Developing productive and competent offspring in families of wealth

By Mark N. Voeller

Here are some suggestions, grounded in research, for increasing the probability that your children will be properly prepared to inherit family wealth.

In families of wealth, there is an increasing concern about raising unmotivated children. More and more parents are seeking advice on addressing the challenges of raising their children or grandchildren to become responsible, self-reliant adults who contribute to society. For the affluent parent, wealth can complicate the already daunting challenge of raising self-sufficient offspring.

Warren Buffett has been quoted as saying he wanted to give his children enough so that they could do anything, but not so much that they could do nothing. The derogatory connotation of the term “trust fund baby” resonates with individuals like Buffett. They want their funds to pass to their children without becoming a de-motivator.

Parents, by their actions as role models and their relationship with their children, explicitly or implicitly facilitate the children’s development. Yet the methods for accomplishing this objective are rarely addressed in a systematic manner.

Since every child is different, there are no standard approaches that can be guaranteed to work with every child. However, we have found that there are several guiding principles for raising successful offspring, and we can offer some ideas for helping your children develop the competencies needed by every responsible adult owner of wealth.

Promotion of autonomy and adaptability

Autonomy is the ability to think for oneself—to look at the world through one’s own eyes. Adaptability refers to the ability to cope with both normal developmental change and unexpected crisis. Both autonomy and adaptability in offspring appear to be closely related to healthy family functioning.

Researchers W.R. Beavers, M.D., and J. Lewis, M.D., found the following characteristics in families whose offspring were judged to be successful:

1. Clarity of communication around roles and responsibilities, structures and rules, marked by non-accusatory, direct statements.

2. Clear parental leadership through aligned approaches and teamwork.

3. Promotion of autonomy in all individuals. Parents defined themselves clearly, invited children to respectfully define themselves and embraced the need to respect the separateness and diversity of others.

4. Parental negotiation and compromise in order to find mutual-gain solutions. Parents honored the premise that there is no one right answer and that humans are not -perfect.

5. Flexibility in family functioning. They handled transitions and unexpected changes well and were open to using outside input and resources, such as extended family, religious congregations, support groups and professional advisers.

6. Acceptance and comfort with the entire spectrum of emotional expression.

Research reveals that parents’ failure to present a united front is one of the strongest predictors of unsuccessful offspring. Therefore, I strongly recommend that each parent quickly scribble down a written answer to a series of questions such as these:

• What is important to us and our family?

• What are the values that we want our children to learn?

• What do we want them to remember from our teachings and parenting?

• What kind of relationships do we hope they will have?

• To what purpose to we want to apply our family’s financial good fortune?

• To what degree do we each believe that money should be used as a form of control?

After you have recorded your personal answers to the questions above, sit down with your partner and work to find a statement you can both fully support.

Promotion of intrinsic motivation

Research reveals that efforts to motivate an individual with external rewards will fail if the individual perceives that the reward is designed to control him or her. Unfortunately, all too often children believe they are being controlled by their parents’ and grandparents’ expectations and wealth. The challenge is to interact with our offspring in a manner that generates self-motivation to become productive contributors to society.

Children who are emotionally dependent on parental approval are less likely to internalize a sense of self-control. When we keep our children dependent by rewarding specific behavior with either money or emotional support, we destroy intrinsic motivation; our emotional approval and our money become the motivators.

Human beings can control only those personal choices that involve their own behavior; the ability to control others is non-existent. (We can influence them, perhaps, but we can never control them.)

Unfortunately, most of us have been acculturated to perceive that in any situation with unpalatable consequences, we are being controlled. For example, teenagers faced with the prospect of losing a driving privilege if not home by curfew will assert that they are being controlled. They don’t typically see their option of choosing to stay out later in exchange for sacrificing the privilege of using the automobile for a week. Parents, too, rarely see that there really is a choice involved. Their intent is to make the child come home by curfew or face dire consequences (not only the loss of driving privileges but also criticism and the application of guilt).

A sense of personal control contributes to an individual’s ability to function at high levels and to cope with stress. Rarely in life do we have actual control over external factors. But the more we perceive ourselves to be in control of our lives and our circumstances, the more motivated and productive we will be.

We achieve perceived control when we possess information about events that will occur or knowledge about the process involved in making a decision. With information about the process or the outcome, we can be ready to respond or know the consequences of certain actions based on that knowledge.

For parents, there are a couple of key considerations. The first has to do with how we promote a sense of personal control and responsibility in our offspring. The second consideration has to do with how much knowledge and information we believe is appropriate to share with our offspring at various ages. Again, defining an approach shared by both parents is essential to success.

The increase in perceived self-control is closely linked to a reduction in oppositional, rebellious behavior. Family conversations that generate a sense of inclusion and information are critical to the development of intrinsic motivation.

Promotion of self-esteem

Recently a great deal has been written about the importance of developing a “wealth identity.” However, being comfortable with “who I am as a person of wealth” requires a foundational sense of “personal identity”—knowing who I am as an individual in this world, with or without wealth.

It is clear that enhanced self-esteem is closely tied to the ability to define the self. At the simplest level, this means the ability to calmly express a preference—the “right” to express one’s own emotional response to a situation.

The challenge is that this ability can be developed only in an environment of respect and tolerance. At the parental level, the keys to success are (1) eliciting from offspring their opinions, preferences and emotional responses to both daily activities and special events; and (2) treating their responses with respect and curiosity. Unfortunately, children’s expression of opinion or emotion is often stifled by remarks that ridicule or sound critical and judgmental.

At the family level, offspring must come to recognize that inquiries about their preferences do not imply an offer to gratify that choice. It is another level of maturation to recognize that one can express a desire without insisting that one’s preference take precedence over all others.

Another aspect of defining self is internalizing a sense of one’s heritage and family values—the principles that guide choices and goals. Every successful individual has a comprehensive system of ideas about human nature and the nature of the reality we live in. While often not articulated or written down, it serves as a guide for living—the drivers that determine the course we take in life and how we treat ourselves and others.

A core part of creating a solid personal identity is accepting oneself. Self-acceptance is a willingness to accept one’s strengths and limitations without self-criticism or judgment. It involves a rational respect for reality, including the facts about our human nature, our unique gifts and our personal needs. When I know my inherent worth, I am less vulnerable to internalizing others’ judgments and able to avoid negative self-talk and self-judgment. I am comfortable taking responsibility for myself and my own behavior. A major benefit of self-acceptance is the ability to achieve mastery of self—to calm one’s emotional reactions, thereby encouraging a rational response to stressful situations.

As parents address these issues with their offspring, they are actually growing and solidifying their own identity. It appears that many adults haven’t made explicit the values and principles that guide their daily lives. That absence of clarity makes it more difficult to model both self-acceptance and the process of defining self.

Promotion of perceived self-efficacy

Self-efficacy is defined as an individual’s belief in his ability to control outcomes in his life. The greater one’s sense of self-efficacy, the greater the belief that one can obtain a desired result—“get things done” and “make things happen.” Research confirms that a high sense of self-efficacy is a better predictor of career selection and success than actual ability, prior preparation, achievement and level of interest.

A high sense of self-efficacy contributes significantly to the development of intellectual abilities and to academic achievement, career advancement, tenacity in the face of problems, implementation of creative and innovative solutions, and management of job stress.

How do our offspring learn that they have mastery over choices in their lives? Most often they learn from failures, from problems, from adversity. Adversity and challenging situations are opportunities to struggle through, to find a solution, to become creative. If parents “bail out” the kids, the children are actually robbed of a valuable opportunity.

Our offspring need an opportunity to learn problem solving, focus and perseverance. They acquire a sense of personal mastery—“I can!” Experience with failure redefines success. A colleague’s daughter stated that after she initially fails at something, when she finally succeeds she takes more credit for her successes and appreciates them more fully. Facilitating this process is our challenge as parents.

Keys to healthy family functioning

Every parent faces the challenges of dealing with the different strengths and weaknesses of each child. For the affluent, there is the added complexity that each child seems to have a unique perception of what having wealth means.

The foundational principles described here are essential in encouraging offspring to be self-sufficient, self-motivated, productive, resilient and resourceful human beings with high self-esteem. These issues are interactively dependent; each builds upon the others, and there is significant overlap. Facilitated family interaction centering on these principles can be very effective.

Mark N. Voeller, Ph.D., is the principal of Dialogue Solutions Inc., Dallas-based family business consultants for succession, governance and conflict management (www.dialoguesolutions.com). He works with families who enjoy the benefits of shared wealth.

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Spring 2009

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