Acquirers’ and Inheritors’ Dilemma: Discovering Life Purpose and Building Personal Identity in the Presence of Wealth DENNIS T. JAFFE AND JAMES A. GRUBMAN DENNIS T. J AFFE Get to know two things about a man. How of inheritance and succession in their families, is a partner at Relative he earns his money and how he spends it. and how people raise their children. In under- Solutions LLP in You will then have the clue to his character. standing these issues, an advisor can help clients San Francisco, CA. You will have a searchlight that shows up [email protected] and their families move toward a more satis- the inmost recesses of his soul. You know fying and productive relationship with wealth, JAMES A. GRUBMAN all you need to know about his standards, something that is often missing in the lives of is a psychologist his motives, his driving desires, his real the rich. and wealth consultant in religion. Turners Falls, MA. – Robert J. McCracken [email protected] THE LIFE JOURNEYS OF WEALTH If you want to know what God thinks of money, just look at the people he gave it to. Much has been written in recent decades about the experiences of the very rich. In the – Dorothy Parker popular literature, in biographies and personal hen a professional advisor sits accounts, in psychology, and in family therapy down with a wealthy client to and family business consulting, views of the discuss money management, wealthy have been largely negative until very the focus is typically on the recently. Beginning with the ’60s rejection of Wmoney, not on the person who owns it. Yet wealth and privilege, some Inheritors began personal wealth is never truly impersonal. It has to question their upbringing and their culture powerful emotional meanings influencing the through their accounts of self-destructive choices, relationships, and life goals of the behavior and confusion about handling inher- owner and his or her family. itances. The mid-’80s brought several land- This article looks at the experience of mark studies of Inheritors, drawing back the the very wealthy family, particularly its mem- curtain on many of the difficulties experienced bers’ growth and development in relating to by those raised with wealth. With the great their wealth and its role in their lives. We will financial gains of the ’80s and ’90s, the newly look at how various origins of wealth can be affluent (many of them young and products of a source of internal conflict, how individuals the ’60s) began to articulate a more reflective struggle to come to terms with great wealth, view about success and sudden wealth. Most and how the quality of their adjustment can recently, there has been a shift toward positive influence what happens with the money. This aspects of wealth as exemplified by the turn life experience looms large over many areas— toward social responsibility and active philan- financial choices, how individuals face issues thropy. Time magazine’s People of the Year in FALL 2007 THE JOURNAL OF WEALTH MANAGEMENT 1 2005 were philanthropists Bill and Melinda Gates. We culture toward the promised land of wealth. This journey attempt to organize the themes from this diverse litera- may be arduous over years of entrepreneurial labor, or it ture into a framework useful to the family wealth advisor may be a sudden leap produced by the right sequence of and to the wealthy family itself. Some of our formula- Powerball numbers. Either way, acquired wealth involves tions about personal development will be familiar to psy- navigating a change from one social class and culture to chotherapists but not necessarily to people in financial another, with all the attendant pleasures, stresses, losses, advising fields. and new language this change brings. Acquirers of wealth People come to wealth in essentially two ways: they are, in a sense, like immigrants. They undergo the life- acquire it during their lifetime through effort or chance, changing experience of traveling to a more affluent or they inherit it from someone else’s reserve. The way country from their homeland. This life experience of by which a person comes into wealth is an important undergoing a major transition is one of two significant determinant of how wealth affects his or her personality factors about acquired wealth. and character. We first explore the experiences of those A second fundamental point is that these individ- who acquire wealth, looking at how they must come to uals come to their new status having already developed grips with their good fortune and how they raise their much of their personal identity in the economic culture children under new circumstances. We then examine the of their birth. Although personality continues to undergo very different experience of Inheritors who are raised development well into adulthood, the reality is that many with wealth, those who come into the world surrounded aspects of basic personality are in place by the ages of 12 by the benefits and drawbacks of upper-class life. to 18 (Erikson [1950]; Levinson [1978]). Since the foun- Clients’ relationship with money depends on where dation of personal identity is formed largely in the cul- they come from—their personal and family history—and ture and economic class of childhood circumstances, those where they are heading with the possibilities inherent in adults who become wealthy in adulthood must undergo their good fortune. Our goal is to define how the pres- adjustment in who they are. Even for those who achieve ence of wealth in one’s life shapes one’s personal sense of wealth early (in their 20’s and 30’s), many aspects of per- self—through the development of a personal identity as sonality have already been set by the formative experi- a wealthy individual, by one’s developmental life journey, ences of youth. This, then, is the other significant factor: and by the legacy that families pass on to their children. with acquired wealth, one’s identity is partly or wholly estab- We propose that development of an individual’s wealth lished before the wealth occurs. The task for those with New identity moves through stages, ranging from innocence of Money is to find ways to successfully integrate the wealth the power and pain of wealth, through a level of conflict into identity. We view this as “The Acquirer’s Dilemma”— over the wealth, to the achievement of a sense of recon- the sometimes arduous process of incorporating wealth ciliation and integration with wealth. For some, there is into the personal identity already in place. the potential to achieve a strong and positive life purpose Inherited wealth by contrast, describes those of with wealth. Although such a progression is not shared by multigenerational wealth who are born into the upper everyone, the pathway seems universal enough to be pre- socioeconomic level. They are the natives of the land of sented as a useful model of development. Our hope is wealth, the children, grandchildren, and succeeding gen- that, by learning the inherent dilemmas of wealth and the erations of those who first made the journey to riches. means of resolving them, advisors can ask their clients Compared to the transition in socioeconomic class that “the questions that lie behind the wealth.” acquirers experience, the experience in multi-generational wealth is of maintenance of one’s class, not transition. Inher- ACQUIRED AND INHERITED WEALTH itors may be fortunate to improve their wealth status by their own efforts, thereby achieving that rare combina- Acquired wealth can be defined as a significant rise tion of being both Inheritors and acquirers. More often, in socioeconomic level within one generation. A hall- wealth maintenance occurs through the skillful resources mark of acquired wealth is the psychological and socio- of the family’s wealth managers. Some transition in wealth logical sensation of transition. The individual achieving status may conceivably bring the individual or family to wealth status travels not across distance but across socio- an even more rarefied level of wealth, as in the transfor- economic class, setting out from blue-collar or middle-class mation of a merely rich $15 million family to an ultra-rich 2 ACQUIRERS’ AND INHERITORS’ DILEMMA FALL 2007 $500 million family. For most heirs, however, the fear is differently by others, having access to new opportunities of losing the wealth and transitioning downward in socioe- and options as well as relief from the burdens of a finan- conomic class. This may be likened to being expelled cially-strained life. They truly are immigrants to a new from the land of privilege. This risk gives rise to many of land, confronting new situations, expectations, demands, the stresses and anxieties reported by heirs. However, the responsibilities, and possibilities. Moreover, those who most prevalent circumstance is the preservation of the come to wealth in a public way are perceived as changed wealth class already achieved, a task known all too well people. Their place in their community may be disrupted to be difficult enough in itself. as other people rearrange their expectations to match both Following from this first difference between acquired reality and the stereotypes of “the Rich.” and inherited wealth, there is a second key distinction. Acquisition of wealth comes through two funda- For Inheritors raised with wealth, the wealth is present before mental types of journey, each of which has unique char- the individual. It exists in the environment, in the home, acteristics and psychological adjustments: and in the childhood circumstances enveloping the heir. Compared to acquirers where wealth comes after the • Through one’s own sustained effort, or establishment of identity, Inheritors begin life as new indi- • Through good fortune or a traumatic event, viduals within the background of Old Money.