Talking About Family Money
5:30 min read
Wealth psychology expert and certified individual and organizational systems coach Joel Treisman has been helping families talk about money, purpose, meaning, and happiness for two decades. In his experience, Joel says financial decisions are inextricably tied to the deep-seated—and often unexplored—emotional and psychological associations we have with money, wealth, and well-being.
During a conversation for clients, Treisman spoke with the head of the Goldman Sachs Family Office about achieving family financial wellness and why it’s so challenging for families to talk about money and prepare children for inheritance.
Treisman's philosophy on what he calls the three F’s—family, flourishing, and finance—has evolved over the course of decades. Although he grew up in an old-money family characterized by multiple generations of business success and increasing family wealth, he recalls overhearing few, if any, conversations about money. Only when he was in his thirties and his grandfather, the patriarch of the family, passed away did it dawn on him that he was not prepared to be an inheritor of wealth. By then, he’d graduated from Stanford, earned an MBA from Yale, and had been working for fifteen years in marketing and management consulting, and as a certified coach.
His grandfather’s passing served as a “wake-up call,” he says, and he resolved then to learn as much—and as fast—as possible about how to be a responsible inheritor and a competent private wealth management client. By happenstance, Treisman's educational journey led him to meet the founder of TIGER 21, a peer-learning organization for high-net-worth investors. He was hired to become a Group Chair in NYC and worked there for the next twelve years, facilitating confidential monthly member meetings, coaching members and their families, and serving as Chief Learning Officer for two years. Treisman's conversations with TIGER 21 members and his experiences as a family wealth coach and facilitator convinced him that the relationship between money and happiness is often misunderstood. As a result, he says, his TIGER 21 members and clients often missed the point that personal financial wellness is a function of what you do with your money, not how much you have in the bank.
“Now is the best time to start a conversation about wealth.”-Joel Treisman
Treisman says money can become the “elephant in the room” that no one acknowledges but everyone dances around. “Now is the best time to start a family conversation about wealth,” he said during the conversation with Goldman Sachs clients, adding that failing to hold regular facilitated family conversations about money can have disastrous financial, emotional, and psychological consequences. “Family capital is a puzzle that consists of financial, human, social, intellectual, and psychological pieces.” He cited research* that identified the primary factors undermining successful transfers of family wealth: a breakdown of trust and communication, followed by a failure to prepare heirs,* and offered some strategies for strengthening family connections and overcoming the taboo of discussing money and wealth within the family.
Step off the hedonic treadmill. “Be wary of getting stuck on the hedonic treadmill, where we continually pursue the bigger and the more luxurious,” he said. On a treadmill, we are always moving but not making progress. “Life isn’t about the next bigger and more expensive thing.”
Value experiences over stuff. Treisman pointed out that it’s important to value and invest in experiences and personal growth rather than in “acquiring more stuff.” Investing in time, health, and vitality is what pays dividends. “Investing in time and experiences has a much greater impact on well-being than any luxury products we convince ourselves that we need.”
Satisfice rather than maximize. More often, “satisficing” as opposed to “maximizing” will make you happier. The happiness level of lottery winners returns to the individual's “normal” set point within two years. And though research has shown that happiness increases relative to income level, it plateaus at an annual income of $75,000 and may actually decrease thereafter, suggesting that there may be an inverted-U relationship between income and well-being.**
Hold regular family meetings. Treisman suggested holding regular family meetings to discuss family finances and to provide a safe space for questions and dialogue—a best practice among families of wealth. The goal of these gatherings is to “strengthen the glue holding your family together.” Family meetings offer opportunities to discuss financial decisions, values and mission, vision and goals, philanthropy, and what “flourishing” means to you and your family. Treisman said that hiring a qualified coach and facilitator to design and moderate the meeting process is another best practice. A competent facilitator will create a protected space that encourages psychological safety and open dialogue among family members. Such meetings are part of the process of educating and preparing the next generation for the future. Treisman recommended holding a half- to full-day meeting each quarter and incorporating guest speakers into the meetings. These individuals may be family office executives, legal and accounting advisors, or outside subject matter experts who can speak with the family about topics such as philanthropy, the family’s business interests, or governance.
Practice gratitude and avoid social comparisons. Gratitude has a positive effect on individual and family well-being. Treisman suggested keeping a gratitude journal or writing and hand-delivering a personal gratitude letter. These are what psychologists call “positive interventions,” and research has shown that they boost well-being. It’s also important to avoid comparing your lifestyle to that of your friends, neighbors, and colleagues. These social comparisons often lead us to feel worse and undermine our well-being.
Pursue purpose and meaning. In Japanese culture, ikigai is a concept that means finding joy in life through purpose, vocation, profession, and mission. This philosophy has been associated with longer life expectancy, and, according to Treisman, can play a key role in one’s overall sense of well-being. If we pursue our ikigai, we will reach the intersection of what we are good at, what earns money, what we love, and what the world needs.
Be generous with your time and money. Philanthropy offers another research-proven means of boosting our happiness by helping others and contributing to community well-being. Treisman said giving back is a great way to engage your children and grandchildren in discussions about family money, especially when children may be feeling guilty or uncomfortable about their lifestyle or inheritance. Generosity with time and money is a powerful way to use one’s resources for the greater good.
Invest in all elements of family capital. Treisman said you should explain to your kids that family wealth is about more than just money. Enhancing family capital shapes a family’s legacy over time and includes human, social, intellectual, and psychological capital. Planting seeds and tending to the saplings in these gardens over time will help a family flourish and ensure that well-being and happiness are part of the legacy you pass down through generations.
Article Resources:
*Williams, Roy, and Preisser, Vic, Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values, 2003
**Easterlin, R. A., “Does Money Buy Happiness?” The Public Interest 30 (1973), 3–10.
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