But here’s a question: How do you drum a work ethic into those who, strictly speaking, don’t have to work?
Most advisers to wealthy families have a simple answer to this: You make sure that the kids do have to work. You give them chores. You insist on summer jobs. You restrain their spending with allowances. And above all, no matter what, you keep the children’s trusts out of their hands until they’re at least 35, unless they need health insurance, more education, a down payment on a house, or seed money for a decent business idea.
“It’s very simple: Either your parents are comfortable paying for everything in your twenties and letting you coast financially through that period or they are not,” says Holly Peterson, the daughter of Blackstone Group co-founder Pete Peterson, whose estimated net worth is $2.5 billion. She’s worked in television and print journalism since graduating from college and recently published The Manny, a satire of wealthy women on the Upper East Side. “Are your parents buying your apartment and giving you the clothing budget and giving you cash to go to J.G. Melon’s?” she continues. “My father didn’t. I couldn’t not work. When I was at ABC News making $32,000 a year as a researcher, my father was giving me $600 a month, which was the difference between a studio walk-up and a place with a doorman—he didn’t like those townhouses with the double doors that girls were getting attacked in.” To this day, Peterson still reimburses her father if she uses his car service. Recently, when The Four Seasons accidentally charged his account for something she ordered and sent to friends who were dining without her, he faxed her the bill with a note that said WHAT THE HELL????? “But in my twenties—that was when we used to argue a fair amount about money: How much he would supplement, why he decreased the amount when I got a raise,” she says. “I would point out that in the last 30 seconds, he had just earned in interest the amount I was asking for. And he would lean over the table and say, ‘I know you don’t understand this now, but the greatest gift I can give you is your independence.’ And twenty years later, I hate to admit this, but I think he was right.”
She adds that these limits led to some awkward misconceptions about her means. “Certainly, I had a lot more money than most everyone I worked with,” she says, “because I had help on my apartment and the ability to go to his beautiful home in Long Island or Florida on the weekend. But it wasn’t like, ‘Oh, I’ll pick up the check because I have tons of his money in my checking account.’ People always thought I had more money than I did, which always made me feel a bit uncomfortable.”
In theory, setting the standard of financial independence for your children is a marvelous idea, and paving the way, en route, through budgeting, household chores, and summer employment seems eminently sensible. Advisers to the wealthy say that many of their clients’ children even prefer this approach, finding relief in the idea that their radical freedoms have some hard-and-fast limits. But the problem, frequently, isn’t with the children. It’s with their parents.
“My belief is, kids need to have a summer job,” says Ellen Perry, founder of Wealthbridge Partners. “But parents say to me, ‘But summers are our only family time, and we have this place up at the lake!’” She adds that sometimes parents model bad behavior with the finest intentions in mind, like the client who recently called her and crowed, “I’m going to quit working to spend all my time with my kid—isn’t that great?” “And I said, ‘Um, I don’t know if that’s great, because then your kids aren’t going to see you going to work.’ ”
So while chores and summer jobs and rationed trust funds are wonderful ideals, they don’t often work in a universe of Birkin handbags and summers on the correct side of the Montauk Highway. Which is why many advisers to the megawealthy take a more pragmatic, nonjudgmental approach to their clients’ spending habits, often of the variety that would astonish the ordinary hardworking citizen. Recently, I chatted with Steve Barimo, the chief innovation officer of GenSpring Family Offices, which serves 450 families whose collective worth exceeds $14 billion. He mentioned a client whose twentysomething, unemployed child was spending in excess of $1 million per year and never saw the bills. “Our response was, let’s first tell her that that’s going to be her budget for the next year—$1 million,” he said. “Let’s put it in her account, and let’s make her get her own credit card, and let’s make sure she lives within that amount for the next twelve months.”