Transition: The Immigrant Mentality of New Found Wealth
February 26, 2018 | Blog
Earlier this week I attended a workshop hosted by Blackwood Family Enterprise Services, Geoff Badger with Richardson GMP and Wendi Crowe from Miller Thomson. The speaker was Dr. Jim Grubman a psychologist who specializes in helping families walk through the transition of inheritance and wealth.
The concepts presented during this lecture were around the similarities between the psychology of immigrants to a new country and those of people who have acquired new wealth either through inheritance or through business.
As an individual or a family transitions from one socio-economic strata into another there is a cultural shift that occurs similar to that of an immigrant moving from one culture and status to another. This manifests itself in a few ways:
- Different economic culture means different social norms and expectations. Just like moving from one country to another.
- Adjustment issues related to the transition – how do you pass on the roots of your culture and history while at the same time attempt to assimilate or integrate into the new strata?
- Entrepreneurs and immigrants have higher risk profiles – it takes courage and a sense of self to start a company, just as it does to leave what you know and move to another part of the world for a better life.
- Entrepreneurs and immigrants have strong personalities which is both a blessing and a curse as it is what gives them the tenacity to keep moving forward, but also makes it difficult for others to be connected and communicative
- There is an adjustment time from the start-up phase, to the growth phase to the legacy stage of an entrepreneurs just like there is an adjustment time for new immigrants from landed immigrant, to resident to citizen.
- Emotions around success include guilt. For the new found wealthy it is sometimes manifested in ways that one engages (or disengages) with old friends (pre-wealth) and new friends. For immigrants it is more along the lines of the luck of landing in a new country that has the security that friends and family left behind do not have access to.
The questions that are asked between the Immigrant and the New Wealthy are the same:
- How do I let them know about the roots of our family?
- How do I raise children in a “land” I didn’t grow up in?
- How do I explain my background and preserve the best of that background for the future?
Wealth Transition and the Rising Generation
The Rising Generation of this demographic also has similarities with the second generation of immigrants. These children are:
- Raised in the culture of wealth or the culture of the new country
- They have less life experience when it comes to facing transition and/or hardship
- They have less experience with risk associated with the creation of a business or the transplanting into a new country as a result they have less experience with transition and hardship
- Birth order matters. For older children they may have memories of the pre-wealth or new-immigrant experience whereas younger children may be too far removed from the early lifecycle stage of starting and building a company and when the wealth arrives within the family; or being born in the new country where older siblings might have been born in the old country.
- These kids may be envied but not valued. They “won the birth lottery.”
- May have lack of control over their own wealth as it might be tied up in trusts and other tax shelters. Just like the child of an immigrant where control over wealth might be tied to the need to support family overseas or cultural expectations of accessibility (i.e. gender roles)
Another interesting finding presented by Dr. Grubman is that wealth changes parenting, just like being an immigrant changes parenting. At some point along the family’s wealth lifecycle as they move up into different economic strata, when a child asks for something to be purchased, the parental response shifts from “we can’t…” to “we won’t…” The opposite of entitlement is appreciation or gratitude.
This begs the question – how do you successfully parent a child who has known nothing else other than affluence and comfort when you, yourself are still trying to figure out what it all means? There is something called the Samaritan’s Dilemma whereby an individual, thinking she is doing the right thing to support someone else, is actually removing the opportunity for that person to participate in that process. This can result in creating a dependency cycle or foster resentment.
Guiding Questions to Manage the Transition
So how do you address this? There are three questions to consider:
- What from my background do I chariesh that still applies that we, as a family (or I as an individual) will hold on to?
- What will I let go from that past that no-longer applies?
- What, in these new circumstances, should we take on that can support us in this transition?
As you transition from an active player within the family business or transition into being an active player within the business you can choose how you show up. Larry Rosen and second generation family business owner says that you need to know your “Best Before Date.” This means understanding when it is time to transition out of a business and ensuring there is time to allow for the transition to occur.
In our experience working with families transitioning from one generation to the next the sweet spot for planning and transition implementation is five years. Transitioning a business from one generation to the next is not about passing the baton or the torch, it is about passing the flame so that the organization still has energy from the founder and the founder still has a purpose within the family and the business.