The Affluentialist: Raising Responsible Children

The toys of the children in affluent families are of a different scale. The two toddlers of one family will likely inherit their Dad’s passion for trains, which he inherited from his father. In this case however, Dad isn’t constructing elaborate scale railroad sets with plastic buildings on a plywood platform in a corner of the family room.

These trains are full-size locomotives and historically important Pullman cars stored in a very full-size warehouse and brought out for special private trips up and down the East Coast.

Just as these kids will need to grow up and receive special training to operate this inheritance, they and all children of high-net-worth families need a financial education to manage the more traditional aspects of wealth. When that doesn’t happen, adolescents and young adults can develop difficult and immature relationships with money matters that can amplify emotional problems from a challenging childhood. Psychologists who have studied wealthy young people and their emotional development have observed several roadblocks to a fulfilling life: lack of motivation, difficulty with self discipline, low self-esteem, general boredom, suspiciousness, difficulty using power effectively, among others.

Every advisor who has worked with wealthy families will have observed cases of unhappy children–and parents in need of guidance to help improve the situation. Professionals who counsel affluent families and their children have remarked how parents may want to be helpful, but they are often at a loss about how to be–and when they try, their attempts often backfire to worsen the situation or the relationship with the troubled child. With an advanced planning approach to financial planning, a psychologist would join the team if the client family requires counseling. When the children are younger, advisors can also incorporate the topic of financial education as part of the discovery process. Simple, direct questions can help launch a conversation.

“Starting those conversations with clients can be one of the most important things that advisors do,” says James Grubman, PhD, Family Wealth Consulting, Turners Falls, Massachusetts, a psychologist who specializes in working with affluent families and their advisors. “Advisors can be a tremendous resource for their clients. Most parents and grandparents don’t know what’s out there for guidance about things like allowances and financial literacy training. They need somebody who can point the way. Some of the best anecdotes I’ve heard from advisors have to do with when they did have those conversations, and particularly for client kids say in the 10- to 13-year-old range. Then they hear stories maybe five, six years later about how that teenager or college age kid is down to earth and much more responsible compared to his peers. The clients are just so proud to know that they helped their kid be prepared for adult life.”

Without Life Skills

Material abundance and privileged access to a private education supports a rarified upbringing for the children of affluence, but any advisor to the wealthy can recount many client stories of kids with drug dependency, emotional issues, and a general immaturity about money matters. Parents who are first-generation wealthy, having created their wealth by their own drive and talents, often exert that same determination when taking on the task of child raising–with sometimes less success. Psychologists have noted the highly competitive lives of many wealthy families–and that performance in all pursuits (academic, sport, art, etc.)–success is the expected norm, average is not acceptable, and true failure is unfathomable. Given the highly social lives of these families, such achievements–or lack of them–are highly visible with other families and childhood peers. Prepping at Andover and captaining the football team, graduating from Harvard, then attending Columbia Journalism School to launch a TV anchor career provides the requisite points and trajectory. Sliding through second-level schools and supporting oneself in a low-level publishing job while writing a novel that never gets published does not. Confronted with pressures to perform well in all aspects of life, many children develop symptoms from the stress–insomnia, anxiety, depression, headaches, etc.

When the accomplishments of the parents are spectacular, it may be difficult for the child to live confidently with a less stellar life by comparison. He or she may feel it’s not good enough, given the family history, regardless of how appropriate it may be for them. “I hear that a lot from the young people that I deal with of the feeling they’re done before they even begin,” notes Grubman. “They have trouble living up to very high powered parents. And the level of expectations in the family can be so great that it can affect self-esteem.”

Indeed, researchers also identified the connection between parents with the drive for competitive success and the desire for children to be outstanding among their peers. The kids learn to define themselves in terms of their accomplishments, not their values as individuals.