Count on it: in three generations your rich client will be poor

October 6, 2009

It turns out that advisers to ultra-rich aren’t always so flush themselves. So, what happens, if, say, you spend a day on your client’s fancy yacht, then go back to your own tiny dinghy?

It’s simpler, more elegant . . . or just smaller.

“It’s an awkward position you’re in when you’re dealing with high net worth individuals and families because even if you have a pretty nice lifestyle at home you go on a trip and visit three or four clients and you come home at the end of the day and say, ‘Wow, how do I suffer through this five bedroom house and four bathrooms, and woe is me,’” BNY Mellon Wealth Management Managing Director of Family Wealth Services Thomas Rogerson told the Reuters Global Wealth Management Summit in Boston.

“I think that advisors that work with high net worth families very often have to struggle with that issue,” he said.

Rogerson is a funny case. He, himself, is heir to a fortune. His great grandfather was president of Boston Safe Deposit and Trust, a Massachusetts state-chartered bank taken over by Mellon, and started the Boston Foundation and Rogerson Communities philanthropic organizations. But, the money is essentially gone.

“It’s gone, I’m sorry to say, or I wouldn’t be here. I’d be a client, I wouldn’t be the employee,” he quipped.

Trying to help his clients avoid a similar fate, he has all sorts of advice about improving family communication and focusing on wealth in terms of human, intellectual, and social capital before financial capital.

But, then again, Rogerson’s family’s case in point, there’s a lot of folk wisdom saying that the wealthy won’t always be the wealthy. Somewhere between 75 and 80 percent of wealth was created by the people who hold it, and it rarely lasts more than two or three generations, Rogerson said.

In the U.S., the phrase is ‘shirtsleeves to shirtsleeves in three generations;’ in India, it’s ‘peasant shoes to peasant shoes;’ China has ‘rice paddy to rice paddy,’ he said.

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