There is the old adage that it’s not “what you know but who you know” that is the key to success in life. While this adage is overbroad, there is a kernel of wisdom in its central observation that we all recognize. What is social capital? It is the network of relationships that that family maintains both within itself and with the outside world. In many ways this can be seen as a complex “eco-system” or meshwork of observable relationships. These might include that includes the family’s business, professional and social ties with people and groups that matter to them. It also consists of the kinds and qualities of the relationships within the family. A significant measure of the financial and personal success of the family and its members comes from developing a thriving and mutually beneficial set of networks that support the family in reaching its goals and through which it assists others in reaching theirs. Successful families take great care to cultivate both the internal and external family ecosystems. Part of this attention is devoted to paying attention to the structures they put in place that institutionalize their ongoing impact in the world. In this framework, typical estate and tax planning entities become far more than tactical solutions to technical problems; they become core strategic assets critical to ensuring cross-generational success. Likewise philanthropy moves from simply being a charitable gesture or tax driven tactic to becoming an integral part of the way the family strategically engages with each other and with the world.
Questions:
- If you had understand the “ecosystem” of a client family, how would you do it?
- What impact would deeply understanding this ecosystem have on your planning for the family?