Money is often the elephant in the room for many families and wealth advisors. However, as the role of the advisor expands to focus on more soft services, I think it is imperative that we expand our skill set and our service offering beyond College Savings Plans and Trust and Estate Planning. Physiologists have been brought into the conversation with our clients because of the massive wealth creation over the last 20 years and the problems it has caused. We need to study their research and opinions to raise our game. A good place to start is Madeline Levine’s book, “The Price of Privilege” and Suniya Luthar’s podcast, “The mental price of affluence”. If you and your clients haven’t read Dr. Levine’s book, please add it to your summer reading lists. The topic of this article is the new research that my friend Dan Gannon has recently completed that reaches some new and counterintuitive conclusions on the family dynamics around money. Dan began working with families in the affluent Bay Area suburb of Atherton in June of 1998. Dan has a unique gift of having meaningful discussions with adults and children because his questions don’t have an agenda. They are rooted in a sincere desire to get to know the person.
I recently sat down with Dan to learn more about his research. He has conducted over 50 one-hour discussions with family members. All of the families are affluent, which in the Bay Area requires a minimum annual compensation of $750,000. Dan started each separate and private conversation with the same question: What is the foundational belief of your family?
Will your clients be interested in this research? Dan’s unscientific survey of people sitting next to him on numerous plane trips was a resounding yes!
Dan, What Are the Top Findings of Your Research?
- The emotional cost to get into the affluent culture was significant on all members of the family.
- Children of affluent families are at greater risk of experiencing negative outcomes like substance abuse and depression than children who live in a middle-class or even an inner-city environment.
- Most people in the community don’t think they are rich.
- The parents and the children answered Dan’s question differently. The children answered that grades and college were the most important. The parents answered that love for each other and your fellow human was the most important. Dan followed up by asking the parents what they talked about at dinner.
- All of the parents had a higher standard of living than their parents.
What Can Parents and Their Advisors Do With Your Findings?
Define your family’s foundational values and create a plan to communicate them and reinforce them.
Educate yourself and your family on your current financial plan.
Thank you, Dan, for sharing your research. It leaves us with a lot to think about.
Money is complicated. Our responsibility as parents and advisors is to start educating ourselves and our children early. It’s no different than the approach we take with our investment portfolios. Create a plan, invest early and watch the power of compounding take effect. The earlier you start talking to your kids about what is important to your family, the healthier your family will be. Help your clients find a local family psychologist and collaborate with them in the same way you collaborate with accountants and attorneys.
Let’s get started, because it’s never too late.