Randy Fox Interviews Gary Shunk on the Issue of Entitlement

Randy Fox Interviews Gary Shunk on the Issue of Entitlement

Article posted in Values-Based on 27 January 2015| 1 comments
audience: National Publication, Gary Shunk | last updated: 27 January 2015
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Summary

This interview with Gary Shunk describes "Entitlement" and offers solutions for addressing the issue including the use of family philanthropy

Randy:    Hi, this is Randy Fox.  It is January 6, 2015.  I am privileged to be with Gary Shunk today.  Gary is a good friend and also an expert in how families interact with money.  Gary's firm Family Wealth Dynamics serves families around the country dealing with the nonfinancial issues of wealth.  Broad subject.  But today we're going to narrow down our subject matter to talking about one particular issue and that is the issue of entitlement.  And Gary, good morning.  Thanks for being with me today. 

Gary:    Yes, good morning Randy.  Thank you.

Randy:    Where do we dig in on entitlement?  How about, let's start with a broad definition of what that means and what it looks like and then we can get into what the effects of it are. 

Gary:    You know entitlement did not have a negative meaning in the past.  If anything it means it's about having a right: “I'm entitled to certain rights.” Maybe the people with legal backgrounds would understand better than I because my background is in psychology and family systems, family dynamics.  How I've encountered entitlement is the negative side of it when families of wealth, in particular, patriarch and matriarch are concerned about their children becoming "entitled" because of their wealth.  What does that mean?  The trust fund child, or “trustafarian” conjures up a sense of somebody who is an inheritor from a family of multi-generational wealth, where they basically were born with a silver spoon in their mouth and perhaps were chauffeured to school or were given so many things at an early age that as they matured and got older, they really didn't develop capacities to be self reliant or self dependent. 

How you and I will speak about it is that entitlement is created.  We can define it as people that seem to be very self-absorbed, pretty much focused on themselves and what they want as opposed to a balanced sense of what other people want, what other people need.   

Randy:    That makes sense.  The American dream as we've all dreamed it, has some downsides is what you're saying.  And so how do parents, how do families prevent this when they have wealth and it's normal for them to do things that everybody else can't do or doesn't do or is unable to do? 

Gary:    Let me try in this interview to offer a few examples.  May I first say to maintain confidentiality and protect the identity of these family examples, I will be speaking of them mixing fact and fiction to illustrate my points.  That said, one family I know of where mom and dad, first generation, created pretty significant wealth during their lifetime.  Their children were brought up with the fruits of that hard work. What the parents wanted to do, which any parent wants to do, is provide more than their parents provided for them.  More experiences.  More opportunities.  The idea “we're so wealthy, we're so fortunate, let's pass on some of this good stuff to our kids.”  They're well intentioned.  However, what can happen is that those good intentions can also set up a sense of expectation in the children. “When I graduated from high school or before I graduated from high school, I was given a Mercedes” which is what happened in the case with these two children and the family I'm talking about.  These two kids started to act out, which children will inevitably do. One of them actually got involved with the law.  What the family's wealth was able to do is hire attorneys that could intervene so that the child wouldn't have to deal with the consequences of his breaking of the law. The child was kept out of the whole process and the parents just took care of it.  Subsequently, he got in trouble some more and again this idea of good intentions got in the way of the consequences, the real consequences of living and growing and ultimately, normal human suffering which is part of growing up.  He didn't get that experience.  He got buffered by their intentions to protect him. 

Protective measures and over indulging can set up inside a child impairment to the maturity of that person. 

Gary:    One of the parallels that I make for inheritors is addiction.  The Latin root of the word addiction means,” is a slave to a master.”  When a person is addicted to something, say a drug or alcohol they're a slave to that master.  In parallel, when an heir inherits, then the master can be the money or the wealth and that person can be a slave to that, meaning that they organize their lives around the money.  “When's the next distribution from the trust going to come?” They organize their lives around that next hit of the drug of the distribution from the trust.  What happens is that they end up becoming focused on something outside of themselves rather than inside of themselves. 

Randy:    I have two questions that go two different ways.  The first is how do parents prevent this from happening?  The second would be, if it's happened already, how is it overcome? 

Gary:    I'll answer both questions with the term I use, “naming.” When we name something, we're calling it out.  To name something, we don't want to go direct and hit it in the head with a baseball bat and call it entitlement.  Families that succeed and create family harmony and family unity, family cohesiveness, over the generations are ones that have conversations about what they have.  They discuss the potential risks of what they have and also the potential benefits of what they have.  A way I like to think of wealth and money, if it's really substantial in a family is that it is actually a member of the family. We are in a relationship with this thing that we have, this great wealth. 

In a family of wealth, it’s important for the kids to learn early on about what this simple idea of spending, saving, sharing what they have and then working together with the family members about how they will spend together; how will they save together or invest together.  And how will we share or give together philanthropically, charitably?  This can begin as early as 5 or 6 years old.  I know of a family where the father gave a dime to his daughter when she was 7 or 8 years old and he said, “We have a lot of these dimes.  And so what I want to do is give you this dime and we're going to decide how we’ll spend it, how we’ll save it and how we’ll share it.”  That was the beginning of her wealth and money education.

If it's down the road like one family I described to you, the same idea of naming is important. If the family has never had family meetings before they may want to begin to have family meetings about their wealth. I often facilitate family meetings around the qualitative or emotional issues that accompany wealthy families.

A three-generation family business had multiple liquidity events over a short amount of time.  That's very new to them and subsequently what they decided to do in addition to getting technical advisors to help them, they also invited me to help them have conversations about what they have and what they want do with it. We held family meetings, conversations among them about what they wanted to do with what they had.  That process intervenes with a sense of the potential of entitlement or active entitlement by beginning to name what we have and how it affects us. 

Randy:    What about the remedial side Gary, that once the kids are older and they realize their station in life and they realize they're going to be big inheritors or they've already been big inheritors and they're just acting as if that was their right and privilege.  How do you correct a situation that may already be out of hand? 

Gary:    In some families, there have been children that had access to credit cards and have maxed these cards out.  The parents pay off the card, and this perpetuates the problem, developing entitlement.  The child doesn't even know this is going on sometimes. When I say child, this could be a 50-year old.  They don't even know how much is on the card because they just go and use it.  If they don’t have limits, they will continue to spend.

What is often necessary is an intervention. How do we do an intervention that is respectful but also firm?  Maybe not all the family members are doing it but maybe one or two are.  It is important for them to come together and talk about how that impacts each other.  There is some emotion there and some anger and typically some anxiety, which equals uncertainty.  For them to name that and to talk about that together in a constructive way is an intervention.  It interrupts what's going on because without it being interrupted, there are no consequences and the problem continues. 

Governance is really about shared decision making.  In this instance, how we decide together to spend and use the credit cards or use the family homes or whatever else it might be that the family shares. 

Randy:    Yes, often this behavior is enabled for such a long time that it's hard to put a stop to and so sometimes there isn’t a way to stop it. 

Gary:    Sometimes it's multi-generational.  When a family finally says this may be over spending or entitlement, which is a sense of self- righteousness, of abusing what the money is, what the wealth is in the family and is then confronted and named, then we can work with it.  It's not easy but it's definitely a great first step. 

Randy:    You mentioned a little while back about families’ joint philanthropic efforts.  Have you seen a big impact that giving has on a sense of entitlement, almost a humbling?

Gary:    I think that's very well put, that sense of humility.  That idea of spend, save, share. A family can accomplish a lot when they start to have conversations about sharing what they have.  They often end up talking about their values and what it is that matters to them.  Maybe it might be environment.  It might be hunger. When they start to talk about those things in family meetings, then what I invite them to do is to talk about what's rooted in why they care about that. Why does that matter to you?  And when individual family members start to talk about that, then they get to the real core values and what I'll do is help a family name what those core values are and then define how else those core values play out in their lives. Also how else do they violate maybe some of their core values? Perhaps, an entitlement issue can be addressed this way. If they violate it, and do they want to continue to violate it or do they want to have a different relationship with that core value? Sharing, and charitable giving, is a great way for individual members in a family but also a family collectively to address and reconcile and name and move in a different direction with the relationship with their wealth.  Philanthropy ends up being a great vehicle to talk about what they have, values, etc.  It even impacts them around spending and investing and how they save. 

One family I serve started to discover philanthropy individually and also collectively. Several of the family members in the third generation ended up realizing that instead of taking their vacations together, which cost this much, that they preferred that that money be given to the cause that they all cared about.  That was a way for them to unify as a family around their values and then also be impactful in the world and subsequently they took another vacation that was not as expensive and they felt really good.  Feeling good is a nice thing, but they really were ultimately impactful in culture.  That was really a boon to who they are, individually and as a family.

Randy:    One of the things you said that I think is really important that I don't want to slide over too fast is that each of the individuals has their own vision of what they wanted to give to but they also did something in unity.  So you can have different values within a family.  Often the younger generation has a different direction they want to go with their giving than their parents do.  And they might be in total opposition to one another in fact.  And there has to be a way to honor that to make it work and it's also nice to add in unified family elements so that they're doing something together as a family in harmony. 

Gary:    There are colleagues of mine that worked with a family where I believe the third and fourth generations currently are the leaders.  The wealth creators would be their grandparents, great grandparents I believe.  They created a family foundation and the foundation was focused on a particular medical issue. By the time the foundation was in the hands of the grandchildren, the illness had been eradicated through their investment and charitable giving into research. The third and fourth generation had to think about well what to tackle next, which is really a great sense of legacy.  They get to create that now and pass on to the fifth generation. 

Randy:    Yes, I see where you're going. 

Gary:    I think when families come together and they talk about what it is that matters to them, and what charitable causes that they care about, is phenomenal. 

Randy:    So those are families that have dealt with the entitlement issue and somehow came to harmony it sounds. 

Gary:    Right, right. 

Randy:   How do we circle back and wrap for kind of a final look at entitlement and what it means? 

Gary:    Families of wealth are concerned about their kids being entitled because ultimately entitlement isolates heirs.  Any individual who feels entitlement is isolated.  What that means is that they become self absorbed and cut off and they don't do well in relationships and therefore their primary relationship is their dependency on the money, on the trust or whatever it might be.  You don't have a mature, self-reliant person.  That creates a lot of anxiety and worry.

The idea of naming if there is entitlement allows us to begin to talk about what we're going to do with it, and keeping it in that simple spend, save, share as a beginning when the kids are young or even when they're adult children, and bringing in conversations about what are we doing.  What does our money mean to us?  How are we in relationship with it?  For families to address these things and get some help from their advisors to do that, can turn around where a family might be already or set the course when the kids are young on a good path. 

Randy:    A good and healthy relationship.

Gary:    A good relationship with their wealth in a positive and mature way. 

Randy:    Great Gary.  Thanks. 

Gary:    Exactly.  

Readers, have you dealt with entitlement in your practice? Tell us your stories in the comments below. The good, the bad and sometimes ugly.

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Re: Randy Fox Interviews Gary Shunk on the Issue of Entitlement

This is a fascinating article. I've had experience with the reverse side of success where parents were so disappointed with their children's lack of respect for money causes the parents to disinherit them.

I think the idea of getting to the problem early is a great one. Also just a discussion of spend, save, give at any age is a great one. I think when you interject the giving into the narrative, that people start to think about what they are spending on themselves and how this unnecessary expense could impact their philanthropy. Any comments on that Gary.

Thanks Gary for your insights.

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