By Ryan P. Dolan
“A society grows great when old men plant trees in whose shade they know they will never sit.”
Greek proverb
“Don’t judge each day by the harvest you reap but by the seeds that you plant.”
Robert Louis Stevensen
A central goal of my work with clients is to get them focused on identifying their core first principles, the motivating values and philosophy that guide their view of a life well lived, and then work to align their money to that mindset. This approach demands clients step out of the busyness and pressure of daily life, and work to articulate their greatest financial hopes and fears. Like everything of value in planning, it demands shedding a myopic focus on the short-term and superficial and embracing self-knowledge and a long-term mindset.
This process tends to unearth a more magnanimous and generational view in clients. I encourage them, no matter what their age, to willingly embrace the role as a family patriarch or matriarch. To me, I define a patriarch or matriarch as a wise, benevolent, family sage that embodies long-term vision, stoicism, maturity, character, perseverance and self-control, to the benefit of everyone around him. To anyone who has had one of these pivotal figures in their life, they know what a profound impact these people can have. Quite simply, they can alter the trajectory of lives.
In observing people and clients for many years, my experience has been that those who embrace this mentality with their money, more interested in helping others than self-gratification, almost invariably tend to be the happiest and most content with their financial life. Now I can hear the cynics, “Well it’s easy to be anxiety-free when you have enough money to give it away freely,” but I couldn’t disagree more. In my experience, many of these honorable people embraced his mentality well before they had accumulated any material wealth.
How can someone start thinking and acting like a patriarch/matriarch today? I believe it begins with a commitment to engaging in financial education and communication with their families. It starts with your children. It is never too early to imbue them with your financial values and work to incentivize good financial habits. This can range from crafting an allowance that rewards children for doing chores to discussing business and the stock market around the dinner table, to building an appreciation for delayed gratification, the value of thrift, hard work, saving and the amazing nature of compounding. There is a high degree of financial illiteracy in our society, across the economic spectrum. Matriarchs and patriarchs ensure this doesn’t occur in their family.
Financial communication and candor should also extends to your parents. It means having honest and candid conversations about their estate plans or the degree to which you may need to support them financially in their old age. I realize these are unpleasant and uncomfortable conversations for many families, but you cannot competently plan your own financial future, or for future generations, without an understanding of the older generations’ financial situation. Everyone benefits, and it can proactively reduce the chances of hurt feelings, surprises and potentially bad outcomes down the line.
Many people start to think about giving generationally late in life. Typically a few years into retirement, affluent people begin to concretely realize they will not outlive their assets, but have them to pass on. We ask our younger clients to, given enough resources, visualize themselves as that retiree and think about how they would like to utilize their surplus wealth to have the most important impact on the people and causes that mean the most to them. Let’s say they identify a desire to potentially provide for the college education of grandchildren?
Some simple math. Let’s take the aforementioned affluent retiree, 75, who has come to the realization that he will have excess assets. He has one grandchild, five, and would like to pay for his college education. Let’s say today’s all-in private college cost is $250,000, with the cost increasing to nearly $600,000 by the time the child attends. To fund this goal, with reasonable investment return assumptions, the grandfather would need to contribute roughly $22,000 per year for the next 15 years. Alternatively, let’s say this grandfather, at 45, embraced his patriarchal role and started thinking about generational planning. By starting 30 years earlier, he would need to contribute only $900 per year to achieve the same goal. By having this foresight, investment returns are allowed to play a much bigger role in the funding than for the 75 year old.
Most of our clients, despite their large and pressing financial needs and goals, could find a way to fund this goal, and others like them, provided they had the vision and the mindset to idenfity the desire and start early enough. Importantly, when clients start thinking in these terms, and understand the generational impact they could have on their families, it often motivates better near-term decision making. They feel, for example, more energized to exert discipline in controlling excessive spending on trivial things today, understanding that it could come at the expense of providing a monumental gift to their kids and grandkids decades in the future. They increasingly see their income and assets as not solely dedicated to their own security and gratification, but rather as part of a broader mosaic of influence they could exert on future generations of their family, one that would live on well after they are gone, in the memories and lives of their loved ones.
Begin today to take the steps to embrace your inner patriarch/matriarch.