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Nine Tips for a More Positive Approach to Family Wealth Advising

Empower family clients to work together toward the creative possibilities their wealth and business can offer.

A new, more positive approach to family wealth advising is underway, deemed “Wealth 3.0.” Instead of the shirtsleeves-to-shirtsleeves in three generations adage that’s infiltrated the professional practice of Wealth 2.0, Wealth 3.0 presents advisors of all disciplines "the opportunity to retain the beneficial elements of what we’ve learned, shedding any underlying pessimism and refocusing on a more positive, purposeful and professional orientation.” The approach also empowers family clients to work together toward the creative possibilities their wealth and business can offer.

What does Wealth 3.0 look like in practice? In the everyday interaction between clients and the many advisors who serve them, here are nine actions that can become a core part of professional practice:

1. Replace negative Wealth 2.0 myths and biases with more positive language and up-to-date research. The first step in any new paradigm is becoming aware of one’s outdated beliefs and actions from the prior system. Learn about the importance of language that refuses to perpetuate stereotypes (“trust fund babies,” joking about in-laws being “outlaws”) in favor of supportive language allowing for balance and possibility. One example: Speak about “financially diverse” couples who, from different economic backgrounds, must negotiate differing approaches to partnership and parenting like any diverse couple. This is more balanced than presuming “fiscal unequal” couples will have strained relationships that will inevitably fail due to the stress of their differences.

Become familiar with the latest studies that clarify how families do well with wealth and family business. Examples include the well-designed Babson University study that showed entrepreneurial families succeeded over generations with multiple operating companies in multiple industries and the Hundred Year Families project that detailed the successful practices of multi-generational families worldwide.

2. Replace unfounded outdated statistics with more balanced education to clients. Stop using those oft-repeated yet disproven “facts” asserting that 70% of wealth transitions fail by the end of the second generation or similar dire predictions ubiquitous on websites, PowerPoint presentations and prospecting pitchbooks. If the advisory firm has seemingly committed itself to those statements, it may be hard at first to admit the statements are wrong. Explain that more recent information has come to light calling those statements into question, then lead the conversation in a positive direction with comments like, “It turns out we may not know the true extent to which wealthy families struggle or do well. Many more families may be doing better than we thought.” Explain that the old research was based on very few studies decades ago on families who may be very different than those of today. Help your clients let go of being labeled by the past, so they can start to chart their own course for the future.

3. Attend to and talk about client families who have done well. Failure stories of wealth are attention-grabbing, but it’s not useful to debate about whether they are the norm; the unfortunate reality is that the field doesn’t have reliable research one way or the other. The more important issue is whether repeating those stories helps or hurts other families’ beliefs about their own fates.

4. Help create possibility. Gather positive examples, and without breaching confidentiality, cite families who are role models for the positive use of wealth. Fight the confirmation bias that easily recalls families or individuals who handled wealth poorly while forgetting the many clients who have done well, parented effectively and remained cohesive over time.

5. Learn to use discovery questions that focus on desired outcomes and possibilities. Let go of the many stock phrases and questions employed to get clients talking in ways rooted in fear. Think of how that seemingly supportive conversation-starter, “Let’s talk about what keeps you up at night,” sets a tone of negativity from the beginning. A better approach is, “What good things would you like to see happen over time as a result of your success?” If the client replies with the pessimistic “I just don’t want my kids to become trust fund babies,” empathize and redirect to the positive alternatives: “If they can be prepared to turn out well with good responsibility, what would that look like?” Help clients see the value of preparation early and often for their children and grandchildren.

In general, ask about what your clients have already done in terms of skill development and preparation. Have a list of helpful resources or consultants available to assist those parents who may be new or hesitant about the area. Direct your questions to those times and situations in which family members demonstrated even partial skill or good decision making in service of financial responsibility. Help clients note the times when their desired outcomes seemed even briefly or partly evident. Those seeds of progress can be nurtured and may, with encouragement, become the green shoots that grow into great strengths.

6. Move beyond either/or dichotomies in favor of balance. Clients will often pose questions based on either/or thinking: Are we a business or a family first? Do we tell our children about our wealth or shield them from it? Is wealth a blessing or a burden? Responding to this line of inquiry perpetuates that the choices must be simple, binary and clear. Suggest that clients will probably have to balance differing priorities—for family and financial goals or how to share information with different parts of the family at different ages and levels of maturity. Between every two concerns lies a middle ground where a family weaves together alternatives and needs. The best responses are typically neither simple nor one-sided. 

7. When discussing the money, emphasize the value of preparing the family more than protecting the family. Many client-requested and advisor-driven actions revolve around hiding the wealth from the children (or spouses). The assumption is that keeping wealth at bay will block its toxic influences and allow the family to grow unimpeded by riches. This often proves counter-productive later when the wealth is either revealed or experienced. Resist pressures to insulate and protect the family as understandable but ultimately unhelpful. Return to explaining the crucial importance of preparation for wealth as the pathway more likely to succeed.

8. Advocate for cross-generational engagement as an important element for success. As with conversations about the birds and the bees, parents may feel awkward speaking openly about money messages and skills with their children. Yet successful families consistently value communication throughout the lifespan. For the many parents who are unsure what to say or do, use books and resources to address natural questions like “are we rich?” including how to be honest and direct without necessarily having to talk about numbers. As the family ages, encourage family meetings as a fundamental vehicle for talking, learning, teaching, listening and—eventually—sharing decision making.

Realistically, some clients just won’t entertain the value of talking about money or wealth, seeing it as risking calamity. For those clients, let it go. However, help them continue to teach skills and decision making even if they don’t want to explain why to their kids. Communication is helpful; preparation is crucial.

9. Always remember that healthy integration of wealth is a long-term psychological journey. Successful development of the family and its individuals ultimately involves finding a balanced, integrated relationship with wealth in life. This process differs depending on whether the clients are the wealth-creating generation (what we’ve compared to being “immigrants to the land of wealth”) or the rising generation (those who are native to wealth). Skilled Wealth 3.0 advisors take a patient, long-term perspective. They watch for opportunities, find teachable moments to introduce new concepts and generally recognize the importance of this development for all family members and the family as a whole.


*This article is an abbreviated summary of “Wealth 3.0 in Practice,” which appears in the February 2023 issue of Trusts & Estates.

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