Financial Times, 15/16 July 2000
What the media says
July 15/July 16 2000
The number of seriously rich people rose by 18 per cent worldwide last year to 7m.
Business success, inheritance and the National Lottery are creating multi-millionaires at an astonishing rate.
But should we feel envious or sorry for the newly rich? Psychologists talk about a new disease that is sweeping modern Britain: affluenza.
It is a disease that many of us would like to catch, and many of us do contract it in a mild form.
Those whose parents owned property in the south-east may well have inherited the financial equivalent of a head cold. Employees who, a few years ago, signed up for successful share option schemes could now be reaching for a handkerchief.
But this is not true affluenza. Those who catch it suddenly, whether through inheritance, selling a business or winning the lottery, face problems that are not to be sneezed at.
Jessie O'Neill, an American psychologist, lists a catalogue of nasty symptoms: "shame, guilt, anger, fear, rampant materialism and all manner of addictive, compulsive behaviour". Worse still, affluenza seems to be contagious within families.
Says O'Neill: "The psychological dysfunctions of affluenza are passed from parent to child."
Ronit Lami is a psychologist working with Allenbridge, a firm of independent financial advisors,
to develop psychological services to help wealthy clients overcome the difficulties of having a great deal of money.
She points to "a painful inability to identify real needs and longings, not to mention doing meaningful work or occupation" as problems.
"Others find it difficult to establish authentic and trusting friendships, whereas some simply cannot handle their inheritance."
But she adds: "You don't need money to suffer from many of these problems.
People have problems regardless of whether they have a lot of money - these are just part of being human. It starts with the individual." The poor little rich kid is not a new phenomenon. What is new is the number of seriously rich the range of services designed to help wealthy youngsters come to terms with their good fortune.
Ian Partridge runs Loedstar, a Geneva-based consultancy that provides training programmes for
young people to help them get to grips with their new-found wealth and to manage their money.
He says: "The wealthy individual has to get to the level of being comfortably involved."
That means understanding key investment concepts: the type of advisors required and how they work and charge for their services. But it also means stepping back from the nitty-gritty of wealth management and being able to see a much bigger picture.
"If you want to keep your money in your generations, it needs planning and strategy," he says. It is this element of planning that is often lacking, particularly when people come into money suddenly or unexpectedly. Many of us live in a relatively haphazard way; the salary cheque drops in, we pay the
mortgage, the pension and the life insurance and go on holiday with the remainder. The wealthy can act in this manner too; but to use their money efficiently involves rather more planning than most of us have to contend with. Clear goals are essential.
Sudden wealth can take its toll on relationships with family and friends. "Love and money are so often confused," says Neil Crawford, principal consultant at the Tavistock Consultation services.The poor little rich kid is nothing new. What is new is the range of services designed to help wealthy youngsters come to terms with their good fortune tock Consultation Service, a dedicated unit of the Tavistock Clinic that studies the dynamics of business success."Coming into money will completely change the relationship between you and your spouse, you and your children, you and your friends, and you and your relatives. It will fundamentally test the basis of the relationship."
Of course, money will not solve any existing problems; conversely, if the relationship is sound, it will survive the change. But it will need care and sensitivity.
Some people will worry about being perceived as gold-diggers and back away, leaving you wondering why they never phone and whether they resent your sudden wealth. Others will react in the opposite way.
Crawford suggests that anyone coming into serious money should seek professional assistance to help everyone through the change. "You may need someone who has a good understanding of the unconscious factors in human relationships someone who understands the psychological impact of coming into a lot of money."
Children are especially vulnerable. Parents who earned their money through hard work and graft may have little idea how to help their offspring grow up with the notion that there is no need to work again.
Bill Gates, founder of Microsoft, has famously said he will only pass a fraction of his wealth to his children.Though a fraction of an amount as large as that is still an awful lot of money, it may be to late to help. You can only hope and pray you brought them up correctly," says Danille Leich of PriceWaterhouseCooper, one of the advisors used by Camelot, the company that runs the National Lottery.
But there are steps you can take to protect your children from the consequences of their own actions - although inherently everyone warns against too much protection.
Setting up a trust that prevents your offspring from touching their capital may create as many problems as it solves. It could set up an unhealthy dynamic between parent and child: "You don't respect me enough to give me control over my money."
Parents in this situation should ask themselves whether they are protecting children or controlling them.
So can you be wealthy and happy? The answer is a cautious, yes - provided you put as much effort into managing your money as you as you did into building your career or wooing your spouse. Just don't expect it to happen automatically.
Affluenza: in sickness and in wealth
Clare Gascoigne finds that coming into money can just be the start of your problems - so much so the problem has been given a name
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