10 Habits That Keep Families Wealthy

Courtney Pullen studies wealthy families as president of the Pullen Consulting Group, framed by his 10 Habits of a Healthy Family Culture.

“Maintaining wealth and growing up with wealth is challenging,” Pullen, a former counseling psychologist, tells ThinkAdvisor in a recent interview. “Wealth exacerbates pre-existing fault lines.”

The primary reason that these families fail, both with their money and the family system, Pullen argues, is “a breakdown in communication [and] lack of trust.”

Financial advisors can be a huge help — and not only on the investment side.

“Every family I work with has a team of financial advisors,” says Pullen, author of “Intentional Wealth: How Families Build Legacies of Stewardship and Financial Health,” released in 2013. “They are a great resource to teach kids the financial aspect of money.”

Pullen coaches all generations of families both individually and in groups. And as a management consultant, he works with corporations, entrepreneurs and nonprofits as well as with their leaders’ families.

His Healthy Family Culture habits include setting boundaries (Don’t let the next generation consider the family money an ATM), practicing skillful communication (“Avoid power games that foster … distrust.”) and seeing the family as a steward of their wealth.

ThinkAdvisor recently interviewed Pullen, who was speaking by phone from Driggs, Idaho. Here are highlights of our conversation:

THINKADVISOR: What are the worst habits that cause wealthy families to fail — not just with money but with “the glue of the family system,” as you put it?

COURTNEY PULLEN: A breakdown in communication, lack of trust and preparation for the heirs, and lack of family governance.

Most financial advisors just give these wealthy families investment advice, but that’s the problem area only about 10% of the time.

You’ve written about “10 Habits of a Healthy Family Culture” for wealthy families. The first one is to establish shared family values.

As families we’re living according to our values in an unconscious way. But it’s helpful to articulate what we stand for and what values guide us as a family. 

We need to make that more overt and spoken than just having our kids guess at what they might be.

No. 2 on your list is to define the family’s mission and vision.

This is so that the kids, or that rising generation, are cognizant of the purpose of the family’s money: This is how it’s supposed to be used; this is what is important to the family that will help guide us.

The next one is to establish healthy limits or boundaries.

My favorite parenting quote is from [pediatrician and psychoanalyst] D. W. Winnicott. He said, “The primary job of a parent is to optimally frustrate your child.” 

My concern about the generation we’re raising right now, who I call “the trophy generation,” is that they get a trophy just for showing up.

No, that’s not preparing your kids for how life works.

And we do want to optimally frustrate our kids, in families of wealth, in particular, because if the child says, “I should get a car for my 16th birthday,” if you’re a family of significant means, you can afford to do that.

So it makes it harder to provide that optimal frustration and to keep the boundaries that are necessary for the health of the kids.

The fourth habit is: Support family members in leading lives with purpose.

It’s so important that families do that. In some respects, the wealth can overtake the rising generation. 

It’s critical that the family invest in the dreams and ambitions of that generation and not say that their identity is they’re a member of the Smith family, say, or that they’re part of the family business.

We need to be supporting the autonomy or the individuation of these kids’ growth.

Otherwise they could grow up wild?

Yes. wild and entitled.

The fifth one is to prepare heirs to manage wealth in ways to further well-being. Families that flourish, you say, do “active financial parenting” with both young and adult children; and when they’re adults they seek advisors to teach them about wealth management. What sorts of advisors? 

These kids are watching their parents, who are role models. If they’re good role models of stewardship and are overt about the power of stewardship, the kids are much more likely to have a sense of responsibility to be good stewards.

Every family I work with has a team of financial advisors. They’re a great resource to teach the kids the financial aspect of money. 

It’s a lot easier for a financial advisor to do that to a higher [level] than the parents.