Author: Thayer Willis
The biggest curse of intergenerational wealth for me and many other people is the illusion that you don't have to do much with your life. You might want to and you might make the effort, but you don’t have the same pressure to earn enough to live on. And that takes away a lot of the incentive to find meaningful work.
Though many wealthy families attend to tax, financial and legal planning, with expert advice and well-developed strategies, they often neglect psychological planning. The consequences can be dire. Here are the top three things that make family wealth a curse.
Too much too soon. This results in the familiar demotivation that wealthy parents worry about. A form of laziness, it involves remittance addiction--being dependent on the money source. Kids aren’t required to support themselves. Parents have low expectations of the next generation. They may have also set a poor role model by not working themselves; kids don't need both parents working, but they do need someone to teach them about work ethic.
My wandering 20s were an example of too much too soon. My parents wanted me to enjoy the freedom of youth. They meant for my financial ease to be a gift. Unfortunately, it didn't occur to me to do anything with my life.
Too much financial focus. This focus can be so big that families neglect human, intellectual and social capital in the family. As a result, there’s no balance. Instead, the emphasis is on the dollars, the assets, the strategies and the money managers. Family meetings only cover financial concerns. Some of my wealthy clients have spent years looking for a way to bring up family communication, relationships, and effective parenting.
Occasionally a major change, like a death or even a birth, will create a window of opportunity. Then the heat is on to make the best of what may be the one shot at this conversation. It can be a turning point, expanding the family’s focus to include the development of human, intellectual and social capital.