When the next generation thinks of wealth, it is not our parents’ idea of a paid-off, picket fence suburban home with a Cadillac in the driveway. Wealth for my generation has a wider arc: work-life balance, sustainable living, purpose, helping others and the pursuit of happiness – and all of this coming at the beginning of a career instead of at full retirement age. We want our wealth multiplied and we want it now.
I should know; I am the next generation in a family-owned wealth management business. Standing on the shoulders of a successful first generation, I have the fortunate opportunity to focus on aspects of my life that would have been a luxury for my parents. They were singularity dedicated to providing financial stability that previously did not exist. Most next generations in a family business today are the benefactors of the previous generation’s sacrifice. But if you ask my parents whether they want their children to endure their same struggles, you of course will hear a definite “no.” They want their children’s wealth to be multiplied as well.
What do I mean by wealth multiplied? Let me break it down in a simple equation:
(Financial Wealth) X (Psychological + Physical Wealth) = Wealth2
Given the successes of those before us, the objectives for our financial wealth center around growth and preservation. While still a daunting task given the speed at which business models evolve in today’s digital world, I would say it is still a lighter endeavor than creating the wealth from nothing.
Financial wealth with the objective of growth and preservation is achievable with a prudent financial plan consistently executed from a relatively young age, hopefully in your 20s. Through diligent savings and compounding returns over time, financial wealth will be attained.
Today’s low cost online advisors (FutureAdvisor, Wealthfront, Betterment, Fidelity Go – just to name a few) provide proven savings and investment strategies that my parents’ financial advisor provides, but also have the next generation necessary delivery vehicle – a digital interface via an online and mobile experience. If these online advisors really wanted to capture the next generation’s interest, they would enhance their products to include social responsible investments, and I have a feeling you will be seeing that soon. So in today’s marketplace, the financial wealth management part of the equation for the next generation is being adequately served – but that is only half of the equation.
Given the prosperity passed on from those before us, my generation can focus on the psychological and physical wealth components of the equation from the beginning. This is true not only for a successful family business, but for the entire nation’s next generation, as we all have benefitted from the last 30 years of financial and social progress.
In making the distinction between financial wealth and enduring happiness, i.e. psychological and physical wealth, Dale Carnegie said it best – “Success is getting what you want. Happiness is wanting what you get.” Happiness comes from meaningful relationships, gratitude and physical well-being.
The recent progression in the scientific field of positive psychology is shedding light on the fact that happiness is not an end destination, but a habit that must be learned and cultivated. One leader in this field, The Greater Good Center at UC Berkeley, has developed a free online course entitled “The Science of Happiness” that provides scientifically proven methods to cultivating happiness. This is just the beginning, because this component of the wealth equation for the next generation is just as important as the first. In the eyes of my generation, financial wealth without psychological and physical wealth is not a lot of wealth. Vice versa, psychological and physical wealth without financial wealth is also a struggle, hence the multiplicative nature of the equation.
I believe there is an opportunity in today’s wealth management industry to incorporate for their clients not only a financial plan, but a life plan, particularly for those in the next generation who will inherit tremendous financial wealth yet are also looking to multiply their wealth across all facets of their lives. Many in the next generation aspire to take their family’s business to the next level … for my family’s wealth management business, I believe this idea of Wealth2 will do just that.
Javaid Ansari is executive vice president of Compak Asset Management, a California-based, family-owned wealth management firm. He may be reached at firstname.lastname@example.org.