Connecting clients and services.

First in a two-part series.

Almost a century ago in a world inhabited by our grandparents, the chasm between old money and new money seemed unbridgeable, as wide as the Pacific Ocean. In early 20th Century society, old money was viewed as being so much better than new money.

In reality, however, old money in America wasn't very old. It was simply that the behavior of some individuals who acquired wealth very quickly offended others.

Old-money scion Herbert Pell captured his class's patronizing attitude toward new money in this Depression-era musing. "Property in this country is drifting into the pockets of those who can keep it and out of the hands of those who can merely acquire it," Pell is quoted as saying in Nelson Aldrich Jr.'s Old Money. "It is obvious that the standards of the 'keeping' class will be different from those of the 'getters' and on the whole they will be better for the country at large."

In today's American meritocracy, Pell's condescension toward "those who can merely acquire it" has generally given way to a reluctant admiration, perhaps even envy, for newly minted entrepreneurs. Indeed, the adage "that money's so old there's ruston it," accurately sums up new money's critique of old money today.

While old money rusts away in trusts secluded within large banking institutions, new money provides the fuel for the engine of independent financial advice. In their best-selling The Millionaire Next Door, Thomas Stanley and William Danko claim that 80% of

American millionaires are first-generation wealth. Mark Spangler, a Seattle-based advisor whose clients include many individuals who have retired early from Microsoft, finds their greatest fear is that money will ruin their children. In some quarters today, the image of a spoiled, shiftless trust fund baby lounging around his Palm Beach yacht is as socially unacceptable as the crude, crass, self-made entrepreneur of the 1920s was.

The financial services industry spawned an entire white paper industry researching the consumer demands of these new millionaires next door. Four of the more well-known studies include Mark Hurley's The Future of the Financial Advisory Business, 1999 and 2000, at; Schwab Institutional's Strategies for Building a Successful Wealth Management Firm, 2001, at under the Market Knowledge tools section; Quantum Alliance's The Future of the Independent Financial Advisor, update 2002, at; and Peter Wheeler's The Financial Services Industry's Adoption of the Family Office Model, 2002, at

One trend this research notes is a demand among new-money clients for what were traditionally old-money services. Along with a growing supply of "newly affluent individuals," there is an increased demand for family office services-first-generation wealth seeking one-stop advising. The Schwab study warns, "Investment advisors who don't explore broadening their service often risk being shut out of the game." These services include investment management, tax compliance, financial planning, family business consulting, philanthropy con-sulting, trust services and concierge services (bill paying, household administration, security services).

While the demand for expanding services is indisputable, the ability to provide this plethora under one roof is still in beta testing. The marriage of old-money services to new-money clients may or may not prove to be a match made in heaven. Cautions Richard Wagner, principal of WorthLiving LLC in Denver, Colo.: "Small advisory firms that try to do everything for everybody are going to be increasingly under the gun. On the other hand, giant firms trying to operate on a more personal basis have a built-in problem. So, I think you're going to see people splitting into either more functional or more advisory models. Advisory models won't provide all the services of the functional models."

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