From Nathan's address to the 2010 Institute for Private Investors Fall Forum,  San Francisco, CA

In my experience of working with high-net-worth families, there is a significant imbalance in the amount of time and energy they devote to the transaction of wealth versus the interaction of wealth. The byproduct: future generations that lack the proper training to deal with the numerous responsibilities and opportunities that come with inherited wealth. This significant oversight is a leading cause of wealth evaporation across the generations.



Roughly 80 percent of high net worth individuals leave the majority of their wealth to their children.  Across three generations, the evaporation of inherited wealth is nearly 90 percent. With so much energy devoted to issues of transaction (e.g. tax minimization), should we be surprised at the outcome?

What Can Families Do?

North American teens spend $100 billion a year. There are numerous opportunities to engage and educate the next generation about essential financial issues, but it requires much greater emphasis on issues of interaction.

The following ideas will help the next generation develop confidence and competence in the choices they make with their money.

1.    Identify Your Values

In my 20 plus years of interacting with families, I have found a common denominator among those who have excellent money habits: they are intentional about linking their money choices to their values. They do this by first articulating their values and then analyzing the link between those values and how they share, save, and spend their money.

2.    Learn to Earn

Learning to earn might be one of the most important life skills a young person can develop before leaving home. The skills gained are significant, ranging from time management to developing interpersonal skills to discovering, firsthand, the value of a dollar. Teens that work in high school and college will earn, on average, salaries 16 percent higher than teens that don’t work.

3.    Money Mistakes Are Okay

Money mistakes are part of the learning process – we all make them. But what matters most is what you do after the mistake—how you adjust your behavior. With credit cards and all other types of currency, it’s essential to monitor your money habits and your mistakes.


4.    Open the Lines of Communication

It’s time to do away with magical thinking about money—that is, the notion that money issues will somehow magically resolve themselves—and take control of your family money conversations. Learning how to communicate about money and putting those words into a practical, values-oriented plan of action is a critically important skill. And who better for learning that skill with than your own family?

5.    Create a Plan to Engage, Educate, and Equip the Next Generation

Hope, without a plan, is denial. You can hope that these issues will simply go away, but it rarely happens. The results are far better when families create a plan to educate and equip future generations while they are also discerning the numerous issues of money as transaction. When you prioritize issues of interaction, you will significantly increase your odds for a favorable outcome.

My latest book, Money Sanity Solutions: Linking Money and Meaning, is designed to bring families together to help them counter-balance the hyper-consumer culture and equip the next generation for a lifetime of financial success. By leveraging everyday experiences families can start thinking, talking, and doing money in ways that honor their values.