Financial decisions in families often involve our most revealing-of-self moments. Consider conversations around child rearing and values, college and independence, marriage and starting life, helping and gifting to others, late-in-life capacity and care, wealth transitions, or wills and death. These topics are about much more than financial planning. They are highly personal, deeply meaningful, and entwined with our family story.
Yet, there is a tendency to view wealth management and financial planning as "rational" endeavors best served by efficient solutions to functional problems. This approach overlooks the fact that Money→Wealth→Estate Planning is a developmental arena through which all of life passes. From birth to death, questions and decisions around finances are ever present, incremental, and increasingly complex.
"Developmental" refers to the way people's thinking, feelings, and behavior change through time. Every life stage, life event, and financial decision is an opportunity for a family to learn and grow together as they navigate intimate, all-of-life conversations and decisions.
Vulnerability is the basis of intimacy and connection
Intimacy is a driving need for all human beings: We want to connect, especially in our families. Achieving intimacy—and the close relationships and harmony it creates—depends on our willingness and ability to be vulnerable. Intimacy is honesty and openness of self. It is letting another person know the truth of who we are. And that creates vulnerability, which University of Houston researcher Brené Brown describes as "uncertainty, risk, and emotional exposure."1
In the generational wealth space, there are a unique set of vulnerabilities that arise. Here are some real-life examples:2
- The stress and frustration Sam and Sahara feel because their aging parents won't talk to them about estate planning
- The intimidation Brian felt when his father tried to control a gift Brian's grandparents left him
- The fear Alicia has because she doesn't know about—or understand—the investments her husband has made
- The shame Levon feels about not deserving the wealth he inherited
- The burden Sue feels as she tries to carry out the wishes of her deceased husband, some of which she doesn't agree with
- The open conflict between 3 brothers because their father decided to treat each of the grandchildren differently without any communication with his sons or their partners
- The rejection Sandra experienced when her in-laws decided to "protect" their money from her so they can "keep it in the bloodline"
- The isolation Camille feels because she is hesitant to talk about her wealth vulnerabilities with other people
These vulnerabilities tap into the core of who we are as human beings: Our identity, our drive for accomplishment, our need for safety and security, our fears and wishes, our feelings about aging, our joys, and our beliefs about togetherness. And they press into how we handle conflict, how we view multi-generational relationships, and how we intend to guide our family's development.
"We really don't know what to do."
Andre and his wife Maggie have 5 adult children and 8 grandchildren. When their own children were young, there was no talk about money and no acknowledgement that the family was wealthy. The children grew up in a modest suburban home with limited access to funds. Now, as Andre and Maggie age, they are experiencing many of the vulnerabilities inherent to the generational wealth experience.
Reflecting on his thoughts and feelings about his wealth, Andre said, "When I ran the company, I could impact outcomes and direct decisions. I had a team around me. We had a process. Now, it's just my wife and me, and we aren't sure who we can talk to about what we are going through. It is incredibly isolating. We really don't know what to do."
What vulnerabilities are Andrew and Maggie experiencing? He has a list: "We are concerned about how this money will impact our children and grandchildren. Will we ruin their motivation if we gift it to them? We don't know how much we are supposed to give them, how to do it, or when to do it. And we don't know if we are supposed to talk to them about these decisions or if that will make it worse. Should we be transparent? Or should we just put it in the will and let them sort it after we are gone? And what do we do about the fact that our kids have chosen different careers and lifestyles? Some of them have money and some don't. It feels like no matter what we decide, we are going to get it wrong."
Defenses to vulnerability can block communication and decision-making
As human beings, we have automatic internal mechanisms to protect us from emotional and psychological harm. Defenses to vulnerability are a response to the fear that arises when we experience or anticipate risk, uncertainty, and emotional exposure. It's scary to be intimate, to be known, to be open. And those fears trigger defenses.
Some of the most common fear-based defenses in the wealth space are:
- Silence – refusing to talk about wealth topics and the related emotions
- Avoidance – creating a backlog of hard-to-address topics
- Hierarchy – keeping men and/or parents in control
- Decisions – pressing ahead with plans that do not incorporate all voices
- Disclosures – making life-impacting surprises the norm
- Expert mode – deferring decisions to "the industry" norms and answers
- Rationality – blocking engagement with emotional and relational considerations
- Control – avoiding transparency and shared decision-making
What's interesting is that many of the conventions, norms, and beliefs in the financial services industry and society related to wealth are versions of defenses. Fear-based defenses have come to be taken as "the way things are done." One of the best examples of these fear-based norms is the prominence of parent-child hierarchies. When families default to parent-child hierarchies, the senior generation—often with "co-parenting" from their advisor—tends to control and direct decisions, while everyone else in the family system is treated like a child. Wealth is the only area of life where we can continue to parent up to, and even after, our death. Being aware of these fear-based defenses helps us embrace the vulnerability of wealth—individually and collectively—as we navigate all-of-life decisions and conversations around Money→Wealth→Estate Planning. Here are 5 ways families can practice stepping into—and being comfortable in—the vulnerability of wealth.
1. Create a safe space for vulnerable conversations
A family's ability to have vulnerable conversations that encourage intimacy relies on creating an emotionally safe space. Family members will withdraw and avoid sharing themselves if they believe that expressing a wish, fear, vulnerability, or point of view will trigger reactivity or judgment, be taken personally, or be seen as a criticism. Foster an environment where understanding people's thinking and feelings is the primary focus. (See 10 Skills of Dialogue.)
How to start a vulnerable conversation
For example, imagine Andre and Maggie decide it's time for a transparency conversation with their children, which they know is vulnerable for everyone. Andre could start the conversation by saying, "I'm so glad we could get together. We don't meet like this often, and I never know what to expect. I imagine you feel the same. I want to start by acknowledging that until now, your mother and I have pretty much done the planning on our own. We now see that we should have opened up a family discussion around wealth transitions sooner. We want to tell you what we have done, but we really want to hear your views, so we can consider how things might need to change. This type of conversation is new to us, so be gentle ... that's a joke."
2. Step out of hierarchy
Hierarchies—parent-child, sibling, gender, education, expertise—limit connection and intimacy because power and control take precedence over empathy and understanding. Peership—a sense of mutuality regardless of hierarchy—allows others to have a voice and view, feel considered, develop identity, and gain degrees of control rather than being directed and forced to agree. (See How to talk to your family about estate plans.)
3. Rethink the role of your advisor
Wealth advisors are uniquely positioned to help families step into the vulnerability of wealth and see Money→Wealth→Estate Planning as a developmental arena where the intimacies of life can be navigated together. Strive to think of the family-advisor partnership as a forum where feelings and vulnerabilities are viewed as normal, not an intrusion to be avoided or set aside.
4. Begin with reflection rather than solutions
Reflection is about thinking personally, deeply, and holistically. It is how we connect who we are to the larger picture and outcomes of our lives. We can help each other get to a place of reflection by asking curious, open-ended, all-of-life questions. Leading with goals and solutions puts the process in a functional space and creates pressure to make a decision. Leading with reflection puts the process in a personal, relational space and helps us connect our planning to more vulnerable interests.
5. Move above goals to wishes
There is enormous potential in moving beyond goal-setting by expressing and aligning around wishes. Wishes are intimate. They are a touchstone for goal-setting because they are bigger, deeper, and more personal. They express an intimate vision for the future and expand our options because they free us from the constraints of "the possible." When we are willing to be vulnerable with each other and share our wishes, we create more closeness in our families. (See Leading indicators of enduring family harmony.)
Incremental efforts lead to compounding change
Learning to embrace the vulnerability of wealth can seem daunting, especially in families where there haven't been many opportunities to practice these important skills. That's totally fine. None of us should feel a need to transform our family engagement overnight. We just need to focus on an effect that may also benefit our investments: Compounding through time.
When we make incremental adjustments in how we engage around Money→Wealth→Estate Planning and those small changes play forward across decades and generations, we change the trajectory for our family. We only need to set an intention to try to be more comfortable with the vulnerability of wealth and then proceed to learn and grow together.