TEACH YOUR CHILDREN WEALTH

Our columnist reveals the four kinds of rich kids — and how to handle them.

By Hobbes Fury

ILLUSTRATION BY KYLE T. WEBSTER

There is no polite way to say it: Your wealth has contaminated your kids. That isn’t to say that you’re a bad person, unless you are. It’s just a statement of fact. If you think you’ll be able to instill traditional middle-class values in your upper-class children, you’re kidding yourself. Any attempts to do so deny reality. The kids know it, and they’ll let you know that they know it. “Why do I get taken to summer camp on Daddy’s jet? How come people on TV don’t have summer homes on private islands?” You’ll never be able to convince your teenagers that they need to start at the bottom when you leave for work in an Aston Martin.

If you can be honest with yourself and your family, you will survive this burden. Don’t mimic the lies of Warren Buffet, who frequently talks about not passing his fortune on to his children but gave his kids shares in Berkshire Hathaway. Same with Bill Gates — do you really think his kids get nothing? They live in a $100 million house. After that childhood, they’ll be more messed up if he doesn’t give them money.

With my clients, I see four types of rich kids. Each requires different handling.

1 The easy kids are the ones who are passionate about joining the family business. These children don’t need to be encouraged; they need access. Go ahead and start them in the mailroom, but make it clear that they’re not there to maintain some pretense that they aren’t receiving special privileges — of course they are — but are spending time in each department to understand how it runs. This child will invariably rise faster than you want her to, so provide the one-on-one time to keep her balanced as she blazes through the ranks.

2 Next in line is the late bloomer. Why is he blooming late? Because you bought him five hot cars in high school, one crash at a time. He’s never had any incentive to grow up.

I often see parents set up a small business for late bloomers. They can’t do too much damage, and the gig keeps them close to home. If you go this route, emphasize that this is a learning experience and your kid’s grade depends upon his ability to turn a profit. Tell him that you’re rich and he needs experience playing with live ammo. Your child will appreciate that you’re not pandering to his incompetence.

3 What if the child has other serious pursuits, like being a doctor or raising a family? Many wealthy parents love the idea of self-sufficient kids. But if there’s a family business, she’ll still need to engage with it, maybe on the board of directors or in a limited role meeting with the family-office advisor. Making her part of the process of planned charitable giving is another great way to include her.

4 The last type is the worst: the drug addict dilettante. If you’re lucky, he just wants to drink beer on the golf course. If you’re unlucky, he winds up comatose in a suite at the Hôtel du Cap. Your job, since you created this monster, is to keep him productive. If you coddle him, you’ll piss off his siblings. Don’t keep sending money; you will never send enough. The best ways I’ve seen parents deal with these kids are sending them to culinary school (lots of drinking in that profession anyway) or landing them a job as a tennis pro — saves face, and the hours are flexible.

If you’re not sure where your kids fall, try giving them what I call the Ferrari test. The ambitious kid will accept one, but won’t have time to drive it. The late bloomer will drive it to work each day at his faux-business. The child with her own pursuits will see it as an assault on her independence and not want it. The dilettante will simply ask if he can sell it “whenever.”

NB — don’t actually give your kid a Ferrari.

Hobbes Fury (not his/her real name) is a CFA and CFP who runs an asset management firm.

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