The Five Challenges For Wealth Inheritors to Develop A Positive Wealth Identity

The Five Challenges For Wealth Inheritors to Develop A Positive Wealth Identity

Inheriting wealth is supposed to be a wonderful and stress-free life opportunity. However, we see many short-sighted or self-defeating examples of people who have or expect to inherit substantial wealth respond to their fortunes. Inheriting wealth can be a source of conflict or difficulty. How can this be?  This post discusses how inheritors can be prepared to receive wealth by developing what is defined as a positive wealth identity, which is the foundation for a young person to develop the internal capability to make optimal use of their gift.

Growing up in a wealthy household, the trappings of wealth are omnipresent. This reinforces a sense that they are ‘special’ in undefined ways, affecting expectations, questions and concerns about their future. This upbringing also provides inheritors an unusual amount of freedom to define themselves. But this same freedom and privilege also offer challenges for how to make good choices and feel good about their fortune in a world where people with inherited wealth may feel devalued by others who have less and resent them. The way a young inheritor integrates the presence of money and wealth into his or her work, personal relationships and life choices, creates their ‘wealth identity’.

How an inheritor relates to money is a distinctive part of personality that expresses deep anxieties, aspirations, choices and values. While every person can develop a positive self-identity in their lives, this chapter focuses on the special challenges facing the inheritor of significant family wealth. Some of the questions family wealth can pose include:

• Does the person see money as a path to fulfilment, a burden or something of an embarrassment?
• Is money the most significant thing in their lives or a minor aspect of their character?
• Does money lead to tension or conflicts in relationships?
• Do inheritors fear or avoid learning about and keeping up on what is happening to their money?

Most of the wealth amassed by global families is new, first generation, wealth. Wealth creators are aware that such wealth rarely survives the second generation. They want to be among those who pass their wealth successfully to their children, but they also are deeply concerned that their heirs use the money intelligently and compassionately. Rather than bringing fulfilment, this gift can bring unexpected complexity or even distress to life. Money comes with tremendous potential, and the choices inheritors can make about how to use it are unlimited. But sometimes these choices can be surprisingly difficult, particularly if they are uncertain about, or lack the foundation of, the awareness, values and skills that can enable them to choose wisely.

Several challenges exist for the next generation: knowing they are wealthy and do not have to work, how to motivate themselves and what to do with their lives. They often live in the outsize shadows of their parents, and wonder what they can do that will be significant and important. The opportunities of wealth can be lost if spent on meaningless, self-defeating or destructive pursuits. It can be a source of confusion if inheritors are not sure what it means to them, what they want to do with it, or how it fits into their lives.

For many clients, money alone is not the issue. It is also the status and recognition that comes with wealth, leading to feelings of power and entitlement but also feelings of entrapment and isolation. It changes their lives. We now recognise that having and inheriting money has a marked impact on one’s core identity — on the beliefs and values that map how we see ourselves as people as well as how others see us. Inheritors can experience guilt about what they inherit, or a feeling that they do not deserve these gifts, which complicates their ability to move forward in their lives with a positive relationship to their wealth.

At its best, understanding the place of money in one’s life can represent a positive, mature life stage, offering many choices but still posing issues of meaning, personal empowerment and social responsibility. After sifting through what money means to them — its effect on their sense of self-esteem, personal relationships, work and community — inheritors of wealth will be better able to embark on new ventures with an invigorated set of priorities.

Inheritors must overcome five key life challenges to generate a sense of life purpose, meaning and positive and facilitative emotional connection to their money. Each challenge describes an important aspect of the psychological relationship to the saving, spending and sharing of wealth. To develop a positive wealth identity, heirs must resolve conflicts and overcome their vulnerabilities in each area.

Advisers to a wealthy family will be called upon to help inheritors with these issues. As advisers become aware of the elements of wealth identity, and how they are formed by overcoming specific life dilemmas, they will seek opportunities to address these areas with their young clients. If they appear to be disabling or difficult, advisers may help them find coaching to develop themselves within each area.

Challenge I: Financial awareness – what does the wealth I have inherited consist of?

Many inheritors avoid the issue of their wealth by using it unconsciously, without knowing anything about it. This challenge indicates the degree to which a person has actively become aware of money matters: how much they have, how it is invested, and how it is spent and shared. Not knowing about money is a way of denying it, or not being responsible for taking care of it. Just as a person must learn to take care of a prized possession, so people should take care of their money, to insure their future. Success in this area indicates a solid hold on one’s finances characterised by the feeling of truly ‘owning your money’.

Lack of financial awareness is seen in people who have difficulty claiming ownership of their wealth, or at worst avoid or deny responsibility for it. They may behave as if the wealth is really not their own, or believe that it is magically taken care of by others, and that it is infinite and always present. Such wealthy people are prey to all sorts of schemes that lose their money.

Many heirs and people who achieve sudden success are not really prepared to handle their money. It comes to them without preparation, sometimes seemingly out of the blue. The existence of trusts and family financial advisers designated to make decisions for them, leaves them feeling like dependent children, reinforcing a childlike lack of awareness and empowerment. This dependency often leaves them feeling incomplete, undeveloped and vulnerable. To avoid entitling their children, many wealth creators do not speak about money or inheritance, leaving their children to cope with the effects of wealth on their own. But to develop a positive wealth identity, inheritors need to inform themselves and begin a learning process.

Sometimes, after a setback or huge loss, they finally take the reins. At other times they struggle to take control of their money against well-meaning but misguided financial advisers, behaviour they are told is foolish or selfish on their part. But taking control does not mean making all choices on their own or rejecting professional advice. It means being informed about what is happening and participating in or being aware of major financial decisions. This is part of being a mature adult. Many heirs feel like their inheritance is designed to keep them from experiencing any sort of personal maturity in relation to their money. They feel that they will never be trusted to take care of themselves.

Inheritors often suffer from difficulties with money awareness. Heirs are given money without necessarily being given the skills to manage it. Some heirs feel disconnected from their money, as if it still belongs to the family member who made the distribution. One variation on this theme are so-called ‘trust babies’, whose inheritance becomes an obstacle to growing up. Yet others feel guilty or ashamed about their bloodline’s good fortune, hiding their wealth from others as well as themselves.

Success in this area comes when an heir develops a solid hold on finances characterised by the feeling of truly owning their money. While details of wealth management may be delegated to a team of professionals, the wealth-holder is keenly aware and in charge of saving, spending and sharing of money. They must develop special financial skills and capabilities that are not taught in college. Wealth advisers can steer young heirs to courses, workshops and programmes to help them in this area, but only after they understand the need and reasons for developing them.

Challenge II: Lifestyle management – how shall I live with the wealth I now have?

This element points to how people get pleasure from using their money: their spending habits and the nature of their life. Positive identity is seen in those who feel genuine pleasure and satisfaction from spending their money, who spend in ways that are not ultimately compulsive or self-destructive. They buy things that have meaning and they buy things for fun. However, they also practice a values-based spending, balancing saving and sharing of money with spending. They enjoy spending without excessive shame or guilt, living according to an overall life plan.

The presence of money can be a resource, or a temptation to addiction and compulsive spending. Consider stories of people winning the lottery, or inheriting, and quickly spending it away. One might expect that they were not truly in control of their wealth and in the end it did not add to their lives. They buy lots of things that do not continue to bring them the pleasure that is expected.

People can feel out of control in spending along two extremes: they either over-spend or spend impulsively, resulting in a short-lasting pleasure, a sense of waste and potential negative financial consequences. Or on the other side of the spectrum: those who radically under-spend feel inhibited by a sense of non-entitlement and feelings of shame and guilt. They are afraid to get pleasure in their wealth, perhaps because they feel they do not deserve it, or it is not really theirs.

The challenge in developing this aspect of wealth identity is to get the inheritors of wealth to define their lifestyle within a set of life goals based on values about the use of their wealth, and how they fit with the kind of life they want to live. After they are aware of the extent of their wealth, their challenge is to define their values and what they want in life, and then to define a spending plan that will sustain their wealth and allow them to live with genuine pleasure.

Challenge III: Stewardship – how do I use my wealth productively to make a difference in the world?

It is not enough for a person with wealth to just look to their own personal satisfaction. Having wealth means the opportunity to influence and help others, and studies show that the greatest pleasure and life satisfaction comes when one gives both to oneself and to others. A steward views wealth as a multi-dimensional resource that is preserved and shared for the benefit of both current and future generations. A healthy person will want to look around, and consider what can be done for other people and for the future.

The presence of significant money should lead a person to explore issues beyond their individual self. An heir may want to consider how his wealth can impact his heirs and community. An individual cannot possess a great deal of money and not listen to the needs that lie around him. A person who has acquired guilt about being wealthy can build a sense of self by defining a positive life mission beyond individual comfort, about what to do with his wealth. By having this broader purpose, wealthy individuals set themselves to live a life where they have a positive role in using their wealth for broader purposes.

People who view their wealth as primarily for their own use, who do not want or have a legacy plan, and who are not concerned about the future use of their money distributions are living in denial of the world beyond their personal sphere. They live in a bubble. Wealth is seen as a private resource for personal use and enjoyment. They feel no further responsibility. Wealth does not, and should not, make someone a saint; spending is not a sin. However, the presence of significant money should lead people to consider issues beyond themselves, how it can impact on heirs and on the community.

If one’s life is no longer defined by having to make money, then the question will arise, what will one do to define who one is and what one stands for? Defining one’s legacy and the meaning of one’s wealth is a key step toward a full definition as a person of wealth. When heirs finds a life purpose that involves doing something for the community or the future, and lives in line with their values, they feel enabled to derive personal satisfaction from moderate use of their wealth.

Some wealth creators see their legacy as primarily to society, and foresee a more limited role for their children. Financier Warren Buffett famously has made it clear that he will leave his children enough to be comfortable, but that most of his wealth will go to a foundation. A common pattern is for the next generation to inherit some money, but more importantly to learn that their self-worth and life’s work lies in philanthropy. The Rockefeller family, after the founding fortune accumulated by John D Rockefeller, has carefully cultivated careers of philanthropy and social activism in several generations of heirs. Newer families such as the US Gates, Moore, Hewlett and Packard families have defined their legacies along similar pathways. Families of more modest means set up a family foundation, and achieve purpose and meaning in their lives by using their time and energy in making a difference in society. This outward and expansive life focus can help heirs overcome conflict or ambivalence they may experience about coming into money.

Stewardship refers to the degree to which one’s financial decision-making is based upon a family mission and set of values. Wealth is viewed as a multi-dimensional resource that is preserved and shared for the benefit of both current and future generations. While it is his or hers, a healthy person will want to look around, and consider what can be done for other people, and for the future.

Strength in this factor is reflected in people who have a ‘future sense’ in their money decisions, who desire to leave a meaningful legacy and who are thoughtful about the impact of distributions to future generations. They plan for how wealth can make a difference both in their own lives and in the larger community. Success in this element indicates a person with a plan for the utilisation of their wealth, who wants to leave a values-based legacy for future generations.

Vulnerability in this factor is seen in people who view their wealth as primarily for their own use, who do not want or do not have a legacy plan, and who are not very concerned about the future use of their money distributions. They see their wealth as only a private resource for personal use and enjoyment.

Challenge IV: Self-esteem/personal security – how can I feel good about myself and the good fortune I have received?

Money by itself does not make people feel personally secure or good about themselves. In fact, its presence may lead a client to feel an increase of anxiety. The element of self- esteem refers to how much an heir’s sense of personal value, self-respect and personal identity is founded on wealth. How comfortable and secure do they feel in their own skin, which includes their inheritance and the role that it defines for their lives? Unless clients have a strong sense of personal identity, the fear of losing money may lead them to feel continually vulnerable. Strength in this element means an individual has a solid and coherent foundation of self-esteem and personal security that is not primarily reliant on net worth. They feel in charge of their lives, enjoying the advantages of money without feeling that it makes them a better or more worthwhile person, or an evil one.

Positive self-esteem comprises a multitude of factors, including the capacity to love and be loved, to be recognised and connected to family and community, and to be successful and productive. Certainly achieving financial independence, a symbol of success in our society, can enhance self-esteem. But what if one did not earn the money, but received it from one’s parents? The impact of wealth on self-esteem can be even more problematic for inheritors than it is for earned wealth-holders. Inheritors may feel unworthy of their gifts and may suffer from doubt and guilt regarding their wealth.

Inheritors may suffer far more from shame, doubt and guilt than their earned-wealth counterparts. The luck of their bloodline does not automatically make for an increase in self-esteem or self-worth. The struggle to develop a sense of self-esteem for wealthy heirs is recounted in scores of moralistic life stories. Heirs can experience a difficult and multi- year struggle that lasts well into adulthood, as they seek to find a sense of purpose and vitality in their lives, and to overcome feelings of guilt, worthlessness and depression.

Achieving self-esteem is a task beyond defining a life purpose, in that the person has to take active steps to live within their values. This often means going on a life journey where they discover their own capabilities by living on their own, with no or minimal support, earning a living and doing something that is remunerative and useful. Sometimes this does not happen until the person has some sort of personal crisis, caused by self-destructive or self-defeating behaviour, which their money or their connections cannot solve for them. By resolving a life crisis on their own, they develop the strength of character that is the foundation for positive self-esteem. The family often inadvertently uses inheritance to keep their children from taking this life journey and developing themselves.

Challenge V: Trust in relationships – how can I trust and build lasting relationships with others who may not have the advantages that I have?

A person’s willingness to trust others in a personal relationship is affected by wealth. The presence of money can make it hard to trust others even as it attracts them. A wealthy person must learn how to select and trust special other people, or he will always feel that money undermines the nature of relationships. People can always wonder if someone likes them for their money, or for who they are. A mature person finds ways to find the personal friends who are genuine. When a person finds their personal comfort zone in handling the impact of money on personal relationships, he or she is able to trust other people and deal with money issues without poisoning or undermining his relationships. Vulnerability arises when intimacy, trust and stability are over-determined or undermined by money matters. Conflicts over money can contaminate relationships with loved ones, causing money- driven hardships and heartaches.

Vulnerability is seen in heirs who develop exaggerated fears about being taken advantage of by others. They are asked for money or loans and then feel the awkwardness of not being repaid. Some people develop irrational fears of contact with others of differing economic classes. Fears about how others may respond to money issues can result in secrecy or at its extreme, the ‘Howard Hughes syndrome’ of privacy with a paranoid edge.

Money must be managed in relationships. It is hard to overcome starting from a sense of distrust and vulnerability. But uncritical acceptance of others can also lead to being taken advantage of. Clients must accept that money will get in the way of relationships, and use personal skills to break through to resolve these issues in their most important relationships

Strength in this capacity indicates a person who has found his or her personal comfort zone in handling the impact of money on personal relationships. A person must learn to say ‘no’ to others, and to not feel guilty at having more than others. He is able to trust other people and feels both confident and trusting in handling the impact of money on relationships.

The value of self in a relationship is not determined by the size of one’s bank account. Strength on this factor does not mean that the interaction of money and relationships is
without difficulties, but it indicates that challenges can be handled without significant pressure on self-esteem or on the stability and involvement with important others. For example, in many close relationships, we see people grappling with differences between savers and spenders. Strength in this factor indicates the capacity to communicate in constructive ways in resolving or reconciling differences.

Help is available: counselling and consultation

There are several avenues that inheritors pursue to progress in their own development. First, and probably most easily available, there are workshops, groups and support networks that are sponsored by investment banks, financial service groups and philanthropy networks where people can combine discovering what to do to preserve their money and what to do with it. They offer several things. First, they offer the support of people who are struggling with similar issues, together with safe and confidential environment to explore issues. They also offer clear outlets where heirs can learn about issues from money management to philanthropy without feeling burdened by the pain and difficult choices that are put upon them by those in need.

Secondly, various types of personal and family counselling and coaching can help one discover a basis for making choices, develop understanding of one’s mixed feelings and chart a course for the future. Family members have a chance to stop the action of daily life, truly take stock of where they are today and create values-based lifestyle action plans.

A third option is to meet as a family. Increasingly, families get together to explore the issues of wealth in their lives, and explore the choices facing their children and heirs. The family can gather informally, at the family home or at a meal, or they can have a more formal gathering, where they talk about specific approaches to money, whether investing, spending or giving. Meeting as a family, to discuss values, how money will be shared and used, and what is important to each member, is a key activity for coming to terms with wealth.

Using the “Wealth Identity and Preferences Inventory” (available online at no cost) can help clients assess the level of difficulty they have in each of these areas, and help them set personal priorities for their own development. By looking at the key areas of vulnerability identified in the inventory, a wealth heir can identify which of these challenges is a starting point for their journey to self-development.

I have presented the most common challenges faced by young heirs as they grow up to be ready, willing and able to receive and use an inheritance in a personally and socially useful manner. As an adviser, one should be aware of these challenges, and alert to helping one’s clients to face them and to take steps to support their own personal development.

The model and concepts are derived from work in collaboration with Steve Goldbart and Joan DiFuria of Money Meaning and Choices Institute. The “Money Identity and Preferences Inventory” self-assessment tool that can be used to explore these five challenges is available without cost at our websites:, and A guide to holding family meetings about wealth is available on the web site,, and many other resources are available on both web sites.

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