
The power of a mathematical formula
Introducing the Conduct Formula – and how it helps wealth
owners create a wealth plan that aligns with their purpose
The Conduct Formula is at the heart of our approach.
It is our overarching principle, designed to help wealth owners understand that the quality of their legacy cannot be measured by wealth alone.
Instead, a successful legacy must take into account the quality of a wealth owner’s relationships.
But succession planning is full of intricacies. After all, we are not just talking about monetary assets – but businesses, real estate, art collections, and much more. The process can become deeply emotional – with a plethora of different stakeholders, each with their own vision for the family wealth, and layers of intergenerational differences.
So, why base our approach around a mathematical formula?
The answer lies in the beauty and utility of formulas.
Formulas – while primarily associated with the physical sciences – offer structured insights into the abstract and help comprehend profound truths. The Conduct Formula embodies this spirit, encapsulating the essence of wealth and legacy planning, and illuminating the relationship between wealth and relationships.
We define legacy not only as the transfer of wealth but also as the continuation of values, wisdom, and relationships. The Conduct Formula encapsulates this sentiment, suggesting that the quality of a legacy is a function of wealth and relationships, with the relationship variable given added weight, as life truly revolves around relationships. This framework aids in deciphering wealth planning, accounting for both tangible assets and intangible connections.
The Conduct Formula’s essence is to highlight a symbiotic relationship in succession planning. The Conduct Formula proposes that wealth – including financial, physical, emotional, intellectual, and social wealth – provides resources for the present and future generations. It also proposes that relationships are the conduit through which values, wisdom, and love are transferred. The quality of a legacy is then not solely determined by the magnitude of wealth, but by the depth and strength of relationships. Wealth planning without the context of relationships could inadvertently foster isolation, casting a shadow of coldness over the legacy. On the contrary, strong relationships can enrich the legacy with warmth, ensuring that it’s not just about monetary inheritance, but also about passing on values, cherished lessons, and enduring familial bonds.
While the facets of wealth accumulation, preservation, and the technicalities of structuring and distribution are undeniably critical, the ultimate focus of wealth and succession planning should pivot towards fostering healthy, meaningful relationships. Such relationships not only ensure the longevity and harmonious transition of the legacy, but also safeguard its intangible essence, nurturing values, traditions, and emotional bonds that can stand the test of time.
Navigating the complexities of wealth planning
The Conduct Formula stands as a concise, precise means of solving the complexity of wealth planning.
It enables our clients to shape a legacy that aligns with their values and purposes, cultivating a positive impact on others that endures through generations.
Here’s why our approach stands out:
1. Simplicity
The Conduct Formula distils the multifaceted dimensions of wealth planning into a comprehensive structure.
By categorizing the diverse elements – from different assets to varied stakeholder perspectives – the Conduct Formula provides a clear overview of the legacy components, enabling wealth owners to evaluate not only the quality of their wealth, but also the quality of their relationships, and the overall strength – and sustainability – of the legacy they are creating.
2. Universality
Every wealth owner is unique. Every family situation is different from another’s.
But regardless of historical, cultural, or social context, the Conduct Formula remains constant and universally applicable.
3. Structure
The Conduct Formula offers a systematic framework to address challenges and make informed decisions.
Much like how formulas guide architects in bridge-building, the Conduct Formula anchors individuals in crafting lasting legacies.
4. Prediction
The Conduct Formula isn’t just diagnostic – it is also predictive. By adjusting the different parameters of wealth and relationships, a wealth owner can anticipate specific outcomes and behaviours.
They can predict the impact of relationship-building strategies, governance systems, and technical rigour.
Combining each of those four values gives the Conduct Formula an inherent capability to highlight the role of healthy relationships. Such bonds lay the groundwork for emotional resilience, fostering both individual and collective mental well-being. In quantifying the significance of relationships in wealth planning, the Conduct Formula reminds wealth owners to invest time and effort into nurturing these vital connections.
This not only aids smoother wealth transitions, but also the emotional and cultural preservation of the legacy.
The Conduct Formula in practice: a first glimpse into legacy planning
To illustrate the potency of the Conduct Formula, let’s consider its application through a simple, fictional case study.
Let’s imagine the Robinson family – a wealthy, business-owning family, comprising of the parents, three children, and seven grandchildren.
Mr and Mrs Robinson are now in their late 60s, and considering their approach to wealth planning. They have:
- Built a thriving multinational family business
- Hold a diverse portfolio of assets
- Established a dedicated senior management team
- Gained the loyalty and commitment of their employees and advisors, some of whom are almost like family
- Integrated two of their three children into the business (while others aspire to roles outside)
But the Robinsons are at a crossroads. As they consider their legacy, they realise they want to:
- Ensure a meaningful legacy that reflects their life’s work and values for their family, business partners and employees
- Plan for succession while maintaining family harmony and the continuity of their business
- Strike a balance between passing on their wealth to the younger generation, while incentivising key employees to remain committed to the younger generations
- Develop an approach that feels balanced and proportionate to the commitment of each family member
- Prepare the next generation for the emotional complexities and challenges of wealth
- Find a wealth plan that gives them true peace of mind
The Conduct Formula steps in
Applying the Conduct Formula, the Robinsons first conduct an inventory of the individual components of both their wealth and relationships. This reveals how their wealth’s preservation and growth are interconnected with their relationships, and how these relationships need to be developed or strengthened.
In doing so, specific challenges come to light:
- How can they retain and motivate their CEO during a critical transition phase?
- Can their son balance his academic career with a leadership role, ensuring harmony with his sisters and avoiding burnout?
- How can they prepare for contingencies, such as their eldest daughter reevaluating her CEO aspirations or their son’s shifting priorities
- How can they build a succession plan that respects each child’s individual path? (Including their youngest daughter, currently juggling motherhood and medical school, but who also has a keen business instinct of her own.)
By applying the Conduct Formula, the Robinsons can visualize their succession plan’s character and quality in various scenarios, and contemplate suitable planning measures, in a structured manner. This prompts them to address gaps in their plan, encompassing not just physical assets but emotional, intellectual and social capital of each family member, and of their family and business systems as a whole.
The Conduct Formula helps them to understand where to enhance specific relationship parameters. For example: by being open on their planning objectives and obtaining the views of the younger generation at regular family meetings, or by creating a formal mentoring program to strengthen their legacy. These steps not only ensure generational cohesion, but empower the younger Robinsons to play an active, informed role in building the family legacy.
Meanwhile, the Robinsons realize the importance of adapting their strategies based on the diverse facets of their wealth. The Conduct Formula doesn’t just provide a static viewpoint; it allows for dynamic adjustments to these wealth components. For example, they can evaluate the potential outcome of allocating a higher percentage of financial assets to one of the members of the younger generation while compensating another with real estate or business shares. Or they might consider how establishing trusts versus direct inheritance could influence both family dynamics and financial growth – in particular with a view on scenarios of the third generation entering the family business at some stage in the future.
By experimenting within the framework of the individual components of the Conduct Formula, the Robinsons can foresee the impact of their choices.
This predictive capability is invaluable. Whether they’re contemplating how to equitably distribute a cherished family home or the implications of issuing different classes of company shares to family members and key employees, the Robinsons are equipped to make decisions that not only align with their planning objectives but also promote family unity. In essence, the Conduct Formula becomes a sandbox – a safe space for them to test out scenarios and strategies, ensuring that their wealth planning decisions are both informed and intentional.
For the journey ahead
The Conduct Formula is not simply an algorithm for wealth planning. It serves as a structured, yet adaptable compass guiding wealth owners through their legacy planning journey. It facilitates informed decisions, encouraging a harmonious transition of wealth and values to the next generation. As we delve deeper into this series, we’ll explore how this tool transforms the legacy planning landscape.