With great power comes great responsibility, as they say. A modern twist on that adage could be that with great wealth comes a great deal of stress for next-generation members of family offices.
Being born into a wealthy family has enormous advantages, of course, but that privilege comes with its own costs — often resulting in loneliness and anxiety for younger members growing up in the long shadow cast by the patriarch or matriarch. Do I deserve to have all this money? What is my purpose? How do I handle all these expectations?
Those kinds of questions dogged Jake Knight as a young man. Born into generational wealth with a father who led a trucking company, but growing up in a middle-income neighborhood in Phoenix, he says he wasn’t always aware of the emotional impact of family wealth.
“As I became an adult, started my career and family, and began navigating life, I became overwhelmed,” Knight said. “I went from high-achieving to depressed. I was overcome with confusion, pain and general apathy. I loved my wife and young daughter, yet I couldn’t connect or show up for them the way I wanted. I had thrived at work but was no longer able to work.
“While not a pleasant experience, this sparked something deep inside of me to seek help.”
Towards the end of 2007, he started what he calls a “healing journey” by finding his purpose in pursuing work that is meaningful. This has led him to openly share more of his story to inspire and invite others to lean into their personal development and growth. His experience was quite isolating, so now as a Bay Area investment adviser and Rising Gen Advocate, he holds space for others to share the opportunities, challenges, and complexities they have faced as a result of their families wealth.
With his Enclave Rising Gen members, Knight emphasizes connecting with peers and creating a safe place to share experiences, which helps build community and exposes participants to new ideas and inspirations. In addition to finding purpose, it’s key to be a good steward of family wealth while “pursuing your own dreams and independence.”
Katherine M. Sheehan, a wealth strategist and managing director at Boston-based Crestwood Advisors, also recommends to her clients to “look at other similarly situated next-gen people who are living the same struggles and ask them: ‘How are you dealing with this? Can I bounce ideas off you?’ It’s important to get another set of eyes and ears.”
Loneliness and isolation are common problems in the next-gen clients ages 30 to 40 brought together in recent years by the Merrill Center for Family Wealth, said Managing Director Valerie Galinskaya. The purpose of the gathering is to “share actionable insights and guide them through these challenges,” she said.
The center’s recent survey of 1,000 members of this rising generation found that “one of the biggest challenges faced by the rising generation is a lack of clarity surrounding family expectations regarding shared wealth — and this uncertainty comes with a cost. At times, younger family members who’ve been gifted assets will avoid accessing those funds because they don’t understand how those assets can or cannot be used. Fear of appearing entitled or inexperienced often hinders open dialogue.
“This silence and subsequent paralysis can lead to frustration and a sense of disconnect from their own inheritance and represents a missed opportunity for empowerment.”
Besides connecting with peers, the Merrill Center focuses on how to start often-difficult conversations with parents or grandparents. Galinskaya recalled a participant who was frustrated because in her family, “the wealth felt like a black box,” and it was “hard for her to make plans for her own life without that clarity and background.” The woman was able to engage in those discussions “coming from a place of curiosity, not from a place of entitlement, but wanting to honor their values.”
Those honest discussions can help clarify expectations, which can often be overwhelming for next-gen family members — especially when their interests don’t align with the family’s business.
“It can be isolating — ‘This is what I am supposed to do and what I’ve been groomed to do, and I don’t fit here, and I don’t want to do that.’ That can bring with it a lot of resentment, anger and loneliness,” Sheehan said.
To deal with such challenges, it helps to go straight to the top — with the family patriarch or matriarch, said James Hering, managing partner at Menlo-Park, California-based Bordeaux Wealth Advisors. “When do they start sharing info with the next generation so they feel included?” Hering said. And do they understand and respect the next gen’s passions and goals?
One way to help members of the next generation understand their role and become good stewards of the family wealth is through philanthropy. “Bring them in to start talking about how they would give away the money,” Hering said. “What does a family do with all their wealth?” In those discussions, family values are shared, and next-gen members feel included and valued.