Wealth, Capacity, and Mental Health: Bridging the Generational Divides
By Jill Shipley & Andrew Rodger
Family Governance and Education, Wealth Management
Broadening the Definition of Impact in Wealth Management
By Jill Shipley Published December 23, 2022
Traditionally, when wealth management firms discuss “impact”, the automatic presumption is a focus on “impact investing.” The reality is, we need to take a broader view of impact. Wealth impacts us as individuals, our relationships, our children, our community and the world.
The Wealth Creator's Experience
Over dinner to celebrate John’s 85th birthday he shares a story about the day he knew he would be financially successful. He was one of the first in his family to graduate high school and the first to go to college. He was 19 years old, sleeping on a friend’s couch, working two jobs to cover tuition and was eating crackers he “got for free” at the local gas station. He swore in that moment he would never let his children live like this. He was going to make it, ensuring his family would have a better life.
John, like 80% of wealth holders today, came from nothing. He poured his blood, sweat, and tears into building a business, sacrificing significantly along the way. It was not only ambition and drive that led to John’s financial success, but also desperation to ensure there was food on the table and a roof over his family’s heads.
The business was more successful than John and his wife Sally could have ever dreamed, and they sold it for nine figures when their children were teens. Their wildest dreams had come true. This was “success.” They had more money than they could spend in their lifetime – they were “rich.”
But John and Sally were taught rich people were greedy, snobby, and self-absorbed. What would people think if they bought a vacation home or started flying first class? And how would this new wealth impact their children? The stereotype of a lazy or spoiled trust fund baby is a parent’s nightmare. It is scary to think the wealth you created to provide a better life for your family could have a negative effect on their well-being and development.
It feels strange to grow up in scarcity and then be thrust into this new land of wealth. You do not immediately shake the thrill of hunting for a bargain, the sticker shock of an expensive meal, the fears of running out of money or the mindset of always striving for more.
Like many wealth creators, they wrestled with how to be comfortable with their financial situation - but not change who they were.
The Rising Generation's Experience
Growing up in an affluent family casts a shadow on the next generation. They recognize they are different than others, but it is confusing and not typically discussed at home. The next generation struggles to trust the authenticity of relationships, and many spend their life hiding the fact they have financial resources from friends, colleagues and significant others.
In a recent gathering of rising generation inheritors, the group expressed similar struggles and questions: Why does everyone look to you to pay the bill at the end of a meal? How do you empathize with friends strapped with student loan debt unable to pay their bills (and should you help)? How do you get comfortable having more than others when you did nothing to earn it? How do you create authentic friendships when you feel uncomfortable inviting them to your parents’ vacation home or even telling the truth about where you went on vacation (cue the “must be nice” or “wish I had your life” comments). What do you say to friends or family when they ask for financial help when you have the means? How do you ask/require a fiancé to sign a prenup which can be perceived as planning for a divorce before you are married?
Today’s inheritors are receiving the greatest generational shift of assets in history, with trillions of dollars moving into their hands, but many are uncomfortable with it. Millennials have grown up witnessing extreme financial inequality and are much more negative about wealth and the wealthy than their parents and grandparents. They have been taught about the importance of diversity and inclusion and were encouraged to not blindly accept institutions and leaders. They lived through Occupy Wall Street, a recession, the Me-Too Movement, Black Lives Matter and the Covid Pandemic.
Although many are embarrassed and feel guilt or shame for having more than others, they are channeling their energy to enable positive change with over 60% of millennials1 actively using impact investing strategies and 74%2 defining themselves as philanthropists.
Ensuring Wealth has a Positive Impact Aligned with Your Purpose
For many, the definition of success is strictly financial. So, it is understandable a wealth creator’s focus after a liquidity event is on protecting and growing the wealth, measuring investment returns, creating structures and vehicles to minimize taxes and putting protections in place to mitigate risks.
Although these may be worthwhile activities, the important question to ask at this point is – why? What is the purpose of your wealth? If you have more money than you can spend in your lifetime, is more the only goal? To what end?
We have broadened how we define the word impact and how we communicate what impact is—within wealth management, impact investing and beyond. We help individuals and families to reflect on their values and goals, define their why and align wealth management activities with their purpose.
Regardless of whether one identifies as an impact investor, all investments have an impact. How capital is allocated affects communities, markets and the overarching planet and ecosystem. These decisions also impact how we view ourselves, how we manage our relationships with families and institutions and how generations coming after us will experience our world.
Conclusion
At AlTi, holistic wealth management involves not only preserving and growing capital for one’s financial benefit but also to enhance human, intellectual, social and spiritual capital. We help families define and achieve the impact they want their wealth to have on themselves, their family, and society - aligning their actions with their values and leaving the world a better place for generations to follow.
About the author
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Jill ShipleyJill Shipley is AlTi’s Head of Governance and Education Practice. She helps families and family enterprises navigate the impact of multigenerational wealth. She brings over 20 years’ experience in family systems, preparing rising generations, communicating about wealth, transition planning, governance, and philanthropy.
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