One of the most critical decisions a family can make is whom to entrust with the financial resources needed for current and future generations. This choice is not entirely a rational financial decision. It is also about who can best take care of the family in a personal sense. Families turn to wealth managers not just to oversee their money but for skilled guidance about how best to use wealth, handle relationships within the family, plan for children’s and grandchildren’s futures,and deal with succession and family leadership.Asking these questions may confuse or scare off advisors whose primary skills are financial, not emotional or interpersonal.These questions may also be labeled “not our business” by the firms employing those advisors.Yet serving a family’s broader needs is a critical process. It not only optimizes the use of wealth within a family, it is the mark of the truly comprehensive and integrated wealth management firm. Increasingly, both the front-line wealth advisor and the wealth management firm must know how to help families in these crucial areas in order to be granted the privilege of managing family wealth across generations.

You get a phone call from the patriarch in a prospective client family. He wants to interview your firm as a potential wealth manager. When you meet, the discussion about assets is clear, you are entranced by the $45 million account, and the patriarch seems like a strong, dynamic entrepreneur you’d love to work with. You get a little concerned when he refers offhandedly to some complex dynamics within the family. Something in his disparaging tone sounds a distant alarm in your head. You ignore that, enticed by the new business. You focus on the potential revenue as you rebuild assets under management and keep staff busy. In a subsequent meeting, you propose a fee just profitable enough to get the client on board. The deal is sealed. Now you have to live with the agreement you just made.

We have spoken at several wealth management forums in past years, and the major concern we hear from older family members can best be paraphrased “ how can we raise our kids so that they don’t develop an entitled attitude, but have a positive desire to work, contribute, and care for others ” Each generation wants the next one to develop a healthy relationship to money, where it can be appreciated but not depended upon for selfworth.While parents want to develop responsible and caring children, the actions they take to make that happen may be irrelevant or actually produce the opposite result. Too often, they initiate a few well intentioned, but very limited actions, that don’t really respond to the deep challenge of raising children amid wealth.pasting

When a professional advisor sits down with a wealthy client to discuss money management, the focus is typically on the money,  not on the person who owns it. Yet personal wealth is never truly impersonal. It has powerful emotional meanings influencing the choices, relationships, and life goals of the owner and his or her family.

Rich people are not all the same. This may seem obvious to the experienced financial advisor. Yet important distinctions about wealthy individuals and couples often are not taken into account when advising about financial matters. A portfolio’s size quently raws more attention than the nature of the people who own it. Although many research studies and surveys have described key differences among the wealthy, most studies look at client attitudes, styles of managing wealth, or risk tolerances rather than the backgrounds of the clients surveyed.

Stephen Goldbart, Dennis Jaffe and Joan DiFuria introduce the Money Identity and Preferences Inventory and explain how this tool can assist your clients who have inherited or expect to inherit significant resources in understanding how money may be affecting their lives.
As a financial professional, you are familiar with the many different ways that your clients respond to their money. Having money means many different things and has many different effects on people’s lives. The way that they experience money, whether they have come to it by inheritance or by success in their work, is often a source of conflict or difficulty.

John is a 43-year-old software entrepreneur whose startup company produced stock options worth $45 million. He took his options and left the company, spending a year buying everything he had always dreamed about: a vacation home in the Caribbean, a sailboat, a larger family home, and every electronic toy he wanted. But financial success and the freedom to do whatever he wanted did not turn out to be a bed of roses. He observed:
“Having money has turned out to be more emotionally complicated than I could have ever imagined...I feel uncomfortable with some of the comments and reactions I’m getting from people...I should be happy, but deep inside I feel something is missing. Now that I have the option to spend my time any way I choose, I’m no longer sure of what I really want to do. I used to tell myself I would do all sorts of things, ‘if only I had the money.’ I’ve bought all the toys I’ve wanted. Now I have to face the truth: I really don’t know what’s important to me.”