3 Lifestyle Changes for Clients Who Are New to Wealth

What You Need to Know

Most families lose wealth within two or three generations.
One key to maintaining wealth: discretion.
Another key: philanthropy.

In some cases, families have remained wealthy for generations and have successfully been able to transfer their assets to children and grandchildren, who then carry the torch.

The DuPont family is a particularly notable example of this.

But in most instances, wealth is created and then dissipated within two to three generations.

As advisors, it’s imperative to realize how important changes in business and lifestyle can become, especially for those families who are new to being wealthy.

Those who have either inherited large sums of money, sold a successful business, or carved out an impressive career as an athlete or entertainer, should recognize how old habits cannot be followed if that wealth is going to be maintained.

At my firm, this is something we have seen over and over again in our work partnering with financial advisors.

To help provide some clarity on how to better preserve wealth for the future, below are a few recommendations that we share both with our clients and the advisors we partner with.

Tighten your security profile.

This is perhaps one of the most common yet most egregious mistakes we see.

Clients often have become accustomed to sharing their highlights in travel and leisure across social media, and as a result, continue to do so even when those life experiences become exponentially more impressive.

In short, this presents a major security problem.

With more wealth and notoriety, they are now a target.

And if they share where they are or where they are going, this invites the threat of either burglary, home invasion, or kidnap and ransom when children are involved.

We remind everyone we work with how important anonymity can be.

But if you must share your experiences publicly, do it only once the trip is completed.

Don’t tempt fate in real-time.

Take advantage of philanthropic benefits.

With new wealth, the amount clients are willing to give will very likely increase.

And it’s important to think about how this can be done most strategically.

Giving to charities not only has a remarkable altruistic benefit, but it’s important to remind them of the financial advantages as well.