A Billionaire's Guide to Raising Money-Smart Kids
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What happens when wealthy parents hide their net worth from their kids for 20+ years, then spring a surprise "trust reveal party" on them?
Spoiler alert: it gets messy.
In this episode, I contrast two wildly different ways to talk to kids about money.
Join me to explore why one path creates resentment and confusion, while the other builds trust and financial competence.
If you're nervous about raising entitled rich kids, this episode is going to challenge everything you think you know about money and parenting.
SHOW LINKS:
Trust Reveal Parties WSJ Article
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Transcript:
Hey, I'm Katherine and thanks for joining me at Heir Necessities, the podcast that turns complex financial topics into real talk for Gen X, millennial and Gen Z inheritors. Each episode of this podcast, I break down a different topic related to generational wealth and inheritance. My goal is that you can stop asking Google or ChatGPT what to do with your money and come here instead for real talk, real advice and real solutions that you can start implementing.
On this episode of Heir Necessities, we are diving into something totally new. It's a new feature I'm trying called Article Blast. I take an article that's about generational wealth, inheritance, whatever, I tell you a little bit about it, and then I tell you why I think it's great or not.
Wall Street Journal's Gunjan Banerji: How Ultra-High-Net-Worth Families Discuss Money With Children
This is a special first episode because I've actually got two articles that we're talking about. Both are from the same reporter, a Wall Street Journal reporter named Gunjan Banerji. She does a lot of this reporting on ultra, ultra high net worth families, how they talk to their kids about money, which obviously is really interesting to me.
And I think it's probably going to be interesting to you as well, especially if you have kids. Because there is some absolutely wackadoo stuff in one of these articles.
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What Are Trust Fund Reveal Parties?
Let's dive into these two articles that I'm talking about today. The first one is an article about trust party reveals, which is basically where ultra high net worth families get together with all of their kids and also probably all of their advisors, so a bunch of men in suits, to sit them down and tell them for the first time, this is how much money we're worth and this is how much you're getting.
These trust fund reveal parties usually happen when kids are older. So kids are in their 20s, 30s, maybe even older and are generally again supported by professional advisors. These aren't cozy conversations happening in family homes. These are family business meetings.
Kenn Ricci Interview: Billionaire Approach to Family Wealth
The second article is a totally different take by EasyJet founder and billionaire Kenn Ricci. Kenn was interviewed by Gunjan and honestly, I think it's maybe one of the best interviews that I've read. I'm dropping links to both of these articles below.
And I just want to contrast really these two articles who are both by the same person, we have the same interviewer, we're talking about the same kind of net worth, right? Kenn Ricci is a billionaire. The people she was talking about in these trust fund reveal party articles are, you know, they have hundreds of millions, if not billions of dollars.
Very, very, very high net worth individuals, right? Top of the 1%. And they have totally different outlooks on money.
Because when you hear what Kenn Ricci is saying, his central message is, if I didn't raise my kids right, hiding my net worth from them is not going to stop them from being spoiled. Which is like such a simple thing. And basically what I say, although I'm not mean enough to say it directly to people, but your kids are not stupid.
They have the internet. They can look around. They can see how much your house is worth.
They can see how much your vacations cost. They know how much your cars cost. Your kids know if you are rich.
Why Financial Transparency With Kids is Essential
So what are you hiding from them? You're not hiding the fact that you're rich. If you are, that's kind of a totally different conversation.
You're hiding how much money they're going to get and how they're going to get it. And you think that by hiding information about their future, you're gonna create so much confusion in them and they'll think, maybe I won't get any money and then they're gonna work harder.
The absence of information is not how trust is built and not how strong financial decisions are made. If you think I can't trust my kids with money, so I'm not going to tell them anything, what happens if you die tomorrow? If you died tomorrow, all of that money would go to your kids and then they would have to figure out what to do with it.
So you know that whole live today like it's your last day? That applies with money too. There is no guarantee that you are going to make it another 20 years.
Yes, statistically maybe, but you need to act and be honest with your kids about the amount of money that they're gonna get. And this honesty should start early. Way earlier than you're comfortable with.
So let's go back to Kenn Ricci. He sits his kids down for family meetings once a quarter. He shares his entire net worth with his kids.
And then he has his kids go around and share their net worth with each other. This radical honesty, openness, and transparency is what you should be practicing with your kids.
Teaching Children About Money: Age-Appropriate Financial Literacy for Toddlers and Young Kids
If you have little kids, yeah, I'm not gonna sit my four-year-old down and tell her how much we're worth, right? That makes no sense. She has no concept.
But we can start talking about money. We can start talking about how our family evaluates money decisions, how we spend our money, why we spend money. We can start teaching her about the trade-offs of costs and benefits.
If I get this and I spend the money on this, then I don't get Y. Or if I spend this much money on this type of thing, it makes me feel a certain way. I don't like feeling that way. I don't feel like it aligns with my values.
Answering Kids' Money Questions: Age-Appropriate Financial Honesty Without Oversharing
And then as she gets older and as she's curious and as she asks questions, we are going to answer those questions with honesty. It doesn't mean that we're going to answer those questions by fully opening the floodgates of information, but we are going to give her age-appropriate honest answers, and if there's something that we won't tell her, we will tell her why we're not going to tell her and when we will be comfortable with it. Not necessarily attaching an age to that decision, but more of a when we can trust that you know how to keep this information private, because even though I'm telling you, that doesn't mean that I necessarily want you to go and tell the world.
We're going to do it the Kenn Ricci philosophy. This philosophy about how families should talk about money is how my family talked about money. He is the first person I've seen publicly that's in that older generation that is examining this philosophy, which is honestly exactly how my parents raised my brother and I.
We share about family money. Yes, my family isn't billionaires, but I know my parents' net worth, my brother knows my parents' net worth, I know his net worth, I don't know if he knows mine, but I would tell him if he was curious and he asks, he's just less nosy than me.
Family Money Conversations: Reducing Financial Anxiety Through Open Communication About Wealth
And more than that, we talk about money and giving. When my parents give one of us a gift, they give the other one an equal gift. We talk about it, it's right-sized, it's all an open conversation.
I know how their money's gonna pass when they die, I know their plan, I know who their financial advisor is, I know what they're working on with their financial advisor. And I don't wonder and I don't feel stress or anxiety about those money conversations because we have been having those money conversations since I was a preteen and there are muscles that we have really exercised and built on.
And so then I want to take this Ken Ricci interview, super open, radical honesty, radical transparency money, the way that I think you should be talking to your kids about money. And then want to contrast it against this other option, these trust reveal parties, where basically you tell your kids nothing.
Because you think they're gonna get spoiled. So you give them confusing messages, right? Where obviously they know you're rich, but they aren't allowed to act like they're rich because then they're spoiled.
But they have money, but they don't know how much money they're gonna have. So they've been operating in this liminal space for their entire lives, which again, we're talking 20, 30, maybe even 40 years. They've been in this weird space where they cannot talk to you about money because you get grumpy when they do or you shut them down.
Why Trust Reveals Fail: Decades of Resentment and Mixed Messages
Because let's be honest, if you're having one of these trust reveal parties, that has been the nature of your money relationship with your kids their entire lives. And then when they're grown ass adults, you sit them down with a bunch of men in suits and you're like, surprise, we're giving you $30 million. It's like, yes.
I'm not saying that's a bad thing, but you have given them no education, no support, and no foundation up to this point. And probably there are times in the past when they feel like you could have supported them and you didn't, and they are upset about that because they never had a chance to get an open conversation with you where they would have said, I could have used financial support in this area. You didn't give it to me and that upset me.
And you can just talk about that honestly. But now you're in a situation where you're sitting with a whole bunch of people who are not family and you're trying to have this first conversation like it's Christmas morning. It's not Christmas morning.
There is 20, 30, 40 years of resentment and confusion and mixed messaging all wrapped up in these trust reveals. And you see it if you check out the article, if you read it, these things can get incredibly tense because kids were also not consulted in any of these decisions.
The Dangers of Financial Secrecy in Wealthy Families
It's the parents, and let's be real, it's the parents' advisors who just kind of serve as this echo chamber back and forth to each other to say, yep, that sounds great, that sounds great. And nowhere in there has there been an actual family conversation about money, a family conversation about values, about stewardship, about maybe money mistakes that parents are willing to admit to, whatever.
You're just kind of coming in like rip the band-aid off and then pretending that everything is fine. But that is not how money works. I understand that it can be scary to talk to your kids about money.
I understand the fear that you are gonna raise spoiled, entitled kids. But what I think is absolutely wrong is this, well, I think my kids are gonna be spoiled so I'm not gonna give them anything and I'm not gonna tell them anything.
If you're not telling your kids about your wealth because you think they're going to be spoiled, you aren't creating the conditions for them to succeed. If you're not telling them about money because you don't want them to feel entitled, they won't end up being entitled, but what they will be is confused, anxious, and most importantly, they will have no idea what to do with money because you never taught them.
Unprepared Heirs: What Happens When You Die Without Teaching Your Kids About Money
And so when you die and spoiler alert, you are going to die. They are going to be floating alone in a sea of confusion because they got no advice from you. And all you left them was a restricted trust fund and a whole bunch of men in suits.
That is not a recipe for success of preserving family wealth across generations. Even if it preserves family wealth, is your ultimate goal that everyone will stay rich in your family for generations? Or is your ultimate goal that you are going to raise smart, self-sufficient people who understand money and understand what to do with it?
Starting Money Conversations With Your Kids, Today
You have the tools to talk to your kids about money. Just literally sit down and start. And yes, it might be scary.
And yes, especially if your kids are older and you haven't had these conversations, it might be confusing. There might be a whole lot of baggage there to unpack. But unpacking it now is the best gift that you could give your kids.
Because if it's their job to unpack it after you die, you've lost your ability to reframe that narrative and to create something positive and enduring in having that conversation about money and values. Because that conversation and those values, that's what transfers down across generations. And if you transfer those values and that knowledge down across generations, then everyone is going to be fine, even if they have a little bit more or a little bit less money.
I know my takes on raising rich kids can be a little bit controversial, but based on my personal experience, I really do believe that radical honesty is the best way forward. And this is an essential part of what I work on with clients at Sunnybranch Wealth.
If you're interested in learning more, you can always reach out to me by email, katherine@sunnybranchwealth.com. You can find me on Instagram @sunnybranchwealth or you can just hang out here, keep listening to Heir Necessities. I'll have another episode coming for you in a couple weeks.
Let’s take the next step together
Understanding how to manage, invest, grow, and/or give away multi-million dollar inheritance isn’t easy. Inheritors can encounter a wide variety of different situations requiring knowledge and finesse to manage. If you need more help, reach out to Katherine Fox, CFP® and CAP®, financial planner for inheritors, to learn how Sunnybranch can help you evaluate your financial situation and build a plan for your financial future.
