By Eric S. Wilson
We ended last month’s column with an answer to the question we first posed two issues ago: What is Wealth For? We cited an answer from co-authors Lowenhaupt and Trone in their book, Freedom from Wealth: It is for freedom and getting on with life. Now this is an answer, not the answer. Your answer may be different. Likewise, the challenges you face in constructing your answer will almost certainly be different as well. Think about your specific situation while considering the following scenario.
A couple raised in modest surroundings by hard-working parents follows in their parent’s footsteps and become hard-working and modest in their own spending habits. Over a career spanning 40 years, saving and investing the difference in what they spent to what they made, they are now planning to retire with a sizeable asset base.
Growing up, they knew no one who had the level of assets they now have. This level of “wealth” is foreign to them, as it is to most first generation wealth owners. In fact, they don’t even use the term “wealth,” as they don’t consider themselves to be wealthy. But because they didn’t grow up having substantially more than they needed, or spending on “extras,” they now find themselves feeling uncomfortable and unsure about dealing with their excess.
Their desired lifestyle is only a small fraction of what they could be drawing annually against their accumulated nest egg. They could definitely spend more, but it’s just not in their DNA to do so. Now, here is the question: is this couple’s wealth truly providing them freedom and allowing them to get on with their life or not?
This scenario is real, as are the acute emotions associated with it. In fact, we are in the process of walking through this very thought process with three different couples as I write this. The American Dream, now a reality for each of these couples, has brought up questions and mental roadblocks you don’t often read about. How does one change a lifetime of discipline and habits to now enjoy all they have worked to achieve? How does one finally live free from the worry of a checking account balance, or a mortgage payment, or a strict budget? In short, how do you live free because of, and in spite of, your wealth?
The emotional ties between having wealth and the memories of times of scarcity or near bankruptcy are constantly at war with one another. In twenty-two years, I have never encountered a first generation wealth owner who hadn’t, at some point, almost lost it all. And it is that fear, of having nothing again, that dictates their life choices many years later. It is ongoing process to educate and gradually shift this type of client’s thinking into a more free way of framing the possibilities their hard work, risk taking, and luck now afford their family going forward.
In truth, it is a process that takes years to fully develop and overcome for each of them. One of the most important steps in their journey comes when they finally realize and appreciate that neither the charitable recipients nor even their heirs are likely to treat their life’s work with the same level of appreciation that they have. In short, once they understand they can’t control their wealth from the grave, they tend to begin to enjoy it more while living. That’s a tough statement and a tough emotional road to go down, but it is true nonetheless.
The American Dream is a reality for all of our clients, but few of them were able to embrace the fullness of that dream early on. Perhaps this article will move you further down the road of embracing your own dream.
Eric S. Wilson is a Wealth Advisor with the Wealth Management division of Morgan Stanley at 5444 Riverside Drive in Macon, GA. The views expressed herein are those of the author and do not necessarily reflect the views of Morgan Stanley Wealth Management or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
The case study presented is for illustrative purposes only. Past performance is no guarantee of future results. These strategies do not guarantee a profit or protect against loss and may not be suitable for all investors.
This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this material may not be suitable for all investors. Morgan Stanley Wealth Management recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
Morgan Stanley and its Financial Advisors do not provide tax or legal advice. Individuals should seek advice based on their particular circumstances from an independent tax advisor.
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Eric S. Wilson is a Senior Vice President, Family Wealth Director, and Founder of the Wilson Wealth Management Group at Morgan Stanley and for the past 20 years he has served the varied needs of individuals and families whose wealth has the potential to change the essential nature of their descendants’ lives. Mr. Wilson can be reached with questions by email at firstname.lastname@example.org, by phone at 877.442.5445, or via his website at www.morganstanleyfa.com/wilsonwealthmanagementgroup.