PortfolioConstruction Forum - Little box of value

Bob DownUnder

Little box of value

by Bob Veres | Monday, 2 April 2007

Advisers who work with family offices or with clients who are about to pass on significant ($20 million plus) inherited wealth have learned some interesting techniques for helping the families reconnect and talk about money, what it means and to give heirs a sense of the parents' values in addition to the legacy assets. The process generally involves using some of the money to set up a charitable foundation, where the family gets together on a regular basis, like the board of directors of a corporation, to make decisions about grants and portfolio management issues. The theory is that connecting with the community and sharing values and ways to make the world a better place is a way to connect with each other in a positive, non-threatening way.

But what about the other 99% of us?

Don't less wealthy families need the same bonding experience to open up rusted intergenerational lines of communication? Hillel Katzeff, an adviser with San Diego-based HK Financial, has created an interesting version of this tried-and-true family togetherness program, which advisers can use with their clients without having to spend or give away a fortune.

"When you have a shared purpose, you have something else that you can talk about, which gets to the value issues, which are at the core of everything," he says. "I ran my program by a billionaire here in the community, and he said, this is a family foundation without all the tax returns and legal documents. It gets the family together talking about giving - which could be a charitable gift, or they could give their time and energy."

The program is called The Little Blue Box (it actually comes in a nice hard plastic, cobalt-blue box). It contains a variety of materials including a ball which is passed around - whoever holds it is empowered to speak - a small hourglass timer to prevent any one person from dominating the conversation, a glass heart which can hold a picture of the family, and a notepad to record thoughts, ideas, insights and plans. The box can also hold loose change or money that will start a micro-foundation before it accumulates to the investment stage.

"The core idea came to me," says Katzeff, "as I was pondering the famous quote from my namesake, the Jewish scholar Rabbi Hillel: 'If I am not for myself, then who will be for me? And if I am only for myself, then what am I? And if not now, when?' I found myself asking basic questions," he continues. "What is a family good for? Where do parenting skills come from? The answer is values."

How does it work? In most cases, the adviser introduces the box to a family, describing it as a way to facilitate intergenerational or inter-family communication. Each family member has a chance to hold the ball and speak - which, corny as it may sound, has actually opened up dialogue where it had been blocked. "One of the quotes from a family that tried this," says Katzeff, "was: 'It was amazing. My son usually says very little, but he was totally empowered by the talking ball. He says, now WE have to listen!'"

Ideally, that first experience will start a tradition in the family, where once a week they will sit down together and talk things over. Another comment from a family with The Little Blue Box on the mantle was "Instead of watching TV on Saturday mornings, our family decided to have family circles. Now we do stuff together and talk."

About what?

At first, something other than each other. Katzeff has found that the family is most likely to participate if it can focus on something else - in this case, on the community, and how they can help in some tangible way. What kinds of problems have they noticed? Where would each of them like to help? Discussing these issues is a way of rediscovering what's important to each other, in the context of a shared purpose which coalesces when the family decides to take some kind of action.

"The idea of a microfoundation is that it's a community foundation, set up by the family, with no start-up costs, administration or ongoing expenses," he says. "You don't need to be Bill Gates or Warren Buffet to make a difference in the community; all you need are good intentions and actions that may include doing good deeds large and small."

Such as?

Katzeff's family has created its own micro-foundation around homeless children in the San Diego area, raising money and doing volunteer work. A client is setting up a foundation around literacy issues. The San Diego Community Foundation now has its own Blue Boxes to share with donors.

Katzeff is also experimenting with other ways to use the program.

"I use it as a way to kick off the week with my staff at the office," he says. "Instead of going straight into the business at hand, we take turns asking a question, and we rotate, and usually it revolves around what we did over the weekend, or the significance of something. It has given us an opportunity to bond in a real way."

With clients, he will use the box at the beginning and end of the meeting. "It sets the tone," says Katzeff. "The first question is: why are we here? What do we want to get out of this meeting? What is the purpose of it?"

Sometimes, the purpose turns out to be very specific. Katzeff recalls the case of a female client with dementia, whose daughter is the successor trustee, and the daughter found it very awkward because her mother had a live-in lover who was also involved in the money. "At first, she was very uncomfortable," says Katzeff. "But, when we did the circle with the mother and the daughter and the live-in lover, the focus when I took out the ball was that we are all here for the mother. That is the purpose. Let's use something positive, and only talk in terms of positives. At the end, it was apparent that it took the anxiety out of the meeting, and then we put the ball away, and it allowed us to talk about how to set things up so that the daughter can get information, and maybe we should open a joint account with the mother, and her man, and then retitle the other account to the trust. Then we did a final circle and took the ball out again, to say, has this been useful?" says Katzeff. "Everybody was complimentary, because it really allowed them to focus on something other than themselves."

The Little Blue Box is still in the experimental stages, a wheel that is not totally invented yet.

Katzeff hopes that other like-minded advisers will get in touch with him and try the Little Blue Box on their own clients. "I need more stories," he says. "I need to get more people using it, so I can get feedback on how to make it better."

You can reach Katzeff and learn more about The Little Blue Box at: info@hkfinancial.com

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