Family Office

EXCLUSIVE: Clients Give Feedback On Peer Networking And The Need For Communication

Harriet Davies Editor - Family Wealth Report 14 November 2012

EXCLUSIVE: Clients Give Feedback On Peer Networking And The Need For Communication

This year saw Threshold Group launch its Community Square forum, a peer-to-peer network which includes specialists on “wealth education issues,” with an event in Chicago.

Editor's Note: Clients' names have been changed throughout for reasons of confidentiality.

This year saw the multi-family office Threshold Group launch its Community Square forum, a peer-to-peer network which includes specialists on “wealth education issues,” with an event in Chicago. It was really a next step for the firm, which was already running a P2P parenting network on a smaller scale. And while there is nothing groundbreaking about the idea of a peer-to-peer network, at the heart of this one is recognition of an aspect of wealth that is still fairly taboo: that it can bring isolation.

“I think that in our world people think that their value is only measured in financial terms. People can look [at wealthy people] as if they don’t have any problems, as if they don’t deserve it. Because the measure is money,” says Kristen Bauer, senior managing director at Threshold Group.

It’s a theme Jessie O’Neill wrote about some 15 years ago in her book The Golden Ghetto: The Psychology of Affluence, in which she explored the darker emotions attached to wealth – feelings of inadequacy, for example – and the pressure created by the external expectation that everything is always “perfect.”

Bauer says wealthy people can feel they live “in a glass fish bowl,” which is often the very reason they seek the privacy of a family office in the first place. Such a tendency is only exacerbated by the privacy concerns created by digital communication.

“The money doesn’t have any power on its own”

Bauer says the first time she ran a parenting network “she was almost shocked” by just how magical the atmosphere was. As the fall event in Chicago approached, with some 30 clients due to attend, she was “hoping it would happen again.”

“It was a little bit of a risk because people are so anxious about talking about this…firstly we weren’t sure they would come, and secondly we weren’t sure they would open up and talk about the real issues.”

To help build trust at these events she lays down some ground rules such as: to really listen to each other, to be non-judgmental while in that space, and to assume best intentions. But what also really helps she says is that the topic of wealth usually ends up being secondary. It’s the issues surrounding wealth that come to the fore – and through these people connect.

Thomas, a client of the firm who attended the event and later spoke to Family Wealth Report, said that what really stood out to him was that “the money doesn’t have any power on its own.” What these families discussed was not money per se, it was what could be done – or undone – with it, its potential for good and bad. It was the topics around money – philanthropy, raising children, entrepreneurialism – that inspired people.

And this is exactly the way Threshold Group wants to reframe the idea of money in their clients’ minds through these events. “These families have a lot of resources…they can do great things,” says Bauer. The event is aimed to show them that “it is okay to dream and think big,” while giving them the tools to get there. A big part of that is showing them there are “other people to relate to and support them…a community,” says Bauer. “The biggest takeaway for them was the feeling that they were not alone.”

The client’s perspective

Thomas’s experience echoes this. He was “a little bit cautious” going into the event but says “you don’t always realize the benefits of communication before you participate.” However, both he and his wife Wendy had attended the smaller parenting forums and Wendy said: “That for me was exactly what I needed at that time.”

Wendy says that the smaller, earlier parenting events did have a more intimate feel, something that decreased as the group got bigger – but she noted that what helped maintain this were the sessions that brought you back together as a group and helped digest the information. “You need to keep figuring out the intent.”

However, despite the bigger group Wendy said she had no concerns about privacy because of the context: “I felt totally respected and knew my thoughts would be kept confidential.”

The couple are “empty nesters” – their daughter is away studying and they are watching her grow up and learn about money and finances. One of the things they were keen to do is “share some of the things we went through with our daughter.”

For example, Wendy says that one of the challenges is teaching her daughter the difference of spending sensibly on everyday items such as groceries, while also understanding that certain investments and large expenses – like college, trips abroad – still make sense. The difference between being careful in everyday spending, so as not to be frivolous, while knowing you can afford certain big-ticket items is an important balance to strike.

She said they felt their experiences were very much echoed around the room. It really taught them that they were not alone in some of the challenges they had faced, such as dealing with first generation family members who “just wouldn’t let go” and still went into the office every day well into their eighties.

Thomas says that from his experience of talking to other wealth holders there are “two different family philosophies”: one that is essentially closed and where the money is hidden, perhaps because “they are afraid the kids might run wild”, and one where the family is completely open. Thomas and Wendy chose to err on the side of openness and feel that it has worked with their daughter. But one of the great things about peer networking, says Thomas, is that you connect across “family types” and this allows for a much richer understanding of how different approaches work, and gives ideas for new strategies on areas where a family might feel a bit “stuck”. “That was a big theme for us,” says Thomas. He found it interesting to see how scenarios around wealth and inheritance were being played out in other families. “I found a lot of comfort,” says Wendy.

On this note, through the family’s work with Threshold Group, Wendy and Thomas have come to a decision regarding philanthropy and their daughter. Thomas experienced some tension from his parents’ inability to let go of control, which means he and his siblings have not got involved with the family foundation. Instead of fighting this, they have come up with the positive idea of taking a portion of their own money and setting up a donor advised fund through which they will work with their daughter, a young adult, to start giving her a sense of involvement and ownership early on. For her part, she has shown an active interest in philanthropy and volunteering, which means the initiative isn’t being forced upon her as such.

The challenges of parenting

Many of the issues where the couple connected with others was over children. What they saw in similar couples was the desire to create experiences for their children that they might not otherwise have to go through. While wealth takes away the necessity for children to grow up through processes like internships and summer jobs, these parents were fairly united in wanting their children to experience these challenges in early life. However, they were simultaneously aware of the wonderful opportunities wealth provided and wanted their children to benefit from these too. What emerged then was the idea of a peer network through which parents could “exchange” children to do summer intern programs, as between them they had connections to a wide range of opportunities.

The idea of mentoring also came about when the couple watched a panel discussion featuring a 24 year-old woman who they thought could really inspire and guide their daughter.

Wendy and Thomas are also keen to deepen their daughter’s financial education. They want her to “better understand what investing is, all the concepts and benefits and drawbacks,” and are considering encouraging her to attend financial education sessions. “We’re at a point now where we’re going to need her to understand more of her finances,” says Wendy.

Their attitudes are remarkably progressive. They are keen to take advantage of the changes in thinking that have occurred since when they were young. Back then, “in so many ways in society there was minimal support structure,” says Thomas. His own family still hadn’t divulged to him anything about their wealth when he was well into his twenties. He feels the change is all for the better on this front.

However, when it comes to some things, the old fashioned way is still the best. One thing both Thomas and Wendy were convinced of was the enduring need for face-to-face communication, saying it was best “for a lot of reasons.”

“I was able to talk to a bunch of [parents] about their children. We were able to connect unrelated to wealth and money…we were able to connect in a way that just looking at our profiles online we would never have connected,” says Wendy, who is nevertheless active on social media platforms. Essentially, a “profile” lacks the depth necessary for authentic connection. What social media has enabled, though, is for the couple to keep in contact with other like-minded people and follow up on ideas hatched during the event. And the fact they are doing so is testament to what they got out of it.

“I think we’re onto something,” says Bauer.

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