By Caroline Kendal, Head of European Membership Development, TIGER 21
With great wealth comes great and unique challenges. Whether self-made or inherited, those who enjoy substantial wealth are often more focused on preserving and protecting capital, rather than trying to accumulate additional wealth. As Michael Sonnenfeldt, Founder of TIGER 21 — the premier peer membership organisation for high-net-worth wealth creators and preservers — and author of Think Bigger: And 39 Other Winning Strategies from Successful Entrepreneurs asserts particularly for wealth creators: “The biggest challenge is often not making money but rather protecting the money they’ve made. Doing so requires them to adopt a new mindset and not think like an entrepreneur.”
Those who accumulate great wealth, either over time, or under sudden circumstances — after a business sale or other liquidity event, tend to seek the guidance of wealth managers and other financial advisors, particularly if their investment expertise isn’t as sophisticated as their entrepreneurial skills. But often, entrepreneurs who have made the money “themselves” and “by their own hands” are not comfortable relying on third party managers, even when those managers have expertise that the entrepreneur does not.
As Sonnenfeldt explains: “Understanding the difference between entrepreneurs and investors is the surest way for entrepreneurs to prepare responsibly for the sale of a business – and the wealth preservation that follows. The next step on the way to becoming the CEO of one’s personal investment company is to begin educating oneself in the fundamentals of finance and investing.”
Even the most financially shrewd ultra-wealthy individual should seek advice from a number of professional advisors as well as turn to their peer networks to assess the advice they receive. Interestingly, the main reason why most entrepreneurs join TIGER 21 is to become better investors.
Notwithstanding a thoroughly researched and vetted team of advisors, a devoted family and a strong circle of friends, wealth can also lead to feelings of isolation. These feelings of isolation, which are often amplified by great personal success, can prove to be a significant challenge. Matters of estate planning, wealth transference, and philanthropy take on added significance and consequences, which can best be understood by others who have accumulated considerable wealth and have themselves confronted these issues. Peer-to-peer organizations like TIGER 21 address these concerns in small confidential groups, enabling serious discussions and new solutions for these challenges.
The often unavoidable sense of difference that an ultra-wealthy individual feels with family, friends and colleagues, means that it is only natural that he or she will also experience diminishing levels of trust with an increasing need for support from independent, authentic peers. This need is intensified by the advent of new anxieties after a liquidity event, which now flood in and replace prior financial concerns – such as health, popularity, respect, and the risk of legal issues.
Concerns that impact thoughtful adults across the wealth spectrum take on a heightened pertinence with the ultra-wealthy. In particular, how to motivate their children to succeed in their own right whilst instilling a sense of humility in them. After attending more than 300 TIGER 21 meetings over the 19-year-period since he founded the organisation, Sonnenfeldt can confidently claim: “The number one question on the minds of most of our members is: ‘How do I support my children without spoiling them or destroying their ambition?’ We all worry about the next generation and want our children to be happy, healthy, confident, and successful and the presence of significant wealth, whilst providing plenty of opportunity and security, poses added, real threats to the achievements of those universal aims.”
In situations where an ultra-wealthy adult has a number of children or an extended family who all seek to benefit from his or her wealth, he or she will rightfully worry about the potential of family squabbles becoming epic battles, which could permanently devastate family relationships.
Despite these serious considerations, great wealth brings many opportunities. With respect to the next generation, the ultra-wealthy have the benefit of knowing that they have the ability to provide financial security for their current family and potentially also future generations. They also have the potential to make a positive and lasting impact on the lives of others outside of their families. The ultra-wealthy have the space and time to define and develop their purpose. To that end, they will want to surround themselves with ideas and opportunities to realise their aims and create a meaningful legacy.
The ultra-wealthy are also likely to have another great asset over their less wealthy peers, of which they often forget to take advantage, namely, “time.” Time to discover and nurture their interests, time to learn new skills and expertise, and time for social pursuits and hobbies.
Therefore, whilst countering the real challenges presented by high-net-worth and the anxieties that follow, the ultra-wealthy need to remember to allow themselves opportunities to enjoy the fruits of their success. This may sound obvious to those who haven’t created significant wealth but as Michael Sonnenfeldt rightly states: “Many entrepreneurs, however, end up delaying gratification for so long that even when they can afford to spend as much money as they want, they don’t. It’s a disturbing irony for many wealthy people.”
The most effective way to create a healthy balance in the lives of the ultra-wealthy is to discuss these topics with trusted peers by gathering their own group of advisors to help them gauge how well they are managing their personal life, their business, and their money. Being a member of TIGER 21 is like having your own “personal board of directors,” powered by the collective intelligence of a group of exceptionally successful wealth creators, in a confidential setting within the safe harbor of a non-selling, no-promotion zone. Outside of that type of protected environment, it can be hard to know who to trust so that wealth can be safeguarded so that its positive impact is maximised.
For more answers to your questions on protecting your wealth as well as tips for successful entrepreneurship, read Michael Sonnenfeldt’s new book, Think Bigger: And 39 Other Winning Strategies from Successful Entrepreneurs, which is available in print, on Kindle, and on audiobook.
For more information about TIGER 21, please visit tiger21.com.