Nothing comes to fruition unless action is taken to affect the change. Establishing clear policies, protocols, and practices for how family members will govern the management of family wealth is what pushes the wheels of family governance into motion. Ultimately, what should be achieved is a written document, commonly referred to as a Family Constitution or Family Agreement.
Purpose of Policies
Management of significant family wealth should be approached like any operating business to give clarity of vision and purpose, define rights and obligations, set expectations and boundaries, designate roles and responsibilities, and to provide accountability and access to information. Formal businesses have policies to meet these objectives. A policy is a statement of intent or principle that is adopted, or a set of guidelines or rules that determine a course of action. Protocols and procedures are how policies are implemented. A lack of policies cause family members to make their own assumptions often creating an environment of distrust and conflicts, while clear policies influence behavior to achieve a desired outcome.
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