The family business space is a fascinating area because of all the complexities that can arise when you mix business with family. When a business is successful enough to provide the family with not just a job but with significant wealth, things can get even more interesting.
I just finished reading a great book, Strangers in Paradise, by James Grubman, that does a superb job explaining how and why family members from different generations can have such different views about wealth.
The book is worth a read for anyone interested in this subject, whether they are part of a business family or a family with wealth, or advisors to such families. Grubman makes the analogy that those who are not born wealthy, but become wealthy along the way, are like immigrants to a new land.
When those immigrants have children, the children are natives to wealth, and will thus view wealth very differently. The book gives detailed explanations of the different ways that these immigrants make the adjustment to being wealthy, again comparing the journey to that of people who uproot the family and move to a new country.
I recently spent some time with my late father’s sister, asking questions about their childhood and their immigration to Canada, and I can tell you that packing up and moving to another country that you have never even visited can be a terrifying experience, even if you do end up in “paradise”.
One of the things that surpises most people is that wealthy people are not always happier than middle class folks. Money can solve lots of problems, but it can cause just as many, if not more. But few people will feel sorry for those whose problems stem from having too much money.
One of the take-aways for me from readig Strangers in Paradise was Grubman’s use of a new term (for me), which I decided to feature in today’s blog title.
When a family has accumulated significant wealth, and they have decided to keep the wealth together as a family, they need to learn how to get along and figure out how to make decisions together. This is not new to me, or to any regular readers of this blog.
What is new to me is the wonderful term “Interdependently Wealthy”.
Most people have heard the term “independently wealthy”, even if they would not necessarily be able to define it. Just so that we are all on the same page, here is a definition that I just Googled:
So if you have enough wealth that you do not have to rely on anybody else, and you do not need to work, you are independently wealthy, fair enough.
But what about a wealthy family? OK, so maybe they don’t have to work for money, and many families are in the position where the next generation do not have to find a job to pay the bills, and hopefully they can find something productive to devote their lives to (but that is the subject of another blog).
Now let’s look at the part about “does not need financial support from another person”. When the wealth is created, it is very often because of the efforts of one person, and for simplicity’s sake, let’s call him Grandpa.
As long as Grandpa is still alive, things are usually pretty clear, since it is “his” wealth, so he calls all the shots, and few will argue with him.
Once Grandpa is no longer around, and there is not one person, but a number of people who own and control the wealth, I strongly suggest that these people learn to get along.
They are NOT independently wealthy, they have become INTERdependently wealthy.
The difference is huge. Some families have figured out how to make it work. Many other families have great difficulty with the distinction, and unfortunately those are the ones that we hear about the most.