As part of our series of highlighting the main behavioural risks for families with wealth, we continue with (2) Trust. Please see our previous blog post (1) The Entitled Generation for the first in the series. We will explain the other risks in future posts: (3) Communication, (4) Governance, (5) Unexpected events, (6) Vision.
Trust is the foundation of any successful relationship. Without it, there simply is no basis for people to engage, whether in a personal or professional capacity. No one would even think of putting themselves at risk over anyone or anything for that matter, unless they had trust. Which is also why the term “trust me” must be one of the most overused terms in the world, particularly when it comes to money.
How do we gain trust in someone? Time is often cited, as in the comfort that in many past encounters the other side behaved as they said they would. We also seek references from (ironically) other people we trust. Then there is reputation, track record, or even contracts to make sure that the people we choose to engage with are held to the principles we agreed to. Fact is though, you can probably trust no one. You can only seek alignment of interests and these are subject to change, as sad as that is.
So how do these rather brutal facts of life translate to family? Actually, the family is at a distinct advantage when it comes to trust. Not only can family members take solace in the fact that they have known their father, sister or brother for a very long time and, as such, there has been ample opportunity to establish a basis for trust in one another. But more importantly, families are inherently designed to look out for one another and in doing so create the safe environment to bring new life into the world and nurture the next generation. The great sacrifices every generation naturally makes to enable growth of the family unit can only come through trust. And that is a beautiful thing and a huge competitive advantage over anyone who does not have a functioning support network and such clear focus.
They say blood is thicker than water, but we also know from much experience that even in families, trust can sometimes break down and things change, particularly when it comes to generational transfers of wealth. What can families do to protect themselves from trivial matters such as envy, greed, ego or circumstance? Setting up family charters, trusts or other forms of family governance that clearly lay out the roles, responsibilities and share of the wealth for everyone are good tools. But most important, is the articulation of a common vision and the respect of the same values by all family members. Everyone must be able to agree that decisions are made for the benefit of all. And if you can’t trust that, you can’t trust anything at all.