F. Scott Fitzgerald famously wrote, “The very rich […] are different from you and me.” The author of “The Great Gatsby” (and “The Rich Boy,” where that quote appears) nailed it: Working with high-net-worth clients can be difficult for an advisor who is not to the manor born. But as Dr. Jim Grubman points out, life is no easier for the wealthy who were born middle-class themselves.
Grubman, a psychologist, neuropsychologist and family business consultant, has worked for nearly 20 years helping ultra-high-net-worth families and their advisors understand how to successfully integrate wealth and life. He developed and taught the first graduate-level-only course in the United States on the psychological aspects of financial planning and advising. (Disclosure: “The Advisor’s Guide to Money Psychology,” a collection of my Investment Advisor columns, served as a text for this course at Boston’s Bentley University.)
Now the owner of FamilyWealth Consulting in Turners Falls, Mass., Grubman has written an outstanding new book, “Strangers in Paradise: How Families Adapt To Wealth Across Generations.” His approach to understanding the inhabitants of what he calls “the Land of Wealth” is so intriguing that I wanted to share it with IA readers.
Olivia Mellan: How did you get into your work with wealthy families?
Jim Grubman: I came at it from two directions. I was always interested in psychology, so I spent the beginning of my career doing family therapy and collaborations with doctors and other medical providers. In my personal life, my father, a successful businessman who had been through the Holocaust, died at the age of 60. That left our family with some unexpected affluence, so we had to learn to live within the borders of the Land of Wealth.
By the late 1990s, I began to integrate my professional and personal lives by shifting from the health care system to the financial services field. I’ve been doing that ever since as a consultant to wealthy families.
OM: In your book, your central metaphor is to view the wealthy as either immigrants in a strange land or natives born into that land. How does that analogy help people cope with the complexities of their wealth?
JG: The metaphor grew out of a Journal of Wealth Management article that Dennis Jaffe, another wealth psychologist, and I wrote in 2007 as the first comprehensive review of the psychology of wealth. It occurred to us that there were many similarities between the family dynamics of the wealthy and the patterns in immigrant families.
There are many different ways to migrate to wealth, but most of these “immigrants” were born and raised in a more modest middle-class or working-class culture, with different attitudes and behaviors.
This metaphor is helpful to wealthy families in a variety of ways. First, it immediately validates and organizes the experience for newcomers to wealth. I always get an immediate “Aha!” reaction from clients and advisors as to how accurate the metaphor feels. It helps them understand their situation in a way they never experienced. Second, it explains one of the central dilemmas faced by “immigrant” parents: How do I raise children in a culture I did not grow up in?
In “Strangers in Paradise,” I point out that people are often unprepared for the complexity of living with wealth. By thinking of it as coming to a land where they don’t know the culture, their experience of having a harder time adjusting than they anticipated is validated and normalized.
OM: You note in your book that there are predictable subtypes of how people adjust to wealth. Two have big risks, while one is more successful.
JG: Just like immigrants to any new land, some newcomers are afraid of what they see as the negative aspects of wealth. They want to cling to what they see as better, which is essentially acting and being middle class. I call them Avoiders. At best, they downplay their wealth and are afraid to have their children exposed to the trappings of wealth. At worst, they can be miserly and resist letting anyone know that they are wealthy.
The second high-risk group, which I call Assimilators, takes the opposite approach. They are ecstatic to leave their middle-class life behind. They fulfill the stereotype of how money corrupts and how tacky the nouveaux riches can be. This group fails to prepare their children and grandchildren for a balanced life with wealth just as much as the first group. Their children never develop skills for handling wealth effectively. The “natives” raised in these households fulfill the stereotype of being spoiled, shallow, overindulged and entitled.