Pitcairn Update, August 2017
By Dirk Jungé, CFA®, Chairman
Click here to download the printable pdf version.

With just a few words, the world’s most effective and successful brands can sum up not just what they do, but how and why they do it with a succinct mission statement.

Here’s one example: “Give people the power to build community and bring the world closer together.” That’s Facebook’s current mission. In one sentence, Mark Zuckerberg and company convey a lot about Facebook – it’s driven by users, values personal connections, and is looking to expand its global reach.

Or take a look at Southwest Airline’s purpose: “Connect People to what’s important in their lives through friendly, reliable, and low-cost air travel.” It immediately gives employees and stakeholders an idea of why the company exists (connect people via air travel) and how they work (through friendly, reliable, low-cost service).

Since the early 1900s, wealthy families have borrowed from corporate America to draft mission statements or similar declarations to define their shared values and legacy. And much like in the corporate world, not everyone agrees on the term “mission statement.” Many families and advisors prefer words like purpose and vision. For all of these words, the definitions vary and start to overlap pretty quickly. In his book, Family Wealth: Keeping It in the Family – How Family Members and Their Advisers Preserve Human, Intellectual, and Financial Assets for Generations, James E. Hughes, Jr., offers a broad but effective definition of a mission statement as “an expression of the purpose, vision, values and goals of a particular individual, couple, family or enterprise.”

Regardless of what you call it, most families and advisors recognize the value of formalizing a family’s guiding principles into a concise statement or document. In fact, 58 percent of ultra high net worth families have a family mission statement or are developing one, according to a survey published by Morgan Stanley and Campden Wealth.

But not all family mission statements are created equal. A fill-in-the-blank or overly generic mission statement does little to define your family’s goals. It can actually do more harm than good for families who see increased infighting trying to draft it or for family members who think a nonspecific statement can replace communication and governance on other fronts. When crafting a family mission statement, keep these considerations and best practices pulled from leading brands in mind.

The process is as valuable as the end product

Company leaders rarely have the luxury of really stepping back and thinking about why they exist and what their long-term plan should look like. Mission statements offer executives a chance to collaborate and think big picture. Families are often in a similar situation. Simply getting the family together to talk through values, expectations, and future plans can be as beneficial as the finalized mission statement.

As families begin to hash out a mission statement, sharing individual mission statements can be a great way to find some established common ground. Many advisors recommend that each family member first create a personal mission statement, identifying priorities, values, and individual goals. This gives family members a chance to think about what’s important to them and creates a starting point for drafting a mission statement focused on shared values across the family.

Many families enlist the help of an outsider to spearhead early meetings and put together a first draft of the mission statement. More than half of affluent families used an external advisor or a special consultant in designing their family mission statement, according to the Campden Wealth survey. These advisors often have exercises and educational materials families can use. They can also play a key role in facilitating difficult conversations and keeping the process moving forward.

Pick a shelf life

Many companies change their mission statement on a pretty regular basis – every few years or so (Facebook just updated to its current mission in June 2017). For these organizations, the regular refresh gives everyone another chance to take that big picture look and course correct where the company’s headed. Other brands keep their mission statements for generations. JP Morgan still uses a J.P. Morgan, Jr. quote from 1933 as part of its mission. While specific values and nuances may change, some companies opt to draft an overall mission with the intention of it lasting forever.

Families face the same debate. Some include separate sections on mission, purpose, and values with specific roles and responsibilities defined for individual family members, serving almost as an investment policy statement for the interpersonal side of the family wealth. Others focus on succession, drafting detailed plans and getting younger generations involved from a young age. Still, others keep it short and motivational – more like a motto on a coat of arms.

Each of these approaches has merit, but the format should be decided early on. Work with family members and advisors to figure out if this mission statement is designed to be reviewed annually, every decade, during significant transitions, or if it’s meant to exist in perpetuity.

Make it memorable

Ultimately, many family mission statements are much longer than a company mission, though there’s no clear consensus in the corporate world either. Whatever format the mission statement takes, a portion of it has to stick with family members. It needs a concise, impactful summary that’s easy to remember and can guide the decision-making process. Ideally, family members would actually reference this preamble when discussing significant family decisions.

Live the mission and values

Who could argue with a mission statement that highlights respect, integrity, communication, and excellence? Those are meaningful attributes that should set a company on a good path forward. Those were Enron’s values just before the company declared bankruptcy in 2001.

A hollow mission statement is meaningless. Employees and family members tune it out, and what could have been a tool to facilitate family discussion can quickly become a barrier to getting family members actively engaged.

At the end of the day, a mission statement is no replacement for good governance. It’s a framework for collective decision-making and a path toward smoother generational transitions and greater financial success in the long run. It should complement other family planning and governance tools like decision-making frameworks, succession planning, and educating younger generations. For many families, a mission statement is a crucial step in acknowledging that family dynamics play an equal role in maintaining wealth momentum as financial factors. But it takes complete family buy-in and some real reflection to make it worthwhile. Just like with brands, a family mission statement should be a culmination of experiences and beliefs, not a starting point.

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