The Importance of Establishing Clients' Relationships with Wealth

#Lifestyle Wealth


As we learned recently at Morgan Stanley’s FLAG (Family Legacy and Governance) Institute from keynote speaker Dennis Jaffe, our posture toward our children must move from paternalism to partnership. This requires transparency, collaboration and mutual trust.  Importantly, however, family conversations about wealth require us to first engage in deep, work within ourselves to understand our own personal values and opinions as well as what drives and motivates us. Only then, once we identify what matters to us individually can we take it to the next level and work to reconcile our views with others in the family with an attitude of true partnership.  That work gives us a sense of shared purpose and value that helps us arrive at consensus and identify a family mission. 

Typically, family members report that it is much easier to articulate their individual views than it is to find that consensus. In our experience, however, family governance planning is most successful when each family member spends as much, if not more, time diving deeply into their own personal relationship with wealth as he or she spends in the group discussions for it is only with that sense of one’s personal relationship with wealth can you begin to engage in a conversation with the family to understand where there is consensus and where a difference of opinion may lie.

“Relationship with wealth?” you might ask immediately.  “What does that even mean?  Money is just a medium of exchange.  I have relationships with people.”

But suppose you think of your relationship with wealth as the values and attitudes you have developed over time as the result of your unique personality, upbringing and life experiences.  How would you describe those values and attitudes?  That may be a more subtle question than you first assume. 

Like any relationship, your own attitudes about wealth can look very different depending on the circumstance.  For example, you may focus on the economic details when purchasing real estate but on a broader list of criteria when giving to charity.  Similarly, your approach to wealth can vary dramatically depending on whether you are making joint decisions with your spouse as opposed to your child.  And your opinions almost certainly evolve over time. 

Keep in mind that wealth can evoke strong positive and negative emotions—and that’s not a bad thing. After all, our emotions can relay useful information about our core beliefs, fears and personal history.

When your emotions have something to say, try to let yourself feel whatever it is your feeling rather than suppressing it. Then, you can translate those emotions into words and consider whether they’re based on relevant experiences and knowledge or other influences.

Additionally, some of our emotions and opinions about wealth may be based on assumptions, which can be explicit or unconscious. There can be a lot of baggage. So, when you think more deeply about your relationship with wealth, the most honest description is usually “It’s complicated.”

Many of the families we work with admit that having significant wealth creates an isolation and loneliness they did not expect.  It is difficult to share with others the challenges and emotions that wealth brings, the fears and insecurities.  Creating a forum for an individual and a family to have an honest conversation alleviates many of those fears and that feeling of isolation.

So, how do you begin to have an honest examination of what emotions and deep-seated beliefs wealth conjures?  Of course, that is a question only you can answer for yourself.  Nonetheless, having worked with many families on these issues, we have several suggested questions you might ask yourself.  Regardless of your specific answers, the exercise can improve the odds that you will come to family wealth conversations with a more nuanced sense of how to best contribute to those conversations.

Some of these questions are challenging, and if they are, that is a good thing as they are intended to help you see what emotions and assumptions might lie beneath your opinions.

Image. What image does my wealth convey to others? Is it positive? Eg.  A generous person who helps others feel good and improves their lives?  A successful person who makes an impact and leaves a lasting legacy?  A uniquely talented, creative or interesting person?  Something else?

On the other hand, do I have any concerns that my wealth causes others to view me negatively?  If so, what specific messages do I worry that my wealth might convey?  Do I myself have any negative judgments about wealthy people?  Do I feel any guilt or shame about being wealthy?  If so, where and when did any of this negativity originate?  Are my decisions motivated by a desire to avoid criticism by others? 

Security. Does having wealth provide me with a sense of security?  If so, what does security mean to me:   A sense of safety? Privacy? Self-reliance?  Financial stability and a feeling of being a responsible contributor to my family and community?  Opportunities for adventure and variety in my life experiences?  Something else?

On the other hand, does my wealth create feelings of unease or insecurity?  Do I have any fear that I might poorly manage my wealth, or otherwise lose it?  Do I feel unsure that I can transfer my wealth to my family in ways that help, rather than damage, my children and grandchildren? Am I concerned that significant wealth may ruin subsequent generations?

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Autonomy. What is my relationship with the respect and power that often accompany wealth?  Do I like that wealth helps me control my own destiny, lead others and protect those who are important to me?  Am I more focused on the fact that money helps me avoid undesirable work, unpleasant conflicts or burdensome commitments?  Or do I enjoy wealth as a means to improve myself, people close to me, my community and even broader society?  Or something else?

On the other hand, does my wealth sometimes leave me feeling vulnerable?  Do I question the motives of some who interact with me?  Do I feel overwhelmed by the decisions that my wealth requires me to make?  Do I feel controlled by others with whom I share ownership of family businesses or charitable enterprises?  Or do others report that they are uncomfortable by the extent to which I, myself, try to control them?  Does it anger me that my wealth will define me and who I am?

These are just examples of questions that can provoke helpful self-examination.  You might also focus on messages you received about wealth as a child and the extent to which you have adopted or rejected those messages yourself.  Consider, also, how your own attitudes and values about wealth differ from those of your spouse and children.  When making group decisions, are you more prone to bend to the opinions of others in your family, or to try to bend others to your own views? 

Once you have engaged in meaningful self-reflection about your relationship and emotions tied to wealth it is time to engage the rest of the family to see what they discovered as well.  Do common themes emerge? Is there a sense of shared mission and purpose? If not, can we imagine one and begin to work toward it? Thoughtful engagement with oneself and one’s family is the most certain path to a sense of purpose, mission and legacy.

David Bokman is Head of Family Office Resources and Elizabeth Chand is Head of Family Office Resources Generalists, both at Morgan Stanley.

https://www.wealthmanagement.com/high-net-worth/importance-establishing-clients-relationships-wealth

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