A notable shift is underway in family wealth advising. The field is moving from focusing exclusively on the management of financial assets toward a more holistic approach to family financial advising. Authored by three distinguished experts, “Wealth 3.0: The Future of Family Wealth Advising” presents a compelling vision for the next iteration of family wealth advising.
The book summarizes the field’s 50-year history and envisions its promising future. Through insightful critiques of past family wealth advising practices, the authors outline a roadmap for a family wealth advising profession that provides a holistic, client-centered approach, ultimately offering more positive advisory practices that support more effective, fulfilling wealth management.
“Wealth 3.0” primarily targets practitioners in the wealth management field, but it offers substantial value for wealth management clients as well. Evolving professional practices and clients who provide substantive and constructive feedback will propel change within the wealth management industry.
'Wealth 3.0' Authors
James Grubman, Dennis Jaffe, and Kristin Keffeler are distinguished thought leaders in family wealth advising collectively spearheading the paradigm shift known as “Wealth 3.0.”
James Grubman, Ph.D., is an internationally recognized consultant to wealthy families and family businesses who authored “Strangers in Paradise: How Families Adapt to Wealth Across Generations” and co-authored “Cross Cultures: How Global Families Negotiate Change Across Generations” with Jaffe. Grubman is a leader in the nonprofit think tank The UHNW Institute and a fellow of the Family Firm Institute and the Purposeful Planning Institute. His expertise is frequently featured in media, journal publications, and speaking engagements. |
Dennis Jaffe, Ph.D., is a distinguished organizational consultant and psychologist specializing in multigenerational family governance and ownership practices. He has authored numerous publications and developed innovative tools to aid global families in intergenerational wealth transfer and business succession. Jaffe’s work focuses on fostering responsible leadership and addressing the complexities of family dynamics within affluent families. Co-author of “Cross Cultures,” he is a trusted guide in the field of family wealth management. |
Kristin Keffeler, MSM, MAPP, is a consultant and thought leader at the forefront of Wealth 3.0. Keffeler works with affluent and enterprising families, focusing on human motivation, family dynamics, and intergenerational collaboration. Founder of the consulting firm illumination360 and chief learning officer for the Johnson Financial Group, she emphasizes a strengths-based approach. Keffeler is the author of “The Myth of the Silver Spoon: Navigating Family Wealth and Creating an Impactful Life.” |
Family Wealth Advising: A Historical Summary
“Wealth 3.0” charts the evolution of the wealth management industry through two distinct phases:
Wealth 1.0
Prior to 1980, Wealth 1.0 was characterized by a singular patriarch who focused solely on wealth maximization and tax mitigation, with minimal familial involvement beyond the decision-making of the wealth creator.
Wealth 2.0
Post-1980, the industry transitioned into Wealth 2.0, wherein the most notable shift was the inclusion of psychology into financial services in three ways:
- Behavioral Economics: Teaching advisors and wealth management clients about the realities and dangers of certain natural human errors in investing.
- Feelings and Lived Experiences: Addressing wealth creators’ legitimate fear about their wealth’s impact on future generations and acknowledging the mixed emotions of inheritors – including shame, guilt, anxiety, ambivalence, resentment, and so forth. Significant advancements were made in incorporating consideration of the human, intellectual, spiritual, and social capital of the individual and of the family as a collective.
- Advisor-Client Relationships: Enhancing wealth management advisors’ client relationship skills through training in active listening and accommodating clients’ feelings and personal issues.
Skewing Toward Fear and Negativity
The integration of psychology in Wealth 2.0 marked a positive advancement. However, it also became mired in fear, pessimism, and negativity. Wealth creators harbored two main and legitimate fears:
- Their children and grandchildren would lack the skills to grow and maintain wealth.
- Wealth itself would be toxic, extinguishing personal growth, healthy financial skills, and life motivation – leading to family conflict and irresponsible behavior.
These fears laid the groundwork for the flaws of Wealth 2.0:
Oversimplification and False Dichotomies: Complex questions about wealth are often framed using overly simplistic solutions, portraying wealth in either/or, good/bad, and blessing/curse frameworks. This includes reducing honest and meaningful debates over whether to pass on wealth to descendants (and if so, how much) or to give it away philanthropically into simplistic formulas that fail to address the unique needs of individuals and families.
Confirmation Bias: There is a tendency to emphasize negative stories about inheritors and wealth creators, reinforcing stereotypes such as “trust fund babies” and perpetuating myths like “shirtsleeves to shirtsleeves,” which suggests family wealth rarely survives beyond three generations. These biases have created an atmosphere of pessimism in family wealth advising for both advisors and beneficiaries.
The Age of Wealth 3.0
“Wealth 3.0” proposes the professionalization of family wealth advisory with a foundation in practice, education and training, and research. It emphasizes a collaborative mindset among advisors and the integration of positive psychology, which focuses on personal strengths, purpose, empowerment, and individual and family flourishing.
Positive psychology, emerging as a distinct field in 1998, shifted the focus from mental illness and negative behaviors to exploring factors that contribute to human well-being and optimal functioning. This includes concepts like happiness, resilience, and meaningful engagement with life, drawing on the humanistic traditions of figures including Abraham Maslow and Carl Rogers.
In “Wealth 3.0,” positive psychology is used to help families identify and leverage their strengths, fostering an environment where each member can thrive. This approach encourages wealth creators and inheritors to view their wealth as a tool for achieving personal and collective goals, a distinctly more positive frame than viewing wealth as a burden or source of potential conflict.
By focusing on positive outcomes and solutions, “Wealth 3.0” aims to build resilient, cohesive family units capable of sustaining and growing their wealth across generations and making a positive impact through philanthropy. This marks a shift from the fear-based narratives of Wealth 2.0 to a more hopeful and empowering perspective, promoting overall family flourishing and a more balanced approach to wealth management.
Wealthy families are increasingly diverse in terms of ethnicity, race, gender, cultural background, and family structure. This diversity necessitates that family wealth advising includes more diverse advisors to match the clients they serve. Wealth 3.0 also redefines success from mere accumulation of wealth to achieving individual and family goals for their wealth, encompassing broader definitions of financial well-being and legacy.
Organizing the Work of Family Wealth Advising in 3.0
“Wealth 3.0” outlines an interdisciplinary framework for addressing the multifaceted needs of ultra-high-net-worth families. This model encapsulates 10 critical domains:
- Financial and investment management
- Estate planning and legal issues
- Social impact and philanthropy
- Risk management
- Governance and decision-making
- Leadership development and transition planning
- Learning, development, and the rising generation
- Family dynamics
- Health and well-being
Each domain encompasses a wide range of specialized activities that are essential for managing the intricate landscape of family wealth. By integrating these domains, family wealth advising ensures a holistic approach that preserves and enhances financial assets, as well as nurtures family cohesion, prepares future leaders, and aligns wealth with the family’s values and philanthropic goals.
This approach underscores the importance of drawing on diverse expertise to support families through various life stages and challenges, ultimately fostering sustainable, resilient wealth stewardship across generations.
Each domain encompasses a wide range of specialized activities that are essential for managing the intricate landscape of family wealth.
Advisors and wealth management clients alike can start today with a few key action points from “Wealth 3.0”:
- Stop using negative storytelling to frame family and individual wealth. It creates an atmosphere of pessimism and fear for advisors and stakeholders alike.
- Start identifying unique strengths, values, and interests. Use them as the cornerstone of developing an effective advisor-client relationship and overall wealth management approach.
- Share “Wealth 3.0” with your clients and family office advisors as a way to engage in reflection and gauge the advisors’ and beneficiaries’ appetite for change.
Professional Practice of Wealth 3.0
The authors propose that family advisors in Wealth 3.0 should focus on retaining specific aspects of Wealth 1.0 and 2.0, discarding others, and adding or enhancing additional components to create a holistic and relevant approach for today’s beneficiaries.
- What to Keep
- What to Drop
- What to Enhance
- A focus on family well-being and the psychological health of individuals in the family, with the understanding that the advisor’s role is a long-term collaboration
- Emphasis on skills like active listening, client interviewing that elicits a client’s goals and values, and an inclusive approach that gives more family members a seat at the table
- Staying open to clients’ personal and family challenges with empathy
- Listening to clients’ fears and dilemmas
- Negative stereotypes and stories about the wealthy and their supposedly inevitable tragic outcomes
- Allowing clients’ fears and worst-case scenarios to set the agenda and tone of family wealth advising
- Using pejorative terms and repeating tragic stories about wealthy individuals and families that cause advisors to see beneficiaries as helpless victims and deepen beneficiaries’ sense of unworthiness and shame about their financial circumstances
- Client relationship skills that focus on strengths, resilience, and purpose-driven behavior
- Transitioning the family advisor role to that of a facilitator rather than an expert problem solver
- Implementing more rigor and evidence-based techniques drawn from better research, increasing discussion and transparency about competitive practices, and paying more attention to the cost and time elements that beneficiaries are asked to participate in
- Bolstering the "four Es" of the family advising profession: education, experience, examination, and ethics
Professionalizing the Family Advising Profession To achieve excellence, the field of family advising must embrace more structure and rigor to prepare wealth advisory professionals and maintain high quality. This involves four key components: education, experience, examination, and ethics. There are several steps to achieving this:
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Conclusion
“Wealth 3.0” presents a person-centered, collaborative, and professional vision for family wealth management, emphasizing the crucial role of psychology in addressing the complex needs of high-net-worth families. By integrating positive psychology, the book advocates for a strengths-based approach that empowers families to leverage their wealth for personal and collective growth. This paradigm shift moves away from fear-based narratives and simplistic dichotomies, promoting a more balanced and neutral perspective on wealth. The authors highlight the importance of understanding the psychological dynamics within families, fostering resilience, and encouraging meaningful engagement with wealth.
Ultimately, Wealth 3.0 aims to create a more holistic and client-centered advisory practice, supporting families in achieving sustainable and fulfilling wealth management across generations.
Kenden Alfond specializes in addressing the intersection of financial well-being and mental health, bringing over 20 years of experience in coaching and psychotherapy. As a Certified Financial Behavior Specialist® and Integrative Enneagram Practitioner with advanced training in Somatic Experiencing trauma therapy, she offers expertise in family dynamics and well-being for high-net-worth and ultra-high-net-worth individuals, couples, and families. Her approach emphasizes self-awareness, family cohesion, resilience, and purpose-driven actions.
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