Immigrants and Natives - Adapting to Wealth

Mike0:00Welcome to The Business of Family. I'm your host, Mike Boyd. Multigenerational wealth creation involves so much more than capital accumulation. The most successful families cultivate values, stories, knowledge and resources to pass on to the next generation, and they do it very intentionally. On this show I sit down with members of some of the world's most interesting business families to hear how they do it. To see where your own family stands, take the Business Family Diagnostic at businessoffamily.net.

0:42Dr. Jim Grubman has provided services to individuals, couples, and families of wealth for over 30 years. His work with clients at many levels of affluence, from the millionaire next door to the Forbes 400, has earned him a reputation as a valued family advisor. Jim is the author of Strangers in Paradise, How Families Adapt to Wealth Across Generations, and the co-author with Dennis Jaffe of Cross Cultures, How Global Families Negotiate Change Across Generations, both with groundbreaking explanations of how individuals and families can adjust to wealth effectively. Jim, it's a pleasure to have you with us today. Thank you again for making time to be here.

Jim1:28Well, thank you so much for inviting me to be on. I'm really happy to be here with you.

Mike1:33I've greatly enjoyed both of your books. And what struck me most was how effectively you explore the intersection of culture and psychology with family wealth and the effects they have on the success or failure of wealth transitions. Can you share with us a little bit about how you came to be involved in the family wealth psychology area and explore this interesting topic?

Jim1:57Sure. I came to be involved in the area from a variety of directions. I was working as a psychologist in the healthcare system and a neuropsychologist, but also in my personal life, our family had achieved some level of affluence due to unfortunate circumstances when my father, who was a successful businessman, died quite suddenly of a heart attack way back in 1980. As a result of that, during the 1980s and 1990s, while I was being a psychologist, I was also with my wife thinking of how do we raise our children, who were quite young at that time, in a way that we ourselves had not achieved. We both were middle-class people from our various backgrounds. And so I started doing reading and getting interested in what was around,

2:54What I did not know was in the 1990s in particular, the whole field of wealth psychology and wealth counseling was being born. So I kind of came into it as it was developing. And then we had the dot-com era and the sudden wealth syndrome because a lot of young people were getting quite wealthy quite fast, the Microsofties.

3:22and then through the 2000s. So I began to transition out of healthcare into working in financial services simply by following my interest and because I actually cold called one of the original wealth counselors, a guy named Dennis Pearne in the Boston area. And one thing led to another and here we are.

Mike3:49Amazing. It's amazing how you start on one journey and end up following a different path entirely. But it's been a fascinating one. And you've created a great body of work by the sounds of it. And one of my favorites is your book, Strangers in Paradise. And you've developed a great analogy of immigrants and natives to wealth. Can you help us to understand this concept of coming to wealth versus coming from wealth?

Jim4:18The genesis of the metaphor and the idea was actually in combination with my just fantastic collaborator and colleague, Dennis Jaffe. We met each other around 2003. We're doing similar things with similar interests. and around 2005 and 6 we realized there was no article that was kind of an overview and a summary about the psychology of wealth and in order to bring it together including to simply create a bibliography because so many people asked about well where can i read about this or that and we realized there was no place you could go to point you to the literature and many people did not even realize there was a literature about wealth psychology and raising kids with wealth.

5:12And so we embarked on writing an article, which later became what's called Acquirers and Inheritors, which we wrote for the Journal of Wealth Management, published in 2007. So in 2006, when we were doing that, during the course of talking about it back and forth, ironically, and you'll enjoy this, Dennis and I were bored. we we we were reading sort of the usual yada yada it's difficult and shirt sleeves are shirt sleeves and a lot of things that to us you know we're like yeah yeah it's been talked about whatever and it was that that sparked a discussion that led to drawing a comparison and i i know from my own background, my parents were Holocaust survivors and came from Eastern Europe. So I,

6:07first generation American, have a cross-cultural background. Somewhere in all of that, we sparked the idea that, you know, if you grow up in middle-class life, and if we look at that not as class, but as culture, socioeconomic culture. And over the course of a lifetime, you become quite wealthy and wind up in a different socioeconomic culture. You know, you have a lot of characteristics of being an immigrant. You've made a transition just like immigrants do. And I certainly knew that from my own family background. And immediately, so many things fell into place where we realized, wait a minute, that makes sense. Because if you then are born and raised in what we proverbially called the land of wealth,

7:02you're a native of that land. You're not from away. You're not an immigrant. This is your land. And we saw that wealthy families have so many characteristics, actually, of immigrant families who start off in a land of great adversity and scarcity. And somebody says, we got to get out of here. We have to do better. And I want to have a better life for my family.

7:31And they make their way to success. And we heard this very often. I had so many clients, and you probably have two, who look at their grandchildren in particular and say, they don't know where we came from. You know, they have no idea what my life is really like at their age. And I really don't know what their life is like.

7:54How do I help raise them when I didn't grow up like them? So all of that quickly fell into place once we grasped the analogy. And so when acquirers and inheritors came out, we made reference to it. And then over the next several years, we expanded on that.

Mike8:16I think it's a fantastic analogy. And the example that you cite of people growing up in one culture and transitioning effectively to another culture of wealth is oh so common. And since I've been hosting this podcast, I've met so many G1s, first generations that are contemplating, how do we raise our kids when I grew up middle class and I've made all this money in technology or some other industry. And all of a sudden, I want to enjoy a life that I could previously never afford. And my kids know no different. They're growing up with a standard that I didn't grow up with. And how do you ensure that you still transfer those values and principles and work ethic

8:59to the children? So I love this analogy that you've developed.

Jim9:04Thank you. It really, what has totally surprised both Dennis and myself is how much the metaphor immediately and intuitively clicks with both families and with advisors. As we are talking now, I've often talked with advisors. And the minute I draw the analogy, it's like, yes, That's exactly it. That's what I've seen. And we might be able to make reference later in a few minutes that for advisors who are in some ways bystanders to this immigrant journey, but also supposed to be experts about it.

9:48people who come to the land of wealth see advisors as inhabiting the land of wealth. But we know that many advisors themselves are still middle-class people hoping to get to the land of wealth. So it's a very interesting process that really illuminates a lot of what goes on.

Mike10:06The other thing that I found really interesting in your books was this notion that so much of a generation's wealth is new wealth. At least in America, I think The statistics were around 80% of all wealth is being created in the current generation, which contrasting that with the amount of family wealth that is lost from generation to generation, there seems to be a cycle which is repeating itself where shirt sleeves to shirt sleeves is obviously the phrase that everybody's heard.

10:37But I hadn't seen anybody really promote such new wealth generation being created, each generation. I think that's really interesting to explore the two and how they actually interact.

Jim10:49Well, Mike, it's interesting because that was very important to me in the original creation and particularly years later when I had so many people saying, is there a book on this? Like, can I read more about this? And, you know, I want to learn more about this. Is there a book on this? It's like, okay, I got to write the book. One of the things that really was influential was I, with my psychologist mind intending to follow the data and the research, for years had been watching for demographic studies that were done by usually wealth management firms who almost in a humorous way, once you started to see the pattern, and you'll love this, I would read a study and they would say, you know, we were going to study

11:37various things about these millionaires. The first thing we did was to look at usually three categories. How many were self-made, how many inherited, and how many were some combination of inherited and self-made. And to our surprise, we found that 77%, 81%, again and again and again, were self-made. And then I would read the next study and they would say, you know, we surveyed to our surprise, 73% said they were self-made. And then, you know, 6% were a combination of inherited money. And the next one, to our surprise. And then after a while, it's like everybody kept thinking it's old money and new money, and maybe it's 50-50 or something like that.

12:27and nobody had ever looked across all the studies, kind of a meta-analysis, and said, wait a minute, it's always around 80%. That's the nature of it. And so what does that really mean?

Mike12:42And so that leads me to a question of where is all the wealth going? If each generation so much wealth is self-made and generated from anew, what's happening to all that wealth if it's not necessarily making it to the second and third and fourth gen, if it's not becoming old money?

Jim13:00It's a really good and very important question, Mike. I think in my own mind, I'm undergoing a shift a little bit about this. I think I still very much subscribe to what I write about in Strangers, which is it is very hard to sustain wealth. But once we look a little more granular, there are multiple patterns that go into this, which actually would be quite predictable. First of all, remember, if you are a millionaire or have $2 million and you have several children and multiple grandchildren in G2 and G3, simply the numbers around the distribution that G2 is not going to be wealthy and G3 may not be wealthy because of the distribution effect across a larger number of people with estate planning.

13:57So at the affluent and perhaps high net worth level, it's not that families leave wealth, it is wealth gets distributed. And so the recipients don't qualify anymore. And remember, that is, in terms of numerically, that's quite a bit of the bulk of wealth. Once you get to the tail of the distribution farther and farther out, then you're getting into factors that relate more to family life.

14:29And that's where most people think, well, it's the money. Money destroys people. That's what we've been told. People become greedy. People become materialistic. I've had so many people, and you probably have heard this too, where it's like, oh, you know, the kids just want to have Ferraris and they don't know how to handle it and they don't have any skills. And so it goes away. They dissipate it. What I strongly talk about in Strangers in Paradise and in all my work, and we now have actual research more and more on, is it's actually very little to do with the money. It is much to do with the cross-cultural adaptation that is much harder than people anticipate when they make the journey to wealth. People come to

15:19wealth without preparation for how they're going to sustain it in the family. And that's really why it is so difficult for families. We can talk about the families actually who succeed and wear shirt sleeves to shirt sleeves does really not describe them. But we have to recognize that most people just focus on the money and they forget adaptation.

15:47And that was one of the key points of Strangers in that immigrants to wealth are arriving without the mental template in order to survive and prosper in this new paradise, this land of wealth.

Mike16:00So how would those gaps filled? I mean, where did your research lead you in this? Can the immigrants adapt? And if so, what's the tool set? How do they actually go about acquiring the skills or the mental template in order to succeed and transition into this new culture?

Jim16:18Well, Mike, here again, the watching of all the demographic studies and the studies about what's important to the wealthy and what they worry about, what keeps you up at night, those sorts of things, pointed the way for me to see subtypes. There also were many interesting studies about subtypes of the wealthy during, particularly during the early part of the 2000s. In many of the studies, there's a real nice core group of about 30, 35, maybe 40 percent again and again that's doing perfectly fine. And again, it's like nobody is paying attention to that. And that's a not insignificant number of people. And I remember watching those studies and they would say, And you even see this now, 66% of the wealthy think their kids are unprepared. 48% of parents

17:18worry about their children looking entitled. And in my, maybe we can call it contrarian attitude from an investment standpoint, I would scratch my head and I would say, well, geez, that means like 40 to 50% are doing fine. They're not worried so much. And what are those people doing? But that doesn't make headlines. That doesn't sell. If you saw a study that said 50% of people think their kids are doing perfectly fine with money, you'd say, hmm, that's interesting and probably move on.

17:55so drama sells but unfortunately it has beat into us what i sort of recently have been thinking of is the fire and brimstone version of wealth management which is shirt sleeves to shirt sleeves in three generations you're going to fail you better do what i say or your family's going to wind up terribly so there we've had evidence all along for different subtypes and maybe we can talk a little bit more about that at this point.

Mike18:25By all means. Yeah, please. Let's dive in because I think that Strangers introduced me to it and gave me a great mental toolkit for that. But I think for the benefit of the audience, that'd be really interesting to explore.

Jim18:40Well, it's funny because what crystallized it for me was looking at the research actually on cross-cultural adaptations in psychology around geographic and ethnic adaptation, not economic adaptation. And the literature is quite clear. It talked about the known strategies that people go through in trying to adjust and adapt to a new environment. And once I saw the different subtypes, I immediately, with my work in wealth, recognized these same subtypes occur among the wealthy. The two dimensions that make the greatest difference are, number one, the degree to which people hold on to or let go of, sometimes even push away, connection to where they came from, the culture, the original culture, combined with the second dimension, which is the degree

19:46to which they take on or resist getting involved with a new culture. So it's those two dimensions, and I have some diagrams in the book, and I've talked about it. How much do you keep of where you came from, and how much do you blend that with or take on where you now are? We know, and we all have examples of ethnic immigrants who move to a new place, but their home is exactly like where they came from. They speak the language of the old country, and they basically have just transplanted their bodies, but not their identities. And we know that with wealth.

20:27Those are what I call the avoiders, the ones who say, I'm still a middle-class person. I just happen to have a lot of money.

Mike20:33Those making the adaptation also face quite significant stresses sometimes too, if they fail to let go of some of those subtypes, they're almost coming up with a new self-identity for themselves and how they operate in this new environment. What has your research in this area shown that individuals go through in making this journey?

Jim20:54But in making what Dennis and I actually later in our second book, Cross Cultures, called the journey up economically, it actually is quite stressful. And I think that's another aspect of what we've learned in the last 20 years, which is that coming to wealth is a lot more stressful than most people anticipate. Everybody wants to get to the land of wealth, but they don't realize what it's going to be like once they get there. And when they walk around and have to actually live there, what their life is going to be like, the new problems that they're going to have.

21:37And, as you say, the adjustments in identity. I once worked with one wonderful woman executive who had made a transition. She'd actually grown up in a working-class environment and never forgot what that life of scarcity was really like. She had very loving parents. And she spoke to me about how it was only later she realized how poor they really were.

22:06They kind of kept it away from the kids, as many families will do. But she remembers the limits and the difficulty growing up, which motivated her to become an entrepreneur and build a business. And we sat one time and we talked and quite movingly, what she said was, I had no idea it was going to be this hard to be rich.

22:30You know, I smiled because I knew what she was talking about, but I asked her to go on. And she said, first of all, one of the things that no one told her about and that people often don't anticipate are the sibling issues. She had two brothers and a sister. And the struggle that she had with their jealousy, a request for loans and gifts, her mother came to her and pressured her, as often happens, particularly with women.

23:03you need to take care of your brother. You know, he's had a difficult life. Turned out actually he was an alcoholic. You know, he's had a difficult life and had trouble making his way in the world. You have to help support him, particularly after we're gone. And she was like, oh my God. And then so many other things. She talked about friends from the school she grew up who did not know how to be with her. They were awestruck and it was so difficult.

23:29she talked about the impact on her first marriage with a husband who could not adapt to the situation. Fortunately, she married somebody who could and worked out much better. On and on and on. She was so eloquent about the fact that it was work to adjust to good fortune.

Mike23:55It's really interesting. And it's not something you would typically expect to hear how much hard work it is to be rich, but you're absolutely right. And it's also one of the things that we explore in this podcast a little bit, this concept of the business of family and the structured work that goes into building and operating the family enterprise.

24:18Everything from family meetings to constitutions and other instruments required to formalize it because families grow so quickly that wealth, I think, is an amplifier in a lot of ways for good and bad.

Jim24:33You know, you make excellent points right there, Mike, that many of the things that are important for and in some ways, as you have seen and talked about, necessary for the business of family are completely unknown to people coming to wealth. Very often when I speak to families or groups, I'll say to the G1s, how many of you come from a family where you did family meetings?

25:03And almost always, I might get one hand. If I'm really lucky, there might be two in a group of 60 or 70, I will ask how many of you had explicit instruction in developing money skills when you were growing up? And again, there may be a hand or two, but most of the time people say, well, you know, I just had to learn it because we had no money and I had a natural instinct for it or, you know, I earned money for chores maybe or whatever. Family communication, which is so important. There's no template for that. Being able to talk about and teach money and then wealth, no model for that. So those really are the things that make a difference in not getting deported

25:56from a land of wealth. And yet very few people know that they're supposed to do it when they get there.

Mike26:01That's really interesting. And I'm curious to explore, do the models and the strategies available for wealth preservation, are they different for those that are native to wealth compared to those immigrating to wealth? Or do they all need to learn the same set of tools in order to preserve that wealth and effectively steward it for the next generation?

Jim26:21That's a really good question, Mike. I think it goes to the heart of, again, the advisor side and how advisors need to understand that you do have to pivot when dealing with somebody who comes to wealth versus they come from wealth. And because, as we talked a few minutes ago, most advisors themselves either are trying to make the journey or heavily identify with middle class, general society, and those who come to wealth. They don't necessarily have a great understanding of natives of wealth and their individual particular stresses and adjustments. You know, we make fun of natives, inheritors, quite a bit. The classic, oh, you know, member of the Lucky Sperm and Egg Club, that kind of thing. And I worked with one G3 one time, sitting in a peer support group of other G3s.

27:27And he started talking and all the other heads were nodding when he was talking. He said, you know, I can tell within five to 10 minutes of sitting with my parents' advisors and my grandparents' advisors who patronizes me and who does not. It's just so clear from their language, their body language, who they orient to. I know who's paying attention to me and I know who's paying attention to everybody else.

28:00And they all were nodding. Yeah, they can tell too. Advisors don't realize how obvious it is in their attitude toward natives. And the fact that, for example, natives of wealth need good understanding and support for the legitimacy of the stresses they encounter. They encounter a lot of, oh yeah, right, I wish I had your problems and the biases about the wealthy. One of the key things I talk about in Strangers is many inheritors are actually disenfranchised citizens of the land of wealth. People think they have money, but they really don't. It's in trust, tied up in partnerships, and they essentially are citizens of the land of wealth who don't have a vote and they don't control much of the wealth associated with them. What that does to your sense

28:54of self-worth and also your ability to plan and have control over your own life. So your point, your question is really quite good.

Mike29:00Oh, thank you. One thing I want to explore next is this, your second book, Cross Cultures, and the work that you did exploring how global families negotiate change across generations, which is the tagline for the book. But I'm Australian, I'm based in Singapore, I do business globally. And I spend a lot of time with other expatriates in this global city. And your book put into words so many personal experiences that I've had dealing with different cultures in a way that I otherwise couldn't previously articulate.

29:36That's just fantastic. Would you mind discussing the main types of culture as you categorize them in the book and help us to understand how that applies to this world of wealth?

Jim29:46I think this was an outgrowth. Again, Dennis and I have continued to collaborate over many years, and our work went global for each of us over time. And we began to see patterns that we were having trouble putting our fingers on, just as you described, until we came across a wonderful article in a new paradigm for understanding cultures that is called the HFD, honor, face, dignity, three culture paradigm that was initiated around 2011 by two researchers in sociology and actually anthropology. What made a difference, and again, it's amazing when that light bulb goes on, how the world turns and everything looks differently. We typically have talked about the East and the West. And Mike, you probably have run into that too. But that never quite

30:43captured what was going on. And these two researchers identified that there are really three main cultural prototypes around the world. For what we think of as the West, they call dignity culture for the basis of how self-worth is determined, the individual dignity. We found that a little jargony, and so we call that individualist culture, which seems to connect with people better. There's the East Asia that in the research is called face culture.

31:21That's where the F in HFD comes from. And the face is somewhat well known, certainly in the East, but in the West, we really don't have a clear analog to what that means. So Dennis and I call that harmony culture because there's a strong emphasis on the collective, the community and the family and maintaining face or reputation socially.

31:45But most important was the third identification of culture, honor culture. And that ties together very disparate countries from Latin America, Africa, Middle East, India, Eastern Europe, Russia, actually even aspects of Southern Europe, Italy. And what honor culture, which is in many ways the original culture of the world, is the emphasis on reputation. and honor. It's tribal. And it is the importance of when you don't, usually it's in places where there's not good rule of law, when you can't count on the government to protect your people, the family has to protect its people. So honor cultures often have a strong emphasis on the clan, the tribe, and reputation, the very traditional cultures. So the HFD or individualist harmony and

32:51honor culture paradigm is what we write about in cross cultures. And we tie it together for what happens in each of those cultures when you make the journey up with wealth.

Mike33:04And this is where it got really interesting for me, because you have this other great analogy, journey up economically and journey across culturally, which is what I'd love to explore next because you made a great point that for most families of significant wealth these days, they're no longer wealthy just within their borders. Almost always, there's a global element to the wealth, whether or not that's offshore business interests or investments or something as simple as the children or the grandchildren leaving the Asian homeland and going to be educated in America, for instance, or in Europe, and bringing home a cross-culture, bringing home influence of other cultures into the family, into the family enterprise.

33:51How are families grappling with this mix of cultures, particularly in this modern environment where everything is so global?

Jim33:56That's what Dennis and I were saying, And we were hearing from colleagues and stuff of the patterns of exactly what you described, Mike, that one of the first things that a wealthy family will do is to send their kids and their grandkids off to individualist countries. So, you know, London, New York, Stanford and the West Coast, L.A.

34:28And it's interesting you mentioned Asia to also Vancouver to Toronto. Canada gets a lot of it, which is a very individualist country. And they do that to get great education and ironically to get exposed to the world and global culture with the intent to come back and serve the family. Well, it doesn't always work out so well like that.

34:53You know, G2s and G3s come back and they are changed. And the stresses on traditional families in honor cultures and harmony cultures from sending kids to individualist countries has been profound. I was talking with one Asian family, and they were actually doing a little bit better in dealing with what was going on. But when I met very privately with the patriarch and the matriarch, one of the things the patriarch talked about, the matriarch tended to agree and whatever, but again, it was a fairly traditional family, was really struggling with the fact that his children, particularly the younger children, because the older was more traditional, had choices.

35:51For the patriarch, it was a foregone conclusion that his son from the London School of Economics was going to return to the family enterprise. And when the son, after education, came back with a British wife and two Asian-looking but very British children visited, and we're even talking about maybe not coming back to live but staying in London, he was absolutely mystified, but he also felt betrayed.

36:26Yep. And he struggled with the idea that his sense of betrayal also carried much less power and influence on the family than he thought it would. There were just so many levels where he was struggling with this seismic change that he himself had encouraged. And I think it's that process that we have seen and the fact that the natives of global wealth really get transformed into what Dennis and I have begun to call the fourth culture, a hybrid blending where they have roots in honor or harmony culture, but strong influences from individualists.

37:16And that's creating a new culture of global citizens all around the world who really understand the struggles that their families have gone through cross-culturally.

Mike37:30It's fascinating to me because what you just described is so, so common in the worlds that I interact with here. Is the fourth culture that you talk about becoming global citizens really the destination for all of these different cultures? Is each family, whether or not they start in an individualist or a harmony or an honor culture, is almost the end goal to transform as a family, not just individuals, but as an entire unit into a more global citizen with a worldview in order to steward the family successfully forward in a blend of cultures?

Jim38:11Well, again, you ask a very good question because it often comes up, well, is everybody kind of becoming more individualist? Is that the direction? And what Dennis and I have seen and some others is actually, no, that's, you know, in behavioral finance, we would call that a home country bias that we're also finding that some, there are some influences going the other way where individualist G2s and G3s sent to Singapore, Australia, Asia, Latin America, Brazil, Middle East, India, they're getting changed by exposure to harmony and honor cultures.

38:56And so the fourth culture is, I would say, perhaps predominantly in the direction of blending individualist into honor and harmony. But there are also commonalities. For example, I've seen many younger people who have a really impressive exposure to the greater family orientation of harmony and honor cultures. They like it. They're impressed by it. They actually find that they felt they almost like missed it, that the strong individualism of the West has its drawbacks.

39:39And so they come back and they have a much greater collective feel and they bring those influences and many of them stay elsewhere because they enjoy the collective community feel. So to your question, I think there is general movement toward the fourth culture from all directions to different degrees. And that certainly in the current political environment today, there are people who rail against the global citizenry.

40:12But the reality is with wealth that we often cite Chrystia Freeland, who's becoming more and more prominent in Canada. She wrote an article in The Atlantic almost 10 years ago talking about these global citizens. And she said, actually, these global citizens have much more in common with themselves than they do with their countrymen back home.

Mike40:37So much of what you just said resonates. As an Australian transplanted into Asia and also a self-described entrepreneur, I come from an extremely individualist background. and I've been exposed to a lot of harmony culture and some honor culture. And here I am running a podcast called The Business of Family because I'm fascinated by the systems and the structure and the frameworks that some families use to operate their family enterprises. And it just so happens to be a contributor to a stewarding wealth, but also great family values and raising great kids. So I think what you've just described is fantastic.

Jim41:12There's a very particular reason for what you just described. One of the things I talk about in Strangers that relates to global culture is the issue of interdependence. Particularly at the highest levels of wealth where you have shared assets, one of the most difficult transitions for families is to move from a strong focus on the individual to really understanding how much you have to build skills and processes and structures for the interdependence of significant wealth.

41:50And honor and harmony cultures are much more prepared, sometimes almost too much prepared, but they are much more prepared to understand interdependence and the benefits, the joys of interdependence compared to those who come from individualist culture. It's really an important process.

Mike42:11Yeah, certainly. I think from my own study of a lot of Western cultures, siblings and sibling rivalry is often about misunderstanding each other, having very different lives, going off in completely different directions and having no common understanding or even interest in working together for the common family unit because forever they've been encouraged to find themselves, find their passion and go off and explore that. And if I have that same conversation with a family here in Asia, the concept of finding yourself and following your passion is so foreign. And it reminds me of the story you were telling about the conversation you had with the patriarch who felt betrayed because, you know, from his perspective, the whole story was already

43:02laid out in terms of what his son would return to do.

Jim43:02And it's a real dilemma, which is why the solution is not an either or solution for families, but a both and kind of solution. And some families understand that and move toward that. And some struggle with it mightily. And that's really, I think, the major focus in moving ahead and the next frontier around global wealth, which is helping families make the adaptation from whatever culture that they're in, so that we get to a point where we can balance the independence that particularly an individual's culture. And for G1s, they're so focused on with the interdependence that makes for success across generations with wealth. So I think we're understanding more and more. Again, it's not about the money. It's about families and adaptation and adjustment and resilience and all the things

44:11we're discovering about families in general.

Mike44:11I think that's an excellent point and leads me to a question now. For the G1s listening or for the wealth creators listening and they're contemplating being the founding generation of some sort of family enterprise or family office, some of this can seem a little overwhelming in terms of so many facets to stewarding wealth in a healthy way, what would you recommend in terms of a great place to start? Or is there a minimum sort of set of tooling or framework that families need to try and reach in order to start a healthy transition to G2?

Jim44:50Thinking about your question, I would say, and again, this often comes from cross-cultural. And in a wonderful book, I contributed chapter to wealth of wisdom, 50 questions that wealth holders often ask, I talk about the three main questions of adaptation. And I think for G1s, as well as the G2s and G3s, sitting around the table and talking together, these three questions really capture what you need to work on together.

45:27Number one, what from our background of where we came from still serves us well and that we should keep? Number two, what from our background no longer serves us that we need to let go of? Number three, and maybe the most important, what from our new circumstances do we need to learn and take on for the journey ahead?

46:00What do we need to let go of? What do we need to keep, which often comes down to values and skills? And what do we need to learn that is new? if the family can work together on those three questions and craft solutions so that everybody knows what the family's working on and work together, the family is going to do just fine.

Mike46:26That's perfect. Excellent answer. Thank you. Changing tack a little bit now, I'm curious to ask, you work not only with wealthy families, but also with wealth advisors. And from your position, I'd love to understand where you think the industry is going from an advisory perspective or even academically. Watching the evolution of this space, what do you think the future looks like in the next 5, 10 or 20 or any timeline that you think makes sense? Are there new trends emerging?

Jim46:55There absolutely are new trends emerging. And I would underline one trend in particular. And I will admit I'm becoming quite passionate about this. I mentioned earlier in our discussion about the fact that the sort of fire and brimstone approach to trying to scare families into doing the right thing. The era that we just have come through and are still in, I would say, pretty much for most advisors from the 1980s to through the present has been an era of tremendous growth.

47:30But it's also been quite fear-based, focused on what's wrong, the challenges of wealth, the pathology of wealth, the difficulties of wealth, and the emphasis on research studies that say, essentially, you're doomed and often followed up by you're doomed unless you do what I say. And I think the field is changing with the advent of positive psychology and new research, which again focuses on who succeeds, you know, the 100-year families project.

48:05What I mentioned before, a good 30 to 40% of wealth people are really on the right track. They don't get the attention. I think we're shifting to what I call wealth 3.0 now. 1.0 was the dark ages of very little discussion, and 2.0 is what we have been in the last 20, 30 years. I think wealth 3.0 will be much more positive, strengths-based, focusing on what works, less fear and negative.

48:38And I think advisors need to let go of and realize a phrase that I wrote recently and that I may incorporate more is sort of, you know, fears are not futures. That because we fear our children will not be able to sustain wealth doesn't mean that's a guarantee. It is normal to see the risks with wealth and to fear what will happen.

49:08But we shouldn't be reinforcing the fears as legitimate or even certain. They're just fears. And I think there's much more reason to be optimistic about what's coming ahead. And I think we are moving into a period that's going to be much more focused on how you succeed with wealth rather than how difficult wealth really is.

Mike49:31And it's certainly something that we're trying to support with this project as well, which is to shine a light on some great examples of families that have done a terrific job in their multi-generational planning and hearing from advisors like yourself about what actually works. Because from my perspective, I've been curious about this topic for so many years, but struggled to find great examples, great case studies. So I hope to try and provide them and share them with others as we go through this project.

Jim49:57I think that will really contribute to it.

Mike50:02Fantastic. Jim, I'm conscious of time. I know you're a busy man. We've got time for one final question. And this is a question that we ask all of our guests. Imagine you're writing a letter to your children. What is one lesson or idea that you don't think many parents would mention, but you think is important to understand?

Jim50:18You know, what comes to mind may sound strange and counterintuitive, but don't chase happiness. Like you said, there's so much emphasis on find your passion, pursue what will make you happy. Happiness is a result. It's not a goal. What I would tell, and in fact have told my children, and I've got the most incredibly cute two little grandchildren in the known universe. You should know that. What I would say is chase purpose.

51:02Happiness comes from a fulfilled life. And I must admit, I'm an incredibly blessed person and very fortunate. I have a wonderful wife and a 45-year relationship with her, three grown children who are well and two wonderful grandchildren, a great career. I have never gone after happiness. What I have done is tried to find purpose in relationships and my work and something that is significant.

51:33And happiness has followed. I'm a happy man because I feel I have purpose in my life. And so the focus on chasing happiness, I think, is misplaced. Once you have purpose, I think then you have everything you need.

Mike51:48Terrific answer. And I think the great body of work that you have produced is testament to the purpose that you've found. So thank you for all that you've contributed. I've enjoyed learning from you and I've greatly enjoyed this conversation as well. Jim, thanks for making the time.

Jim52:07Thank you very much for having me, Mike. It's been a great conversation.

Mike52:11Thanks for listening to The Business of Family. You'll find the transcript and key ideas from this conversation at businessoffamily.net, along with the Business Family Diagnostic. It's free, and it shows you where your own family stands. And if someone in your family should hear this episode, please send it to them too. I'm Mike Boyd. Until next time, take care.