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More-than-money wealth planning

Monroe M. Diefendorf Jr., CLU, CIMA

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Consider a holistic, multigenerational approach to working with clients.

Imagine you are awakened by your 5-year-old daughter, who tells you she smells smoke. You gather your family of four and congregate by the designated tree in front of the house. As you look back at the house, you see no flames, so you return to gather a few items. As you enter the center hallway, the smoke is getting thicker. You drop to the floor and begin crawling down the hall. Your mind is racing as you realize there isn’t enough time to gather all the things you would like.

There is a fireproof box in the bedroom closet with $30,000 in cash. In the room off the kitchen is your laptop, with all your critical projects that you have not backed up. And in the hall closet is a box of family heirlooms you just collected from your mother’s house after she died. You make a snap decision to get just one item. You grab it and, as you exit the house, you turn around and see the house burst into flames.

Did you go for the money? Did you go for the thing that makes the money? Did you go for what’s “more than money”?

From my experience, the majority of people go for the family heirlooms. It’s what the majority of people feel is most important — their family. And growing a healthy family is high on the list of priorities. But how does a family grow strong roots for their family tree?

Dimensions of wealth

Let’s examine what typically keeps a family together:

  • The parents (but they pass away)
  • The possessions (but they dilute and dissipate)
  • The purpose (that transcends and binds for generations)

With this as the backdrop, I began to refocus my practice on the family and the three dimensions of wealth. I included not just financial (what you have) wealth, but personal (who you are) and social (how to make a difference) wealth.

More money was not the answer to people’s problems. In fact, it was often the cause of them. The more money, the more difficult it became to build a better family. This is due to what Malcolm Gladwell refers to in his book “David and Goliath” as “living in an inverted U-shaped world.”

As the assets grow, there is a diminishing benefit to the heirs and ultimately a detrimental impact on heirs, unless we can address the family’s total wealth — their values and their valuables.

Unfortunately, too many families do not realize their money is not the answer until it’s too late. However, if an advisor can introduce both tangible and intangible wealth into the early family planning, the results may look quite different. To do this, it becomes imperative that advisors think multigenerationally in our delivery of services.

Our research revealed that preparing heirs for their total wealth required four areas of emphasis: values, legacy, gratitude and governance. Without these being part of the multigenerational conversation, it was business as usual, which wasn’t scratching where clients itched. It is only when we address clients’ total wealth that we can guide them into a more meaningful and lasting legacy.

Presenting a multigenerational plan to prospects

This is a presentation I use with prospects that can be done on a paper napkin at lunch:

  1. Mr. Prospect, would you agree your wealth is more than your money?
  2. What dimensions of your wealth — financial (what you have), personal (who you are) and social (how to make a difference) — would you like to leave as a legacy to your family?
  3. If you had to leave out one dimension, what would it be? The answer I get most is “financial” because if my kids have the other two, they can make money on their own.
  4. In all of the dealings with your advisors, where have you spent most of your time?
  5. So what you are telling me is that you are spending all of your time addressing the thing that is least important to you. Isn’t it time you find a new kind of advisor who can address your total wealth, including your more-than-money wealth?

Monroe Diefendorf is a 41-year MDRT member from Locust Valley, New York.

Contact: Monroe Diefendorf roey@3dwealthadvisory.com

 

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