Parenting in any context has its challenges and opportunities. When a family has significant wealth, parenting is more complex and intense. Preparing the next generation of stewards ideally starts with couples before they have children and at a minimum doing the right things during the first few years of a child’s life. Whether starting that early or later in childhood, teens or beyond, there are many positive and productive ways to start the conversation and create realistic expectations that greatly help avoid problems. A key element for parents to keep in mind: this is not a one-time conversation but a long-term process of healthy development of children, and the family as a whole – in a special context.
Jeff Savlov has unique expertise combining child development/parenting with the growing field of family business/wealth development. His Purposeful Legacy Family Project is customized for each family client.
A couple from an eastern European country met, married and moved to the United States to attend university. The wife had never been out of her small town and the husband had been to the U.S. for a couple of short visits. They worked hard and completed graduate work in chemical engineering. Each found work in their field, lived simply and saved their money.
They saw an opportunity to offer a creative service in their field and started a company. Over the course of eight years it grew significantly, and they were able to sell and walk away with $40MM. Along the way they had a son and a daughter who went to public schools for elementary school in their middle- to upper-middle-class town. They started a second business and based on their previous success, many investors lined up and they easily raised capital. The business was on its way to unicorn status (billion-dollar valuation).
They moved to a very exclusive area and a much larger home. Their kids began attending a prestigious private school. The parents became more and more concerned about how to open a conversation about the changing financial status of the family without harming the work ethic, motivation and humble family values of their kids. The parents held quarterly meetings with all their advisors (trust and estate attorney, CPA, wealth managers) and kept committing to having “the conversation” with their kids who were both in high school.
Quarter after quarter passed without it happening, however. It became clear to one of the advisors who knows Jeff and his niche practice that the parents needed guidance around creating a development plan for the family. As it turned out, the parents did not follow through because they had no experience with this kind of conversation and also tended to see it as a one-time conversation – telling the kids they were “rich” – rather than it being an ongoing process starting with family history, values and wisdom of prior generations before talking money.
Main themes and interventions:
- After an initial meeting to meet and learn about one another, all agreed to work together and Jeff was engaged for a foundational year. He set up two meetings with the parents to accomplish several objectives:
- Present an educational overview of family wealth dynamics (historically and current practices).
- Develop a genogram (family tree chart) to learn about the family history and bring out significant family stories to be shared with the children. Every family has stories of success and despair, wisdom and tough lessons learned the hard way. This is a treasure to share with children to provide context and greater connection to the wider family.
- Understand the children’s developmental level and maturity in order to tailor the project.
- Gain an understanding of the professionals advising the family, areas of expertise and previous attempts at engaging next generation.
- Coach parents on writing ethical wills to share with children later in the process.
- Educate the parents on how to comfortably explain their purpose in reaching out to Jeff. They were nervous and Jeff calmed them with education and support.
- The kids were open to the idea and intent of the “Purposeful Legacy Family Project” and surprised their parents by being much more aware and astute about the family’s significant wealth. They were open to learn more and to meet Jeff.
- Early meetings with parents and kids together focused on helping the kids understand the process as an ongoing effort to ensure family wealth serves family values, and to clarify the common pitfalls for families/inheritors in these situations.
- Ethical wills were shared in a moving family experience.
- Jeff led creative exercises to help the family articulate life values as individuals and as a family. These would be transformed into family mission and vision statements.
- Extensive time was spent on facilitated family conversation about money as one type of capital (financial capital) and explaining the other types of capital and their importance, e.g., Human, Social, Cultural.
- Variety of fun family exercises to open discussion around family and purpose. Examples include:
- Wants vs. needs
- Role of material wealth in life
- What makes a good person? A good family?
- Jeff’s signature Licorice Lesson was used to give a context for the family’s wealth compared to all families in the world without getting into numbers or amounts.
- There was an overview of the parents’ extensive philanthropic work and the values behind it. Children were not previously aware of the extent and purpose. Jeff developed a “Shark Tank” TV show type of process in which the kids were able to explore causes important to them and “pitch” their parents for money to donate based on their presentations. There was a focus on the difference between only giving money and the parents’ desire for all family members to get directly involved in causes important to them.
- The parents shared a religious tradition and while the children grew up in U.S., they were drifting from that. A focus of the work was to help parents express the importance of the next generation staying connected to this tradition without forcing it and causing the kids to rebel. This was done by encouraging the kids to express what they knew and liked about the religion and then connecting that to what was important to them in life.
- Several educational modules concentrated on the concept of “wealthism” – the bias against wealthy people simply because they are wealthy. Issues covered included going to college and meeting and befriending people of lower socioeconomic means, dealing with comments about “the 1%,” and being able to afford vacations and other “extras” when friends may be struggling to pay tuition and get by.
- Jeff developed, shared and facilitated a variety of situational challenges designed to stimulate thinking and family conversation about situations likely to arise in the future. These included:
- When do you tell someone you are dating that your family has significant wealth (if at all)?
- What are the pros and cons of having all your friends being from a similar socioeconomic level as you vs. more diverse?
- If you have friends who can’t afford to go out to eat and your allowance allows you to pay for them, should you? How can this be negative? Positive?
- Since the family had an operating business, time was spent discussing expectations for entering the business and whether or not this was something the next generation was entitled to or had to earn and how children thought they might earn their way in.
- A complex set of trusts had been set up for a variety of planning reasons. There had been no education of trustees about their future responsibilities, and beneficiaries knew little about the plan or the trustees they’d need to coordinate closely with in the future. Jeff developed a series of educational meetings to bring these parties together, along with the advisors involved in creating the plan, to begin to help them all develop a collaborative mindset and mentoring relationships for the next generation.
*Identifying details have been changed to protect client privacy.