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After the Windfall
Anne Field
09/01/2004
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At other times, entrepreneurs simply fail to thoroughly
consider the consequences of their actions—however generous their intent.
DiFuria points to another client who suggested to his sister that he pay for his
favorite nephew to attend a private school. His sister quickly chastised the
client for interfering with and undermining her husband’s feeling of self-worth
as a provider. Goldbart suggests that the newly wealthy become crystal clear
about their intentions when they offer money or gifts, and adhere to a
hard-and-fast rule: “You have to manage the impact of your wealth on others,” he
notes. “Giving money to people has a powerful impact.”
Newly found wealth can
often affect our most delicate and treasured relationship with our spouse. In
Cook’s case, she and her new husband became partners in her first year of
wealth, and together they forged their new life together. But, of course, they
also were newlyweds. Standing marriages face more difficulties. A spouse
unaccustomed to being in the limelight “suddenly may find herself being put on
boards, forced to be in a world she has no background for,” says Hausner. The
couple might realize they have irreconcilable goals for their new wealth—one may
want to establish a foundation to help the less fortunate, while the other would
rather invest it entirely for the family. In other cases, conflicts arise as to
how to treat the children. “One spouse will want to be as generous as possible;
the other may say, ‘Don’t leave them a lot and let them work for it,’” says
Hausner, who nonetheless reports that she has not witnessed many marriages
destroyed by newfound affluence. But, she adds, the money can magnify the
tensions and disagreements present in any relationship.
Surge of Solicitations
If our windfall becomes public knowledge, however,
we are bound to attract unwanted attention. Because Fernandez’s IPO was covered
by the media, he was deluged with requests for charitable donations—letters,
calls, emails. “Some were heartbreaking, others weird,” he says. Fernandez
recalls going to a breakfast with someone from a nonprofit advocacy group soon
after the IPO and was stunned at how quickly and unceremoniously the person
started asking him for money. “I think we hadn’t even been served coffee before
he asked me for a million bucks,” he recalls.
Cook’s deal received a fair
amount of local press. She, however, was prepared. Before she sold her company,
she met with an attorney who specializes in nonprofit work. Two months after the
deal was signed, she established a family foundation with its own email address
and website. When the news of the sale hit the papers, and requests for
charitable donations started pouring in, she was ready to accept inquiries.
Ultimately, the key element affecting how entrepreneurs react to new wealth
is what Hausner calls “the money messages” they received as children. “Money can
be a very emotionally charged subject. If parents argued a lot about it or used
it to manipulate their children, that can have a lot to do with how
uncomfortable people are” after a windfall, she explains. DiFuria recalls one
entrepreneur who suffered a bout of guilt because he had so much more money than
his parents, and, as a result, was unable to do anything with it. “He felt he
had surpassed them, and it wasn’t right,” she says.
Fortunately for Cook,
those traumas never existed. “My parents, teachers, everyone else I knew, always
told my sister and me we could do anything we wanted,” she says. “And we
have.”
Tiger Tales
Suddenly wealthy entrepreneurs who are at a total loss as to what
to do with their new money have an ally. Michael Sonnenfeldt, a former
entrepreneur himself, oversees The Investment Group for Exceptional Returns in
the 21st Century, or Tiger 21. Described by Sonnenfeldt as a peer-to-peer
learning group for affluent investors, Tiger 21 now runs three (soon to be four)
groups, each with a cap of 12 members. Monthly meetings are held in New York,
but include members from around the country. Group attendees help each other not
only choose investments, but also address other crucial issues they face, from
how to bring up children to what to do with the next phase of their
lives.
Membership is not for everyone. Tiger 21 candidates must have an
investable net worth of $10 million to $100 million, and pay annual dues of
$20,000. For more information call 1-888-TIGER-21 or visit www.tiger21.com.
Illustration by Ed Fotheringham.
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