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What is a "Wealth Coach?"

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By Amy Zehnder

As a strategic wealth coach (our term for my role at Ascent) I am often asked, “What does that mean?” I pause, raise my eyebrows, smile, and reply, “I’m a money coach, I help people deal with the emotional side of money.” This comment alone does not explain what a “wealth coach” is or what one does, so I typically carry on by providing a story or two that might help clarify what a wealth coach looks like in action. My favorite introductory story goes like this:

     
      One of my clients, a grandmother, wanted to create an educational trust and fund it with $10 million to be used by future generations, but the initial draft didn’t provide much direction regarding “how” it could be used. So, I said to her, “I’m one of your great-great-great-grandkids who never met you. Can I use the trust to attend private school K-12, then an Ivy League college, go on to get three masters and two doctorates, all living off your educational trust?” “NO!” came her reply. I spent the next four hours helping her define, specifically, how the educational trust can be used. The future Trustee in the room thanked me profusely.       
     


As a “wealth coach” I consider my role to be one of way-shower, “what if’er” and facilitator of some of the most important conversations and decisions people will make in their lives. Recently, I was able to reflect more specifically on my role when I was asked to do an interview on “wealth psychology” — a term often associated with wealth coaching. While reflecting on the best stories to share during that interview, I realized that it was time to share them with a larger audience. Therefore, what follows are the questions asked of me and my responses, including stories that I hope will demystify “wealth coaching” and the role of a “wealth coach.”

     
     Wealth coaching is essentially the study of one’s relationship with money and wealth.      
     

 

1. What is wealth coaching?

Wealth coaching is essentially the study of one’s relationship with money and wealth. We all have a relationship with money, and through money messages that we learned at an early age, this relationship guides the majority of behaviors throughout our lives (see recommended readings). Take a moment and contemplate — what is your relationship with money, and what behaviors does it drive in your life today?

Next, add the concept of “wealth is more than money” to the picture. What is meant by this saying? Simply stated, there is more value in your life than just money. When looking at your relationship with money, it is helpful to understand what matters most to you; think about your values – maybe family, freedom, independence, spirituality, integrity, loyalty, honesty and time, for example. Then consider where you are blessed. Are you blessed with love, family, spirituality, knowledge, or relationships? When people are fulfilled in an area that they value, they often consider themselves “rich” because…wealth is more than money.

Another example of wealth being more than money relates to work: Have you ever turned down a better paying job because you gave it some thought and other factors weighed more heavily into your decision? Perhaps you had kids in school, didn’t want to relocate, you liked your current boss or co-worker(s), didn’t want the hassle of changing jobs, were close to retirement, the commute would be longer, etc. At that moment when you decided to turn down the better paying job, you exercised the notion of “wealth is more than money.”

A third example relates to impact. Significant wealth places one in the position of being able to create jobs, finance new entrepreneurs or donate considerably to causes and organizations whose goals align with yours. Some of these investments may generate more wealth, but the joy is rarely in the money; it is in the impact of that money in the betterment of society — however you may define that on small and large scales.

2. What does a wealth coach do?

A wealth coach helps individuals and families in the following areas (to name a few):

1. Family Education: Facilitating family meetings and retreats, offering activities that focus on family legacy, values, communication, family systems, family business concepts (distributions, ownership, stewardship), and NextGen (next generation) education and leadership.

2. Family Business Governance: Helping families create decision-making processes, structures and agreements that provide clarity for family members, owners (stakeholders) and the business entity. Providing guidance on decision- making forums, such as family councils or boards, which provide platforms for voices to be heard, information to be shared and problems to be addressed using a formalized process.

     
     We all have a relationship with money, and through money messages that we learned at an early age, this relationship guides the majority of behaviors throughout our lives.     
     


3. Succession Planning: Helping families create a plan for transitioning key roles in a family business from one person to another.

4. Family Communication: Creating safe spaces for difficult conversations to occur. These types of conversations cover the spectrum from cross-generational expectations about daily life to selling a business and determining how decisions will be made after the sale. The topics of discussion here are endless. While families know that they need to talk about these issues, they don’t know how to without creating upset or conflict, so they tend to avoid them, which only makes matters worse. Having a wealth coach facilitate these conversations allows for regrets, resentments, and resignation to make way for greater trust, understanding and new possibilities for working together in harmonious ways.

Consider the following money related scenarios and what very few people know how to address effectively:

  • Mom and Dad help some family members considerably more than others. The latter group wants this “gift giving” to stop and for the dependent family members to start pulling their weight. Naturally, the kids have been keeping score and now they want everything to be equalized by getting their fair share. Where do they start?
  • A large family business has a strong gravitational pull on the family — everything is centered on the family business, including dinner conversations. Despite the pervasive presence of the family business, the kids are unsure of their roles when it comes to the future of the family business. Can they choose a different career path and pursue their own dreams? What actually gets discussed with the kids? What unspoken expectations remain under the surface?
  • The older generation still owns and controls all of the money yet has been very generous with its kids. In turn, these adult kids (50+ years of age) have become dependent on the family funds for basic living and lifestyle expenses. Suddenly, concerned by some of the next generation’s behaviors, these parents and adult children are wondering how to avoid raising the next generation as entitled, spoiled kids. How do you go about initiating systemic change and address what has been modeled for this next generation?
  • When friends know that someone in their group has more money, there can be an underlying pressure regarding “who” picks-up the tab or pays the bill. What if this peer pressure were happening to your kids while they were in college? How can you influence change in this scenario?
  • A family has amassed considerable wealth, and the parents have decided to join “The Giving Pledge,” through which they give most of their money away to charity. How do they share this information with their kids without causing resentment or harm?
     
     Having a wealth coach facilitate these conversations allows for regrets, resentments, and resignation to make way for greater trust, understanding and new possibilities for working together in harmonious ways.     
     
  • Children of wealth often grow up in a nice house, taking nice vacations (sometimes flying first class or by private jet) and parents buying not simply the kids’ first cars — lots of middle-class families do that too — but luxury cars. The parents are now struggling because the kids have not “launched” on their own. Where is the point of pain? What are the options for helping these kids become completely independent when they have been raised in this lifestyle and are accustomed to its amenities?
  • A family business has no family employment policy. A new brother-in-law starts working for the company in a position he is not qualified for. Then, a blood relative gets turned away because he’s “not qualified” for a similar job. Trouble on the horizon?
  • In an effort not to burden the kids, Mom and Dad have decided to transfer all of the family business’s voting rights to a non-family management committee. The kids are curious about how this works to their benefit over the long haul. Without family representation, how do they ensure the family’s desires are considered?
  • Dad insists that the daughter-in-law-to-be sign a pre-nuptial agreement, while mom takes the stance, “Over my dead body!” How would you handle this conversation?
  • Or, what about the dad who makes one son-in-law sign a pre-nuptial agreement, but not the second son-in-law? The daughter is furious at this display of favoritism. Where do you begin to address these perceptions?

In summary, a wealth coach helps families identify a future desired outcome while working through complex and often emotionally related situations over a period of time.

3. Why is it important for wealthy families to invest these sorts of services?

Clarity of expectations combined with transparent and open communication is key to wealth sustainability. Studies show that 95 percent of all wealth doesn’t make it collectively through the third generation, and the majority of that failure rate mdash; 60 percent — is rooted in poor trust and communication among family members. Another 25 percent of the failure rate comes from inadequately prepared heirs1. For the most part, older generations don’t know how  or don’t want to talk about money, expectations, hopes, dreams and/or concerns with the next generation; and the next generation has learned not to ask, even though it has questions that remain unanswered.

     
     Clarity of expectations combined with transparent and open communication is key to wealth sustainability.     
     

To illustrate my point, below are some closing comments that a family shared following a recent meeting:

     
     Mom: This meeting was energizing! I was dreading this meeting and didn’t know what to expect and how great it would feel to get the questions out there that need to be answered. Now we have a plan for how we’re going to get there.

Daughter #1: We met with our estate planning advisor before we had this meeting. I thought this meeting would “wrap things up.” Now I see how much work there is to do. I’m looking forward to seeing our family employment policy and the additional meetings with the board to understand our larger enterprise.

Daughter #2: Today was non-confrontational; it was discussion-based all day and really enjoyable. I still have questions about a lot of issues raised.

Daughter #3: It’s great to have better communication tools and be more open with the money discussion. Having a facilitator made a big difference.

Son-in-law #1: We now have an idea of how to break the news to our kids and when to talk to our kids about ownership. One of our kids is already asking, “Are we rich?”

Son-in-law #2: The items discussed today will be discussed over and over again. I like the idea of a family meeting after each shareholder meeting, and I appreciate that you included us in-laws at this meeting – it’s a good model for us and will be a good model for our kids and future generations.

Dad: Talking about money and these things that we discussed was easy – easier than I thought. I didn’t know, going into the meeting, if this would be hard or not. I like putting systems and policies in place to address key topics, and there is more to come. We agreed to the following next steps:

- A “state of the company” update to be conducted annually
- Expectations around the use of the dynasty trust will be shared; this will lead to further conversation
- Impact investing as an option for us
- Philanthropy and shared giving as a family
- We’ll work on the question of whether we want to own and manage shared real estate together – the cabin, vacation home, and condo

    
     


These are only a few examples of why it is import for affluent families to use wealth coaching services.

4. Is this service only for wealthy families, or are there benefits for families of other financial means as well?

The services provided by a wealth coach are often focused on open and honest communication, especially about the #1 taboo topic: money. According to T. Rowe Price’s “2017 Parents, Kids & Money Survey,” which surveyed 1,014 parents of 8-to-14-year-olds, “69% of parents have some reluctance to discuss money matters. Additionally, 61% of parents only discuss money with their kids when their kids ask about it.2” So, if this is true, how do kids learn the value of money and more specifically, expectations around money, budgeting and finance? Given how little emphasis educational institutions place on financial literacy and economics, any work in this area benefits families at all socio-economic levels.

One misperception about money talk is that you have to reveal amounts, numbers, your balance sheet or paycheck with the kids. This is not what money talk is all about. Instead, it’s about helping people learn healthy money management skills in the areas of earning, saving, spending and sharing. Examples of money talk include conversations about financial basics, such as how money moves through your household. Keep in mind, these days, kids rarely see money change hands because so much of it is automated and/or online. They don’t even have a clear idea of basic expenses or what things cost. Further discussions include credit cards (including the full cost of an item, if you only make the minimum payment), credit scores and how to build credit, the difference between credit and debt (such as buying a cell phone on credit or taking on debt (getting a loan) to buy a car, and making regular payments), paying a monthly bill, the power of compound interest and basics of investing and budgeting. All families could benefit from having more money conversations, especially when it comes to expectations that are rooted in hidden money messages.

Speaking of hidden money messages and unspoken money conversations, let’s not forget about the oldest generations still living among us in significant numbers, the Silent Generation (born 1925-1942), and the early Baby Boomers (born 1942-1953). By sheer serendipity of when they were born, these two generations were likely to have encountered messages about hard work and not taking money for granted when they were growing up (the Silent Generation really being children of the Great Depression), followed by not having encountered significant money obstacles as they came of age during WWII and the postwar era, when the economy boomed, jobs were plentiful, housing was cheap and accessible, as was education, and they were more likely to stay in one job that resulted in a good pension. They might not have had to engage in challenging money conversations. As a result, these generations can be the most closed off to having money conversations, especially with their spouses and/or their kids, and yet they have some of the greatest needs when it comes to such topics as online finances, retirement, and end-of-life planning. For example, they are at the greatest risk of being taken or swindled by the latest cybercrimes, fraud schemes and/or unethical advisors. Check out a local senior fraud prevention session in your area and watch this age group fill the room. Many are fearful, lacking in tech savvy and needing of further guidance.

In sum, yes, the benefits of learning to talk about money, using open and honest communication skills, can be experienced across all socio-economic levels as well as across all generations.

     
    The services provided by a wealth coach are often focused on open and honest communication, especially about the #1 taboo topic: money.     
     


5. What does a consultation entail? How does the process unfold and what should families expect?

Once a family decides to engage the services of Ascent’s strategic wealth coaches, a baseline is created, either through a survey or interviews, or both. This baseline addresses areas such as family values, communication effectiveness, decision-making channels and understanding the family business. We seek to discover what the family wants and needs to preserve, avoid and achieve. We want to help the family preserve what is working, achieve desired goals and address what’s not working in healthy, productive ways. Sometimes what’s not working can be a simple fix, i.e. sharing information or changing the flow of information. Other times it can be much more challenging, i.e. transitioning decision-making authority from the wealth creator to “anyone else.” For family business governance work, we help families create processes, structure and agreements. Once we have a baseline, we help the family identify their goals and priorities, and then we get to work. Often times this work occurs through a combination of family meetings, retreats, board meetings, and individual coaching. A minimum governance engagement lasts 18 months and can go on for years depending on how committed the family is to doing the work and its sense of urgency.

One family we’re working with is cruising through the governance process at lightning speed because they are committed to doing the work. It is a larger family (35+ people in three generations), so more hands are available to assume responsibility for different tasks. Time is of the essence for this family too, because the elder generation, who still retains the majority of ownership and decision-making power, is showing signs of cognitive decline. In one year this family formed a family council, six committees, and three sub-committees, all focused on different priority areas. The family as well as each sub-group has met multiple times, and the family already has three policies addressing sensitive topics ratified and ready for implementation. The work has not been easy, but the family stayed focused and committed to its future.

     
     Family work is most effective when the families commit time, energy and resources to the process.    
     


Another family that embarked on the same process struggles to find any time to get together, as everything else seems to take priority. And in this case, only four family members are involved.

Family work is most effective when the families commit time, energy and resources to the process. We are your trusted guides but to succeed families must be active participants.

Therefore, what should families expect when they enlist the services of a wealth coach? In short, they can expect that we will work on priority issues as defined by the family, that we will work at their speed, that there will be a plan of action aimed at a future goal, and that when fully committed, all of the family’s hard work will pay off.

6. What are some of the most common issues you find families have when it comes to effectively managing their wealth?

  • Parents don’t know how to discuss money matters with their kids, and kids don’t ask because they don’t want to be perceived as greedy.
  • Assumptions can lead to conflict if not discussed – “Unspoken expectations are pre-determined resentments.”
  • Keeping score: For parents, fair does not necessarily mean equal, but for the next generation, fair does mean equal. Kids of all ages keep score.
  • Wealth often elicits a lot of guilt, but people don’t feel sorry for the rich. That combination can be isolating. Further, money seems to amplify imperfections that exist in one’s self and in family relationships, resulting in a lot of sad and lonely wealthy people out there with estranged family relationships.
  • Contrary to popular belief, money does not solve all problems, and it doesn’t lead to more happiness. There are three things money cannot buy: self-esteem, self-worth and self-confidence.
  • People don’t know what they don’t know. Family members who are out of the loop don’t really know what to ask, and those in the loop think everything is ok and that they don’t need to share information. Parents tell themselves, “My kids get along great and they’re smart, so when we’re gone, they’ll be able to figure it out together and stay together as a family.” This is often not the case. Just because it worked that way in the past doesn’t mean it will work in the future. Also, kids know how to be on their best behavior around their parents, even as adults. The same can be said for family businesses; those close to business know what’s happening, assume that other shareholders have the information they need and/or are okay with how things are going. Those not close to the business don’t know what questions to ask and have a lot of unanswered questions about the future.
  • Above all else, parents want their kids to get along and they know that money can be a destructive force. One wealthy father stated, “The best gift my dad gave me was ‘nothing,’ not even a dollar when he died; I wish I could do the same for my kids, but it’s already too late for that.” Some parents have mentioned that they would give it all away if it would keep their kids close. Parents want the wealth to enhance their kids’ lives, not destroy them. Money should be viewed as an opportunity, not an expectation–a hand up, not a hand out. I often hear parents use Warren Buffet’s quote: “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.”

In conclusion, wealth coaches are adept at helping families improve communication skills, create a vision and mission for the family and its wealth, lean into money related conversations, create formal family business decision- making strategies and view conflicts as opportunities. While money is complex, money conversations are an art.

Individuals and families who engage wealth coaches can benefit enormously across a broad spectrum of topics and issues as they participate in difficult conversations, learn about family systems and devise governance strategies. It is a results-oriented process, striving to achieve short and long-term goals with a focus on the future and balancing financial resources with family harmony.

     
      Recommended Readings:

For a variety of online resources on this topic, search:

  • How to Talk to Your Kids about Money
  • How Childhood Memories Affect Your Money
     
     


1 Williams and Presser, Preparing Heirs Preparing Heirs, Five Steps to a Successful Transition of Family Wealth and Values, 2003.
2 https://www.prnewswire.com/news-releases/t-rowe-price-parents-are-likely-to-pass-down-good-and-bad-financial-habits-to-their-kids-300428414.html


Amy Zehnder is a strategic wealth coach for Ascent Private Capital Management of U.S. Bank in Denver, Colorado. She is a certified executive coach and has a degree in industrial and organizational psychology. Amy often facilitates workshops on the impact of money on family members, family values, communication, decision making and overcoming the taboo of speaking about money.


Investment products and services are:
NOT A DEPOSIT • NOT FDIC INSURED • MAY LOSE VALUE •
NOT BANK GUARANTEED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

U.S. Bank and its representatives do not provide tax or legal advice. Each individual’s tax and financial situation is unique. Individuals should consult their tax and/or legal advisor for advice and information concerning their particular situation.

Wealth Sustainability services are not fiduciary in nature and Ascent serves in a non-fiduciary role when providing these services. Wealth Sustainability services may include strategic wealth coaching services in order to facilitate your self-assessment of wealth sustainability issues. Ascent does not engage in the practice of psychology.

The factual information provided has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness.

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Investment products and services are:
Not a Deposit   •   Not FDIC Insured   •   May Lose Value   •   Not Bank Guaranteed   •   Not Insured by any Federal Government Agency

 
 

Equal Housing Lender Equal Housing Lender. Credit products are offered by U.S. Bank National Association and subject to normal credit approval. Deposit products offered by U.S. Bank National Association. Member FDIC.

U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

Wealth Sustainability services are not fiduciary in nature, and Ascent serves in a non-fiduciary role when providing these services. Wealth Sustainability services may include strategic wealth coaching services in order to facilitate your self-assessment of wealth sustainability issues. Ascent does not engage in the practice of psychology.