stewardship and ownership literacy journey for all of you wonderful Readers (and your friends and family!) I’ll have more to say about Tamarind Learning Canada over at my new Family Office Ecosystem Newsletter.

To the journey,