With most wealth in the country being first-generation wealth, as Wilmington Trust’s Tom Rogerson says, it’s not so much how do you prepare the money for the family but how do you prepare the family for the money.
“They didn’t grow up with a lot of wealth, and the idea of being able to know how to prepare your children for it is a new concept to them entirely,” Rogerson said at a press briefing titled “You Can’t Take it With You” this week in New York.
Some of the top trends Rogerson, senior managing director and family wealth strategist at Wilmington Trust, is seeing in the high-net-worth space are related to this idea of family education, governance, philanthropy and communication.
Warren Buffett once said, “I want to leave enough to my children so they can do anything with their lives but not so much that they do nothing with their lives.”
Rogerson is seeing this become a popular trend.
This summer, he said, “you saw a lot of people talking about Sting saying he’s going to leave very little to his children because he doesn’t want to demotivate them.” And, he added, “We are seeing more of that.”
Beyond philanthropic reasons, Rogerson said there are two reasons people want to leave less to their children.
“Typically they say, ‘I don’t want to damage my children with wealth,’” he said. “They’ve seen children become so entitled that it can be damaging. Equally interesting, they’ve been [saying] ‘I don’t want to take away their motivation. I’m proud of the fact that I built what I have. I’d like them to go do the same thing.’”
Instead of leaving less to their children, families are recognizing the need to build their children’s confidence in being able to handle future wealth, which ultimately builds their parents’ confidence in their children.
Rogerson said families are starting to invest in family communication education meetings and governance meetings, often bringing in a consultant or provider who can start the conversation.
“We’re seeing families as a new trend trying to be a little more intentional about building the communication [among] family members,” he said.
Communication becomes a key aspect when it comes time for decisions to be made.
Rogerson added, “What do we do with the house, the vacation house, the collection, Mom and Dad’s remains? These are tough questions that they are going to learn how to communicate at that time.” Giving Together
A common struggle among high-net-worth families, Rogerson said, is how to bring the next generations into the future of the family. And one of the ways families are doing this is through family philanthropy.
“Family philanthropy is not just encouraging your kids to give to charity; that’s individual philanthropy,” he said. “Family philanthropy is when we make a process of this where we engage together, and the word together is the imperative word on that. When they’re together deciding, they’re learning about each other.”
Family philanthropy can help fill a void between generations and between children and their spouses.
“We’re seeing some of the families recognize that maybe through our philanthropy we can learn about each other more so that when we have to make these decisions later on about the wealth and the collection and the business, we at least know these people,” he said.
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