The Challenges of Working with Clients of Newly Acquired Wealth

Most, Bruce W.
August 1998
Journal of Financial Planning;Aug1998, Vol. 11 Issue 4, p48
Academic Journal
This article looks at how planners can help those with newly acquired wealth deal with their money. How well baby boomers are able to establish a relationship of rapport and trust with inheritors will depend a great deal on how well planners understand the emotional issues inheritors face. The degree and depth of guilt can be tied into how many generations the money goes back, how the money was made, according to Katherine Gibson of Blacksburg, Virginia. For example, if the money they inherit was originally earned by contributing to the culture, they will feel better about it than if they feel it was earned by raping the land or exploiting Third World labor. Inheritors also struggle with what they often believe is a monumental gap between public perception and reality about their wealth. One aspect of inherited money that may surprise financial planners is how woefully ignorant many heirs are about money. Planners should emphasize philanthropy. It is better that they plan how to give their money away, rather than do nothing with it, spend it frivolously or give it away without any plan. Beyond the obvious financial benefits, it can be emotionally beneficial to have the inheritor--even an 18-year-old--go through their own estate planning process, suggests John L. Levy, an inheritance consultant in Mill Valley, California. If the parent or donor are still alive, a family meeting can do much to clear that silent air for the inheritor. Business owners who have come into newly acquired wealth through the sale of a business can present somewhat different emotional issues for the planner. The transition period can be especially painful.


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