To help families avoid losing their wealth, advisors must understand their clients and explain to them the developmental nature of wealth, the speakers said. In exploring this concept with clients, Boudewyn said he and Armstrong use an article that appeared in the March 2009 issue of Private Wealth magazine, entitled "Immigration to the Land of Wealth."
"That's a wonderful article to give to clients and we've gotten some very good feedback on it," said Boudewyn said. "It helps them to understand how they fit in this whole experience. It's really an issue of two cultures clashing. It's no different than the experience of an immigrant family with kids who are first generation Americans."
About 75% to 85% of high-net-worth clients are "new" to wealth, Boudweyn said. They either personally created the wealth, or acquired it by marriage. The major challenges for this group are wealth stewardship and the preparation of heirs.
For clients who are not new to wealth, that is, those who have inherited wealth and are in the second and third generations, Boudewyn said the challenges are different. They have the experience of wealth stability and should know by now how to shepherd wealth and prepare heirs. Their most significant challenges are managing risk and finding purpose and meaning in life.
-Leila B. Boulton