Since the 1970s, economists have been observing the dropping costs of everyday items such as clothing, electronics, and food. Lower costs for these kinds of items are usually considered the spoils of globalization due to free trade and technology innovation. For the past two decades or so, we’ve also heard more and more about the implications of all this easy access to daily necessities: overly materialistic kids, a “throw-away” culture, and epidemic health problems from too much junk food.
In his recent book, The Challenge of Affluence, Avner Offer, a professor of economic history at Oxford University, suggests that chasing affluence creates a ‘hedonic treadmill’ or ‘rat race.’ Offer explains, “If these rewards arrive faster than the disciplines of prudence can form, then self-control will decline with affluence.…New rewards are compelling, while their costs are not yet known.”
In the 21st century, however, Americans are slowly becoming aware of the dangers of having too much. Along with that awareness, we’ve also increased our familiarity with possible remedies. We are beginning to understand “sustainability”—making sure that what we use can be re-used in some way—and promoting nutritional activism, such as the organic food movement and the elimination of sugary foods from schools. In each of these cases, we, as a society, are starting to recognize excesses and are working towards moderation.
Someone said to me the other day that if the last century was about industrialization, this century is going to be about behavior modification. In other words, we spent the last 100 years successfully learning how to mass produce everything, now we have to learn how to curb our own appetites.
What does this have to do with your high-net-worth clients? Those clients often experience life stages similar to that of the nation’s. When most of your clients were starting out—either starting a young family or building their own businesses and careers—they tended to have a very narrow focus. After all, it takes a great deal of time and effort to build and secure a good life for your family. Upon reaching some level of security, they begin to focus on other areas of their life: their health or refining their professional development. As they experience more financial success, they start to enjoy the fruits of their labor—travel, second homes, collecting art, wine, or other hobbies. Finally, they become conscious of the community. Whether they define their community as a local neighborhood cause or the global community at large, it’s typical for your clients to begin acting philanthropically after they’ve shored up the success of their own families and businesses.
This hierarchy of values—beginning with your family’s safety, then on to your improvement as a person, then to the environment—is a predictable series of stages that explains why your more affluent clients have a keen and growing interest in charitable and generational financial planning. They’re considering their legacy, but before they could get there, they had to concentrate on their own success.
Now is the time of year when we acknowledge our country’s origins. It’s also a time to marvel at how far we’ve come as a nation. Some say that the previous century was America’s Century, just as some might believe that your clients’ greatest accomplishment was their accumulation of substantial wealth. However, I believe that some of your clients’—and the nation’s—greatest contributions lie ahead as people allow themselves to look inward and discover what will bring them the deepest reward.
I’d be interested to hear about what motivates your client’s interest in philanthropy. Post a comment here or send me an email at lewisschiff@advancedplanning.org.
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