The Myth of the Silver Spoon with Kristin Keffeler

What happens when the inheritance arrives and nobody prepared the people receiving it? Kristin Keffeler, author of The Myth of the Silver Spoon and co-author of Wealth 3.0, joins Derek to challenge the assumption that wealth transfer is just a financial event. Drawing from her own experience as the daughter of wealth-creating parents, Kristin explores the psychological barriers inheritors face, why a growth mindset matters more than a trust document, and how to start financial conversations with your children before it's too late.

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This podcast is presented by Jensen Estate Law and produced by Marguerite Productions.

Transcript

SPEAKER_00 0:00

Hi, I'm Derek Jensen, a state attorney and host of Who Gets Wood. I'm so excited to share my conversation with Kristen Keffler. She is the author of The Myth of the Silver Spoon and a co-author of Wealth 3.0. Kristen draws on her experiences as the daughter of wealth-creating parents and her expertise from her master's in positive psychology to guide affluent families and the rising generation. This conversation was enlightening, so stay tuned to learn from Kristen's experience and expertise. Well, Kristen, I first heard of you when I was reading the book Wealth 3.0. And from that book, I kind of uh said, I gotta learn more about this subject. Uh, this is

Kristin Keffeler's Background and Books

SPEAKER_00 0:46

a subject that's got to be important to all my clients. And then your book, The Myth of the Silver Spoon, was recommended to me. I really love the way that you uh blend in uh the scientific reasoning and thought behind it, also uh, you know, give some practical guidance and then also these great stories about uh many of your uh clients that you work with that you've helped over the years, uh, that really personalized so much of this conversation or this discussion. So I thought the book was great.

SPEAKER_01 1:17

Thank you, Derek. I I really appreciate that. I feel like um The Myth of the Silver Spoon was um it it preceded Well 3.0. And so it was the first book project I'd ever um embarked on. I really poured myself into it in an attempt to capture the nuance that I think is important. And so when I get feedback like yours, it's really meaningful. Thank you.

SPEAKER_00 1:41

And the idea with Well 3.0 is that really we're looking at money differently. Instead of be trying to do your job here, you're the author. Why don't you help me uh explain this to our listeners?

SPEAKER_01 1:53

Well 3.0, in some ways it's a it's a call to action, it's a it's an invitation to a paradigm shift that um really Jim and Dennis and I, so my my co-authors, Jim Grubman and Dennis Jaffe, have said in our book, like we didn't invent this idea. Um we put language to it, but really it's a shift that's been taking place probably for five to seven years now, where there's a shift in the industry, the industry meaning the the collection of professionals that support high net worth and ultra-high net worth families. And um, so it's this whole system, right? It's the advisors and it's the families themselves, and it's our orientation collectively to both how we operate together um and what the the resource is itself. So maybe it's helpful to go back to to just sort of mapping like, well, what the heck was Wealth 1.0 then? And wealth 1.0 is really this idea of from early from the

Understanding Wealth 1.0 and 2.0

SPEAKER_01 2:50

industrial revolution, really, where when when Americans, and this is well, the the Wealth 3.0 really is a model that has taken on worldwide. Um, we we mapped 1.0 and 2.0 and 3.0 to what was happening in um in the United States. We we have various patterns that you can see in other countries, um, European countries, particularly Asian countries as well. But in in America, the industrial revolution was the the first time we really had significant increase of wealth. And at that time, up until like the 70s, late 70s, early 80s, was what the era of wealth 1.0. And in that era, there was generally one patriarch of a family, a man who was uh the wealth creator who would pass his assets to his eldest son, so who would become the next patriarch. And um, and those family systems had one advisor who was her trusted advisor. It was usually either a financial, um a financial advisor or a tax advisor or an attorney. And those two people were the people who primarily had information, talked and and had information about what um what the family resources were. And there was really no communication broadly shared with the family. There was no um there was no acknowledgement of the idea that there might be a psychology to to wealth and inherited wealth. And um, and in that there was just a there there bred a lot of more entitlement, like, well, we are wealthy, so this is what our this is kind of like what our our life and our standing is, um, but also no real acknowledgement to the lived experience of family members in those families. And so wealth 1.0 was very much a top-down, need-to-know only, um, sort of centered around the patriarch and with very limited information sharing. Um and and that was how it was for you know in the industrial revolution until like the 1980s. And in the night in the 1980s, which um we map as really being the dawn of wealth 2.0, was when the there was a significant rise of um wealth more broadly. And there's lots of reasons for that, some uh um which we all we detail in the book, but some of those things have to do with the ability for people to have retirement accounts and the ability to gain and and and hold wealth that way. Then you look into the 90s, and there's um tech booms and IPOs, and you could just see this proliferation of wealth to not just this very narrow band, but to a broader um base of people. And so there are many things that happened in wealth 2.0 where there was just more information that was shared. There was many more advisors. It was the rise of the true financial planner, someone who was thinking of taking like the whole life, one's whole life into account, not just their financial resources. But there were also some things that came out of Wealth 2.0 that were problematic. Things, you know, really negative narratives about inheritors, negative narratives about um what family success rates could be, right? And and a lot of citing what we what we thought, what I as a an advisor 20 years ago thought were were statistics based on research. And what we have now found and we're and have been able to debunk that that so much of that early quote unquote research, the results were taken out of context, and that that that the sort of flashy ideas of the failure rates of families, it became really strong fodder for motivating families to take action, but in fact weren't rooted in research. And so there there was a lot that came with, you know, came along in Wealth 2.0 that um that didn't really serve families and didn't serve the individuals and families. Um, and I think that because there were these siloed industries that that families that recognized they needed, right? They needed a financial planner and an estate planner and a tax advisor and maybe someone who is a psychologist. They had a more complex system of advisors they needed, but those advisors hadn't been raised and trained with collaboration, right? It was like, whose client is it? And that's my client or your client and sort of who's the quarterback. So anyway, well 3.0 is really the dawning of an era of a new paradigm where we look at all 10 domains of family wealth. Um and in the 10 domains model, we talk about there being four technical domains, five human domains, and then the center domain is really about the family advisor relationship. So the client, the um, the family is at the center of that, and their relationship with their advisors um is key. And and in that model, it's necessary to collaborate because we know high net worth and ultra-high net worth families have immense complexities, and no one person can hold

The Shift to Wealth 3.0

SPEAKER_01 7:58

all of the knowledge about how to support these families well. We also have have had a call to action for better research and real research. So we understand what are the patterns of families over time and how can we pull from the best of what we know in positive psychology and in organizational development to really help families think about creating patterns of more virtuous upward cycles over time. So that's kind of a long way to say, well, 3.0 is really a call to action, of a bit of a manifesto, in fact, to say, like, hey, there's a there's a better way for us as advisors to work with families and for families to really be supported to a path of thriving.

SPEAKER_00 8:40

And I think what we're talking about there with some of the myths was like the hundred-year myth, uh shirt sleeves to shirt sleeves and three generations myth, which uh when I first read that in uh the Hughes book, Family Wealth, I was like, whoa, wait a minute, that's very fatalistic. Uh is that really the way it has to go? Is there something different? And for my clientele, uh, you know, which is maybe more emerging wealth, you know, we're not we're not in that that realm yet, but a lot of my software clients and and real estate clients and others uh and business clients are are definitely on that path. Uh I was thinking, you know, maybe this, maybe the idea is more involvement with the family, maybe it's incremental family wealth, like you can kind of get there over time, and it's not just the first generation is the wealth creator, it's also you know, the second and the third, and they're kind of more on all on the same team. And then uh to read wealth 3.0 and kind of see some of those concepts pulled out further and and really going into it. Uh, there's a lot of detail in there that's just fascinating and got my my brain just twirling around and thinking about it as I was going. So I really appreciated the book.

SPEAKER_01 9:48

Yeah, thank you. Thank you for that. One of the things that was really wonderful about collaborating on this book because of my age and because I'm, you know, a couple decades younger than both Jim and Dennis. And so there were parts of the history of the rise of um the financial advising industry that um I was not personally privy to and hadn't spent time studying. So as you're you're referring to, Derek, there there's like the whole first section of the book is really a look back on where have we come from. There were whole parts of that that were brand new to me that I actually learned a lot from as well. So I'm I'm delighted to hear you did as well.

SPEAKER_00 10:27

Yeah, no, I think that's true. I mean, I've been in practice for a few years too. Uh I can remember back into the 90s, and there's definitely been a change in my practice, both in terms of the clients coming in and also uh different advisors and the way that the advisors are working with them. But yeah, you know, the patriarch kind of idea of that was was not something I've really seen much in in my practice. It's it's definitely been more solidly in that 2.0 version. But in any event, it's it's it's a very interesting uh to kind of think about how it changes over time and that things aren't static and they're not, you know, uh fatalistic or it's oh, this is the way it's always gonna be, you you can't change it, and and to wonder about that. And this brings us back

Challenges of Wealth and Parenting

SPEAKER_00 11:09

to your other book, The Myth of the Silver Spoon. Because for many of my clients, they're struggling with this idea, hey, what do I do for the kids? Am I gonna give them too much? Am I gonna spoil them? And this is still, I think, part of that 2.0 version kind of coming through. Um, and that's really what you were addressing in this book.

SPEAKER_01 11:28

Yeah. That one of the things that's so meaningful, like I have never talked to um, I've never talked to a set of parents who who had made significant wealth, you know, and experienced the blessing of that, uh, who were disengaged from the impact of that wealth on their kids. Like there's always a question of how can we handle this well, regardless of the age of their kids, right? In general, like whether people are coming to me and their kids are little and they're still actively parenting them at home, or whether their kids are in their 20s or 30s and they're saying, like, okay, we haven't shared a lot of information with them. They can look around, they can make assessments based on what they see, but they don't know what's coming to them or what's not. And we we don't know even how to tow into that conversation. I always hear where that comes from, which is like a deeply heartful place of love, right? Like nobody wants something that has been something they worked really hard for and and felt like they they got sort of the the magic of this Midas touch um to be something that actually has a downstream impact that becomes a net negative for the people they love the most.

SPEAKER_00 12:44

Yeah. And you know, one of the things I think about it with with the kind of the first generation wealth is a lot of times we see this idea that um, oh, you know, you gotta go do it yourself. You know, you these lessons are hard, hard lessons in life, and and that's the way that that you're successful is if you go out and kind of have this struggle and and go through all of this. And yet they are in a different situation than their parents. And it would be um, you know, they know what kind of schools they're going to, they know what kind of houses they're in, what trips they're taking, all of this. So to pretend that um, you know, that that that isn't there or that isn't creating kind of a oh, I don't know, uh just a motivation for the kids, or kind of maybe disappointment for the kids, even to say, well, gosh, you know, why can't I have if I go out and do that, it's gonna be really hard for me to to buy a house in this kind same kind of neighborhood as mom and dad and and this and that. Um and so those are the kind of things I'm kind of thinking of with with a lot of those clients coming through. But you had a lot of examples in there of some of some of the uh the people you've worked with. And I think one that was kind of interesting to me was uh Liz. And so Liz, if I'm if I'm recalling this correctly, Liz had an opportunity or was motivated to start her own uh studio. And she got an opportunity to go uh sailing with her mom. Her mom invited her to go do that, and so she kind of went on the trip because that's what she loves doing, and her mom was probably putting pressure on her. Hey, come on, you can come along here, you know, and and that kind of was changing her direction because of that. Maybe you can kind of share that story a little bit.

SPEAKER_01 14:21

Really, all of the stories that showed up in the book um were ones that I picked because they're emblematic of other stories that I have heard many times as in the the 20 years of doing this work. Um and so Liz's story is one that that I've seen a good handful of times at least, where there's uh where you have a rising generation family member who um

Finding Personal Fulfillment

SPEAKER_01 14:45

has a close and connected relationship to their parents and who is in a situation where they are haven't like fully plugged into their own life yet, right? They're um for whatever set of circumstances, they're not yet earning consistent income, that not they don't have sort of a standard job, but where they're earning a paycheck or something like that, which often happens, right? It's like it's not unusual for a rising gen to do some things that are non-traditional but still give them time flexibility, um, whether it's you know going into a field like real estate or while we're um investing, right? Doing things where they're like, oh, I can do this and I can try to earn some money, but I'm I'm not bound to an employer's time clock. Um so that's not uncommon. Um, and in this case, this particular person, Liz, had um, she'd been doing a lot of investing. Like I believe that they, she along with uh some of her siblings were investing in restaurants. And so in her 20s and early 30s, she had been a part of these investment groups with her siblings doing some of that that kind of work. And it had been enough to um to to give her extra money on top of what she was getting from her tr trust distribution. And um, and ultimately she really came to the conclusion that like she didn't feel like she was living her own life. And um, and that was when she met me, and we really talked about like, well, what would it look like for you to invest in something that was truly yours, not just invest money, but invest yourself into something that was truly yours. And um, and that's where this idea of uh the um Pilates studio or yoga studio came up, and she um she did an immense amount of work to to really push that forward, figuring out where she wanted to do it, how she was, you know, she had a business plan, she'd done an immense amount of work. Um, and ultimately in the her um, her parents were getting to go, getting ready to go on a a significant sailing trip, like a multi-month kind of sailing trip, and um and invited her to go along and she decided to do it. And on one hand, like who could blame her, right? Like that sounds incredible, and time with your parents, like you can't get that back. Um but the the part that I see as as really challenging ultimately to a rising gen is that when they keep sort of skating off the the real like gritty part of what it takes to believe in something and do the work until it gets off the ground, because they don't have to do that, they actually lose belief in themselves that they're capable of that. And that um that robs them of the opportunity to really experience their full potential. So they can be doing really other fun and enjoyable things in their life, but missing the real chance to to learn what it's like to tap into the deep part of you that that um that knows how to create and knows how to and and learns how to stick with something until it is a success. Uh and I think that's that's what what is sad about those stories.

SPEAKER_00 18:06

Yeah. You know, and it's it's it's really interesting because you know you go in a lot into the idea of work and how work you know how how they might approach work, and you you talk about a lot of their money clutter uh in there and and how you know really some of these

The Concept of Money Clutter

SPEAKER_00 18:23

ideas are are are stunting them and keeping them from and it's it's in it's in their head kind of. Is that a fair thing to say?

SPEAKER_01 18:32

Yeah, yeah. So the the um to give the to give your listeners kind of the the broad view of this idea of clutter. Um so in the book The Myth of the Silver Spoon, I talk about, I liken our um emotional and psychological stuff that gets in the way of our ability to really fully engage in work, in relationships, in our own identity, um, in our own lives, as as clutter. And I the the analogy really comes from this idea of like, you know, the it's clutter, physical clutter is like the stuff that we often just don't quite know what to do with. So we we shove it away into drawers or into the trunk of our car or like jammed in our closet. But pretty soon, if we haven't sorted through it, it starts to make it tough to move around in our space, right? But it's not the stuff that we're like shining forth to the world. You don't put clutter on your front lawn, you don't put clutter in your front um uh entry hall, right? You the clutter's the stuff that we sort of tuck away in the dark places, and um and our psychological and emotional clutter is the same. So from looking at someone from the outside, you would say, like, oh my gosh, they have it all. Like, look, they had they have a cool car and they live in a great neighborhood and they get to do these cool trips with family, and and all of those things can be true. And unless someone has a really strong core sense of self, a really clear um idea about how they want to create impact and contribution in the world, a really solid sense of how to be in authentic relationships that are two-way streets where you feel like you are as loved as you are loving. Um, and a really clear sense of with money clutter, a real a really clear sense of what this resource is and what it isn't, and what it is capable of doing in your life and what what it will never replace, right? It never replaces the the uh power of self-dignity, the dignity you can get from um learning you can do hard things, from from having integrity, from showing up and contributing each day. And and so it's these kind, these kinds of clutter, and I talk about the four kinds: money clutter, identity clutter, relationship clutter, and contribution clutter, as being these really important areas for rising gen family members to spend some time doing some work. Because a little clutter clearing goes a long way to really helping one find the that strong sense of self that is both able to integrate a family's this an incredible narrative of their family's story while also not losing themselves in that narrative and and still finding that that sense of individualism that allows them to be um to to find power and self-actualization in their own life.

SPEAKER_00 21:30

Yeah. And I think in with Liz's story, just to wind that one up, I think although the uh the studio didn't work out, she was able to go and find a role within the family enterprises uh for work, and it was something that she did find a lot of satisfaction on. But you know, a lot of us when we start you know work, a lot of it's out of necessity. And so we're having to work our tail off at that. And so without that kind of motivation, you know, and then uh you know if I imagine, you know, where did I find I think you called it maybe the flow, you know, this idea that you kind of are you're jumping up in the morning and say, I'm gonna go get this, you know. Uh where does that come from for uh for the rising gen? How do how do they how do they find that? How do they tap into that? How do they kind of keep it centered and keep going forward?

SPEAKER_01 22:19

Yeah, that's a great question. I think that um so there's a couple of concepts I think are helpful to think about this idea of passion and like and how do you actually like get to the place where you can feel like you're like fully plugged in and and like just excited about what you have in front of you each day. And one of them is I I think it's important for us to remember that um

The Human Need to Work and Finding Purpose

SPEAKER_01 22:46

culturally, like we have a very complex relationship with money and with wealth culturally, and and we can go into more about why that is or why I think that is later. But we we tend to have a pretty complex relationship with it. Like money fundamentally is just a tool, but we have we think about it as something that and we act like it is something that is um that is more than just a tool, right? It's very often we use it as a proxy for a lot of other things in our lives, whether it's power or love or communication, it's like we money becomes the stand-in um rather than us really recognizing um kind of what it is we're needing. Money becomes this proxy. But one of the things, and in that this complex relationship that culturally we have with money, I think we have this misunderstanding that that if we if you remove the financial need to work, that somehow you've removed the human need to work. And it's just fundamentally not true that you, that no matter what, like more important than the financial need to work is the human need to work. We all have a need from from the very earliest on to see that if we do something that that we get a response in the world, meaning like there's this feedback loop for I matter, right? When I drop a toy out of the crib and someone comes running into the nursery to say, like, okay, enough, like it's time to take a nap, stop dropping the toys out of the crib. I just realize like I have power in the world, I matter. When I do something, I get paid attention to. And that's just like this little nugget that grows in us and is important for us to recognize like it it is a huge differentiator to feel like when I wake up in the morning, when I bring my gifts and skills forward into the world and I see that it impacts others, like that it's a virtuous upward cycle of impact that feels more inspiring to get up and do it again. And so I think it's important to hold this piece of of remembering that removing that financial need to work doesn't remove the human need to work. So that's still an essential component. And um, and then this other piece, which is um about what like when and how do people find purpose. And I I'm we we can most definitely pull some examples of some late teens or early 20s who just knew what they were here to do from very, very early on, right? Like we could probably think of some big tech names that that you're like, yep, that Bill Gates, like he was pretty clear from like the earliest earliest stories of what he was going to be doing, right? Um, and I think so I think we we there are those exceptions, but most people aren't like that. Most people actually have to build a pretty deep well of identity capital before they really understand what their purpose or what their passion is. Um, identity capital is this, is something that um we build primarily in our in our late teens and 20s. Um and it's the way that we, you know, it's all the things we do in the world. It's the crappy early uh coffee shop job that you're like, oh wow, I found out I don't like getting up at 4 a.m. or I don't like service jobs, or um, it's the internship. It's the it's all the things that we do, self-assessments, um, you know, personality and career assessments. It's the stuff we do that helps us find out information about ourselves. And so we can really become more clear on like what's me and what's not me. Um, the more we do that, the deeper well of identity capital we have. And we use that identity capital to help um focus and create a filter for what is a right fit purpose for us. One of the challenges that I often hear with parents who have created wealth is that they know what it's like to work so hard. And and there's there's a part of them that doesn't want their kids to have to sacrifice quite as much as they did. And so I've heard plenty of parents or grandparents say, we worked this hard so that so that you can go follow your passion. I just want you, I just want you to go follow your passion. And which is sounds like a beautiful gift, but the the challenge is that what 18 or 22-year-old

Navigating Early Career Challenges

SPEAKER_01 27:29

knows how to do that? And so immediately you that 18 or 22 or 25-year-old already starts to feel a little bit like they don't have the it factor that maybe their mom or dad or grandparents had because they're like, I don't even know what that means. Like, how would I do that? And there's something that's just in my experience, the vast majority of people just need time to go like grind it out at some non-fun jobs to just figure out like what works and doesn't work for them so that they have a they can start to have a refined sense of what it is they would actually want to create.

SPEAKER_00 28:05

You know, and I I think that's true. You it it's just gonna take time a lot of times. You know, my when I was taking my my oldest uh child, my oldest daughter, uh around to different colleges, we uh was it was a great experience, but when we went to one of the schools, I was surprised when they told us how many times uh a graduate from the college was expected to change their careers over their lifetimes. It was like five, seven, eight, nine times or something. And going back to your, you know, just the example of the 1.0 and kind of thinking back to, you know, uh when you got a job from from you got that job until you're great until you're in the grave or retired, you were going to be in the same job. But there's just really a change out there. And people, it's it's great because people can go and find something that fits. And if it doesn't fit and they they have the ability to go find something else, uh that's that's great. And it does take time to kind of find that that true kind of calling. I mean, heck, I think that you know, even in my own existence here, you know, it's changed too. I mean, I have a calling for a while, and then you you have something else that comes up and you say, Oh, wow, that's really interesting. I'm gonna chase after that for a bit.

SPEAKER_01 29:16

So you're so right, Derek. And it's the ability to like one of one of the other elements that I think is really important for rising gen to cultivate. And I I talk about this in um in the myth of the silver spoon because it came out in my research on exemplar rising gens, like the the rising gen who were like just at the top of their game. And um, in that research, I was trying to understand what were the character traits and skills, or were there any character traits and skills that those rising, those exemplars had in common. And

The Importance of a Growth Mindset

SPEAKER_01 29:52

one of the things that came out was growth mindset. And I think that having a growth mindset, being able to try things and and um find and and realize that even if you don't totally crush it, that you're still learning about what works and doesn't work for you, right? Like, so to go put yourself in this situation where you're taking calculus and struggling like crazy and and realizing like I am learning about learning in this. Even if I'm not destined to be a mathematician, there is value to trying things and sticking with them and getting feedback and learning new techniques and like all, you know, whether it's school or sports or music or computer programming, like the growth mindset, it makes all the difference in how um successful someone will be over the course of their lifetime. Because it means they will do things like what you were just describing, like they'll reinvent themselves. They'll say, okay, like I I've been passionate about this particular niche focus for five years. And and now I'm finding like, I think I did all I could do here. I'd like to layer on something new that's kind of interesting and keeps me excited. And that's what a growth mindset allows one to do.

SPEAKER_00 31:12

You're talking about money. And so many people, I think, are coming from a place of fear when it comes to money or anger even. And that's a very unhealthy place to be. And so uh imagining that you can somehow get past that and you can find uh a higher, higher meaning uh for yourself, but also a more healthy relationship with money has to be a goal that we should have as parents is to help our kids kind of get there.

SPEAKER_01 31:40

Oh, I I sure agree.

Cultivating a Healthy Relationship with Money

SPEAKER_01 31:42

I think um, and I have my own I have my own version of needing to sort of slay some some money dragons, right? Some really tough beliefs in my late 20s. Um and I feel like it wasn't until I really came face to face with some of the the really um heavy narratives that I had around money that I was able to start to transform my thinking and my ability to use money as a tool and really start to trust that I could do big work in the world and that and that money would come back to me in a way that would allow me to continue to do big work in the world. But I think that um one of the things that we we that we don't think a lot about as parents, but probably should think a little more about is that um just like we inherit lots of other patterns of behavior, we as kids, we inherit patterns of behavior around money. And and so much of that, some of it is what our parents have said, right? If our parents say, um, you know, we don't live with debt, always pay her for a credit card or um, you know, never spend more than you have, right? That like there's the messages we can send, and that's one way that that we share some beliefs around money, but the more impactful ways are with um it with cultural in family cultures is always what we do, right? Um whether that's I mean that's just not money, that's everything, right? It's it's food, it's drink, it's how we treat the neighbors, it's like what we do is what kids model. And so if if what kids are seeing is that that we feel really stressed and and tight and tense and we have a scarcity mindset and there's never enough, then you can say all you want to about about how you, you know, what you wish your kids would believe around money, but they're gonna watch how we are with money. So as a couple, if if that's a place where a couple fights or one member of the couple doesn't share all of what they're spending money on with the other, right? If there's all those patterns or things that kids absorb. Um, and I think that one of the things that we collectively could do to really enhance our relationship with money is to go into those narratives and and and really clean them up so that we can create more um positive and empowered beliefs around money. And that's actually what in the in the myth of the silver spoon, when we talk, when I talk about money clutter, there's each one of the clutters has its own worksheet. And the money clutter one um in part is about getting to a to those core beliefs and think and then doing the work to to figure out like, well, what is a belief and a mindset that would really serve me? If I'm fine that I'm coming at this from a place of scarcity or feeling like um like I'm in a bad relationship with money, right? Like if you were to anthropomorphize it and you're like, oh my gosh, I wouldn't date this person. Look at like I'm I'm this is a terrible relationship. Then like how would how would you empower yourself to start to get to transform that relationship you would want to be in?

SPEAKER_00 35:15

I'm gonna shift gears a little bit and kind of go back to my uh my prototypical clients. So uh imagine now uh some new wealth uh and they are they have their their kids, but their intent would be normally to leave inheritance to their children you know at their death, which I think is probably the vast majority of my clients. But now they're exploring uh doing something during their life. And partly that's motivated by uh I live in Washington State and we have our own estate tax here, and so we have just increased our uh state

Inheritance and Wealth Transfer Strategies

SPEAKER_00 35:51

estate tax rate. And so a significant number of these people are looking at those tax bills and and they're they're thinking, well, maybe I have to leave to another state, and I'm of course encouraging them to stay and I'm trying to find solutions for that. But um but in any event, you know, as they're kind of struggling with this idea of of maybe moving assets or moving some of their resources to their children, uh how should they approach that? How should they approach that that fear that they're going to uh cause problems for their kids with with those kinds of gifts or to keep them motivated? Really the topics we've been talking about here. Um do you have some advice for those those right, uh those those particular types of folks?

SPEAKER_01 36:35

Totally. I think, I mean, I understand the instinct to want to wait until you're passing the to have wealth pass on to your kids. Um and I think the I mean the instinct really is one that comes from protectionism, right? Like, well, well, my kids by then will be full-on adults, they'll they'll know, they'll have their own lives and their own careers, so they'll be able to integrate this into their lives um in a way that if I start gifting to them sooner, maybe I'll derail their lives. And I I really think that there is um such a different way to approach this, but and and ultimately, ultimately, the the money is an important piece of the puzzle, but it's not the most important piece of the puzzle. And this is the way I think about it. First of all, I I I think about the difference between like a dimmer switch and a light switch. Um, and you know, the light switch is really about the like, I'm gonna keep them in the dark until something catastrophic happens to me, right? It's gonna be my death. And then the light switch is gonna come on, and they're gonna like just think about what it's like when you're in a dark room and the light switch comes on and you are just trying to get oriented to the space, right? They probably at that point don't know the language of trusts and estates, they don't necessarily know the complex financial vehicles, they don't know where where money is, who it should be going to. Like, there's a lot to learn in this space. And if you find out in the middle of also grieving and um and trying to deal with the loss of a parent, that to me feels like a really hard time to try to get oriented to a whole new landscape. If you take the dimmer switch approach, turn it up a little bit at a time, you like the whole family can continue to get oriented to this room together as the light comes up and you start to understand, like, okay, now I understand the landscape. Now I understand the language of trust and estates, I understand the language of uh these more complex financial vehicles. Like, there's all this stuff that you can learn together that doesn't actually have to do with a balance sheet. It's just about being on a learning journey together. And where I always think the the most powerful starting place is really for a family to explore who are we as a family? Like, what is our ethos? What are we a stand for no matter what? Like, if all the money, like this isn't a conversation about money, this is a conversation about who we are. And what are the character strengths that we think are highly valuable? And how can we celebrate those character strengths that we see in our family members? And how do we think about making decisions in the world? Not even money decisions, just like how do we show our character in the world? Those are all conversations that when those are had first, then when you start to talk about the education, as uh, you know, trust and estates language and all that kind of stuff, you can still give information, like you can still start giving more specific information, but really have it mapped out um as a as a chart without numbers. It can still be something that's like, hey, like I just we are on this journey together. I want you to understand all these pieces and parts before you, before this turns into something that um where we're starting to just share information about money. Ultimately, what I find is by if you use that dimmer switch approach, that by the time you're actually talking about dollars and cents, there's not the sense of a big reveal. It's just, it's like, oh, okay, now I understand I understand what mom and dad's intent is for this. I understand how this is structured, I understand how their estate works. And that's a time when it can be really helpful then to start with, you know, share um maybe starting to give an annual gift and and starting to pass down wealth in a way that is enough for family members to start to um explore, to take some of the rough edges off life, but without so much that like it's gonna totally derail their lives. And and that's a way to take like a step-by-step path towards bigger and bigger gifts that over time would um would would probably make a difference to someone's life. The last thing I'll say on this is that I have I've been a part of situations where um family members have had the light switch approach and a loved one dies, and the and then the light turns on. And one of the greatest heartbreaks to me is watching how that person is navigating so much grief and other things at the same time. And then they don't have the person who would probably be most qualified to help them understand what this all means. That person is not there to help them. And as a parent, as a as the mom of three daughters, I think about like what a what a heartbreaking thing to not be the one to help them figure out the social implications, dating and and impact on marriage. And how do you think about parenting with with with more resources than your peers? Like being in those conversations is just as important as being in the conversations about like how do we think about alcohol? How do we think about sex? How do we like you want to be the one that is in those conversations with your kids? And the same is true when it comes to money.

SPEAKER_00 42:10

So I have that in common with you. I have uh three daughters myself, and it's uh it's a fabulous uh experience. Now, as a as a dad of daughters, you know, we we take a little bit different approach on some of those questions. Some of them we do leave to mom. And uh but you know, as I'm thinking about how do you introduce these questions? How do you introduce this discussion to uh to the children? You know, is it kind of give us a what's the first spoonful that we should we should uh provide to them and explain to them to give them a little bit of understanding

Introducing Financial Concepts to Children

SPEAKER_00 42:41

of of where we're at financially?

SPEAKER_01 42:43

What I have noticed um in my own parenting is the time where your kids start to become more aware from a developmental psychology standpoint is when they're getting into like middle school and they start to have this sense of like comparison on a lot of fronts. Both my approach as a parent and also my my approach as a consultant has been like, this is a time to let their questions come to you. I'm gonna share like this is a safe place, and I want every question to come here first. And and questions about um about money and wealth and and kind of what house we live in and how we make those choices um are ones that have been that it's like an appropriate time to let them come to you and not to sit everybody down when they're 13 and 14 and say, like, all right, now we're gonna start talking about our family ethos. Um, but I do think that by the time kids are getting into their late teens is a valuable time to really start just talking about who we are as a family, how we think about philanthropy. That's also a time when kids probably are starting to think about college. And so that's a, you know, many of their friends might be taking on debt or um or looking at scholarships, and it it might be a time to say, you know, we've we've saved for your college. And so this is what our expectation is. The the little doses. Can start to happen more in late teens where you're really having more conversations around that because there's going to be more real life situations that will require it. And then certainly by the time they're in their early 20s is a time that talking about family ethos, starting to talk about whatever the story of wealth creation is can be like those these are times when I think you can start to more actively weave it into conversations about who are we, how do we think about character, how do we think about contribution.

SPEAKER_00 44:30

Oh, I think that's fabulous. I can just imagine some different scenarios. And it seems like, you know, to engage with them and to enable them to make these decisions. So, you know, as I'm thinking about young people, some of the the big decisions they're going to be making that might around finances might be, you know, what college to go to, um, a car, you know, kids like cars. And so those types of decisions are great opportunities, it would seem, for parents to really kind of discuss, you know, some of the different family values and and money and and the different thing and really engage with the kids where they're at, right? And and try to bring parts of that in.

SPEAKER_01 45:08

Like there are these natural points where where they get more ex they get more curious because they're more motivated about something, right? Like a car is a perfect example. I found with with our older girls, like that was a time that they got really curious about gas prices, like budgets, right? Because we we we calculated how much we thought that they would need in a gas budget and would give them that much a quarter. And then they had to manage their gas budget over the the course of a quarter, which as 16-year-olds was like kind of a big deal to figure out like how to not blow it all at once, because then the rest of it would be on them. Um, but those are the times, the moments when you can lean into more of those um conversations because they're interested. And I think it's really an opportunity that as parents with more financial resources, it's a missed opportunity if you don't lean into to thinking about how you want to handle those things. It's easier to just say, like, ah, like just give them a credit card. Like, I don't want to track it all. I, you know, it's like basically like when your pocket is big enough and you and it doesn't pain you what they're spending, it's it's easier to just let it go. But from a parenting perspective, you've lost a moment that is an important moment to help them really build some internal scaffolding that um that will hold them in good stead as adults.

SPEAKER_00 46:36

Yeah, that's fabulous. I remember uh once in our uh with one of our kids, there was a game, and I can't remember which which game it was, but the game had little add-ins that you could buy. And uh boy, I tell you, I got the bill for that one one month, and that was like, oh no, what's going on here? So uh I it we took care of that pretty quickly, and that's it's actually was a very good lesson, I think, for for the girls overall. But it was uh you know just very early on. I mean, it was you know not something that I I think they were really aware of or thinking about was there's actually someone's gonna have to pay this at the end of the day, and it's gonna be your dad, and he's not gonna be real happy about it. So let's be a little more careful on that.

SPEAKER_01 47:18

Aaron Powell We had a similar version of that with the you know, kids today don't know that it used to cost money to send texts. And um we had a similar situation with like getting the phone bill. I'm like, what? And it's like, oh, this is also a resource. Like this this texting is a resource just like other resources.

SPEAKER_00 47:38

Aaron Powell One of the things I often do with most of my guests is I ask about their family wealth story. I believe that all of us come from someplace, you know, and we can use the more monetary version of wealth or we can go back to the more expansive version of wealth. But you have already shared a lot in your book and and here today about your own family wealth story. But one of the stories that you had that I really thought was delightful at the very beginning of your book was about your first car.

SPEAKER_01 48:02

When I was a senior in high school, my dad, um, my dad who had always been a successful executive, and at at this point, um, in the in his story, he'd always he had built um companies inside a company. So what we would call an intrapreneur intrapreneur now, I'm not sure there was a word for it back then. Right as I was getting ready to go to college, he went and took all of his uh all of his capital, remortgaged the house, and decided he was going to go build a company on his own with his own money. That was the start of what was a pretty significant ride. Ultimately, he took a company pub that company public and sold it, which became the significant part of my family's wealth story. But at the time that I was getting ready to graduate from high school, he was he was in a place where um he had been sort of

Kristin’s Final Thoughts

SPEAKER_01 48:57

rolling large for for a long time. He was getting ready to to go take this um capital and put it into a company, but he hadn't yet done that. Um and he was really proud of me. I was the youngest of four and and his only daughter, and had a I had a scholarship to school, and he was like, I think, like, let's go get you a car. And um, and so I got this car. I was so excited about it. It was a little two-door sports car, black, like, you know, had the brand new car smell, had this moonroof and this amped-up radio, and um, it was this five-speed little rocket, and I I loved it. Um, we drove it off the lot the next day. I was driving to school, I drove it and I realized that um I was like, I can't park in the student parking lot. Like this thing will get dinged up. But students weren't allowed to park in the teacher parking lot, and I was like really torn up about what to do. I ultimately decided to go park in the teacher's parking lot, and then had the realization that that car was nicer than any teacher's car in the lot. And I it was really and then I like I got out of the car and I sort of slunk in to through the side door of the school, and um and it was my first real experience of of this confusion of like I hadn't done anything wrong, like I mean, besides parking in the teacher lot, but like risk receiving that car as a gift wasn't anything shameful, but I felt a little bit ashamed. And it's like I didn't, if my in my brain at that time, I couldn't really detangle like what that was all about. Um, I knew that it was came from such a good and loving place in my dad. I knew that I had worked hard for the scholarship and and in that way it like the gift was sort of quote unquote earned, right? Like it was like the special thing he could do. And and I I could feel all that goodness, and I could feel this sense of like, oh my gosh, everybody's gonna look at me like and project onto me whatever they're gonna project onto me. I had that car until I was in my late 20s, and until I was well into my 20s, it was that car was always a little bit edgy for me because when I was dating, it was a signal. Like I would show up to a coffee shop or whatever to go on a first date, and there was it was a signal of like whatever, you know, whatever someone wanted to project onto me based on what I was driving. And um, so that car has a a very beloved place and a very complex place in my heart, but it was a a place where I learned, I learned something really important.

SPEAKER_00 51:43

That's an incredible story. I can just imagine kind of the the all the different feelings that go along with that. And it really, I think, epitomizes what we're thinking about here when we're talking about uh the wealth and going from you know to to onto the kids and some of those issues that can really be pushed forward for for the children and trying to think of it from their perspective of what you're doing and what your action was. Of course, your dad would have wanted to provide for you and and and celebrate your your accomplishments. But, you know, if he had thought about, well, wait a minute, maybe we need to do something a little bit different here, uh, so she's not feeling uh uncomfortable with this situation, maybe it's just talking about it or whatever. I don't know. But uh, you know, d just so interesting because what felt so natural for for him and for you to have that car, but at the same time causing these these kind of emotional problems.

SPEAKER_01 52:34

It was certainly conflict. It was like inner conflict, right? It was uh it there was there was a lot there. And I wish to your point, I would have been able, I would have known to ask questions and to be able to talk about it with either of my parents, but it never even occurred to me. And instead it was just this thing that I sort of managed, right? Like where I would park when I went to college and whether I would let someone pick me up or I would drive to their like drive to their house. Like all these things were things that I was managing, but I didn't really even truly understand it until I could reflect on it.

SPEAKER_00 53:11

Kristen, this has been a wonderful conversation. I really appreciate you joining me today on our podcast.

SPEAKER_01 53:17

Thank you so much, Derek. This has been a true joy to be in this conversation, and I I love all the the elements of both Well 3.0 and the myth that you wrapped together. They're they're both near and dear to my heart, and you did that beautifully.

SPEAKER_00 53:30

All right, great, thank you. These are hard issues, but they take conversations. Who do you need to have a conversation like this with? The best way to get started is to send them a link to this show. I highly recommend both Kristen's books. Check out the link in our show notes for more information. Please rate and review wherever you are listening to this podcast. Subscribe to stay up to date with our latest episodes. This podcast is presented by Jensen Estate Law.