Measuring Up

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Self-Esteem and the Child of Affluence 

Most Americans would suspect that the children of highly affluent families are among the happiest people in the world. Why wouldn’t they be? They live in big houses, travel to beautiful places and attend great schools. They are free to pursue whatever strikes their fancy, with no legitimate concerns about their financial security. Life has to be great, right?

Family preparing food
According to Dr. Madeline Levine, author of “The Price of Privilege,” that was the prevailing view of the American psychiatric community until quite recently. Then they started taking a closer look. They found that the sons and daughters of ultra high net worth families are more likely to abuse drugs, commit suicide and suffer from clinical depression than any other demographic group. By several important measures, the kids who have everything are in worse shape than children who grow up in abject poverty.
Complicating matters, Dr. Levine notes that the children of wealthy families are particularly adept at masking the symptoms of emotional crisis. Her research at Stanford University revealed that actively suicidal children, for example, show no decrease in their GPA. Fully 17% of Ivy League students are self-mutilators, and an equal percentage of college students have been treated for substance abuse. Dr. Levine reports that the wealthy children she sees in her practice are often poised, polite and seemingly self-confident…despite the fact that they cut themselves, abuse drugs and may even be actively contemplating suicide.

What is going on?

 
The Unique Stresses of Growing Up Wealthy
Chester Taylor, a next-generation trainer with the consulting firm Independent Means, has grappled with issues of growing up wealthy as both a child and a parent. He reports that it was a struggle to establish his own identity within an uncommonly successful family. Taylor had difficulties finding friends he could trust and even tells of a cousin so coddled by the family that he was reduced to tearful paralysis when required to change a plane reservation.
Many of the young people attending Taylor’s workshop expressed similar feelings of isolation from their peers and difficulty in navigating social situations. Great family wealth was spoken of as a sort of dirty little secret, difficult to divulge to friends and romantic partners for fear of distorting the relationships. Many found it difficult to find people they could talk to about their problems because, as Taylor puts it, “you feel like no one wants to hear about a rich kid’s problems.”
This sense of disconnection from family and peer groups, according to Dr. Levine’s research, is prevalent among the children of wealthy families and is one of the two leading causes of stress. The other, she notes, is the pressures that come from expectations of perfection.
 
The Problem With Perfection 
Children of affluent families often have big shoes to fill. Most are the progeny of uncommonly successful parents, and the rest have illustrious ancestors further back. Of course, few parents openly expect their kids to be perfect. We would just like them to be strong, self-confident, great-looking people who are all-star athletes, stellar students and leaders in their communities. And it would be nice if they played the violin. We surround them with extra help, signing them up for private coaching and prep classes and running out to get a tutor at the first sign of a “C.” Even if parents don’t put the pressure on, the rest of the world will. Since the days of kings and queens, children of great parents are expected to do great things.
 
Earning and Entitlements
In his book “What Investors Really Want,” Professor Meir Statman discusses measures to help children of affluent families establish “economic self-efficacy.” These are the underlying skills needed to live as a financially independent adult. The Glenn Klimek Professor of Finance at the Leavey School of Business in Santa Clara University, Statman joins Dr. Levine as a strong advocate of assigning tasks to children and rewarding them for their work. He cites studies indicating that paying children for chores enhances self-efficacy as they mature into adults while giving children allowances tends to detract from it. Allowances, he concludes, are perceived as entitlements, promoting dependency, while payments for chores foster a connection between achievement and reward.
 
Spend More Time With Your Kids and Less Time Watching Them 
The economic self-efficacy study contains another finding of particular interest to affluent parents. Professor Statman writes that children who only listen to their parents talk about work do not show increased self-efficacy when they become adults. Children who talk with their parents about work, on the other hand, do. According to Dr. Levine, these sorts of interactions are among the most important actions parents can take to promote the emotional health of their children. “There is no substitute,” she says, “for spending time with your children—BlackBerrys and iPhones turned off—completely focused on them.”
Dr. Levine believes that sitting on the sidelines, watching your kids’ games, hardly qualifies as quality time. If your interaction with your children is primarily as a spectator, she notes, all you are doing is modeling passivity.
 
Starting the Conversation
Having simple conversations with your children, particularly adolescent children, can be like pulling teeth. For many teenage boys, “Uh huh” is practically a monologue and their sisters may be less than enthusiastic about sharing their  innermost thoughts with their parents. So how do you approach difficult conversations, like those about critical family wealth issues, or even concerns you  have about their emotional health?
Communications expert Peggy Klaus underscores the importance of preparing for potentially awkward discussions. Ask yourself a few questions and write down the answers: What do you need your child to understand? How are they likely to perceive this news? What information and assurances will they need from you? What is negotiable and what isn’t? This kind of preparation, she notes, may seem a bit overly formalized at first, but it can help you get your point across in terms that address your kids’ needs and objectives.
“It’s good to have money and the things money can buy, but it’s  good, too, to make sure you haven’t lost the things that money 
can’t buy.”
— George Lorimer
 
 
 
 
 
 
WHEN MORE HELP ISN’T HELPFUL
Parents don’t like to see their kids fail. Our most basic instinct is to protect our children, lift them up and help them succeed. Dr. Levine argues, however, that too much help can undermine a child’s ability to develop an authentic sense of self. She believes that struggling with a difficult yet achievable task builds self-reliance and coping skills. “People tend to feel terrific when they do something terrific,” Dr. Levine says, before cautioning against what she calls, “the bastardization of self-esteem” and denouncing participation trophies and other forms of empty praise. She urges parents to help their kids set realistically ambitious goals and to reserve praise for honest efforts to reach them.
 
 
 
 
 
 
 
 
 
 
 
 
“My father used to play
with my brother and
me in the yard. Mother
would come out and
say, You’re tearing up the
grass.’ ‘We’re not raising
grass’ Dad would reply.
‘We’re raising boys.’
— Harmon Killebrew
 
 
 

Morgan Stanley
Private Wealth Management