With so many families still trying to recover from the Great Recession, the wealthy aren’t feeling much love from the American public.
The average net worth of households in the upper 7 percent of the wealth distribution chain increased 28 percent during the first two years of the nation’s economic recovery compared with a 4 percent drop for households in the lower 93 percent, according to a Pew Research Center analysis of data from the Census Bureau.
In real numbers, 8 million households saw their mean wealth grow from 2009 to 2011 to almost $3.2 million. Compare that to the estimated $133,817 mean wealth of 111 million households.
So large is the wealth gap that it’s hard to identify with people who seem to be so well off that they don’t worry about outliving their money or how to pay for their kids’ education.
Like most people, I have trouble grasping why families with substantial net worth have so many problems. Yes, money can’t buy happiness. But surely it isn’t as problematic or stressful as living paycheck to paycheck.
And yet we shouldn’t be so envious of those who are prosperous. Many of their families aren’t thriving.
“Few wealthy families devote the same intensity, energy, and commitment to their human assets — their family members — as they devote to their financial assets,” says Ellen Miley Perry, founder and managing partner of Wealthbridge Partners, a firm that advises wealthy families.
Perry’s seen a lot that money couldn’t fix over her two-decade career. And now she’s taken the lessons learned and put them in “A Wealth of Possibilities: Navigating Family, Money, and Legacy” (Egremont Press, $20), which I’ve chosen for this month’s Color of Money Book Club.
Before you scoff at a book aimed at the affluent, let me assure you much of the advice applies to the rising rich too. You might not own a summer home in the Hamptons, but there’s a lot in this book if you’re making more than enough to overindulge your children and turn them into entitled terrors. “First-generation wealth-creators are often inclined to make the lives of their children easier through their financial resources,” Perry says. That’s not always a good thing.
There’s a line from the movie “The Descendants” delivered by Matt King (played by George Clooney), an attorney who is the sole trustee over his family’s land in Hawaii. Many of the relatives need King to sell the property because they have squandered their money. King, on the other hand, has lived below his means and at one point says, “I don’t want my daughters growing up entitled and spoiled.”
You have to manage your wealth so that you “give your children enough money to do something but not enough to do nothing,” he says.
Or perhaps you work so hard that you don’t have enough time for your children. Think about these questions, she asks:
■ How do you keep your feet firmly on the ground in the midst of great abundance?
■ What is the fundamental purpose of our monetary wealth?
If you are striving for success, you need to address these questions. These questions should be front and center so we don’t lose our way or our connection to our children.
Much of her advice is about communication. Have regular family meetings, she advises. Develop a family mission statement. Talk about your values. All the talk should lead to balance. Don’t allow the machinery — meetings, travel, projects — that allows you to make money take too much attention away from your family.
“But it’s easier to pass down money than it is to pass down values, unless you have a plan and attend to it with the same thought as you do the wealth management,” Perry writes.
There’s another issue she sees in wealthy families. “Parents, who have themselves accomplished much and now expect more from their children than is healthy or natural,” Perry writes.
I’ve done that — pushed too hard.
Perry does a good job of showing me that in many respects, the rich are just like us. Despite their fortunes, their families can be as complicated as ours.