For many CEOs, the definition of a nightmare is two words: Ethan Couch. Remember him? Back in 2013, the spoiled scion of a roofing and construction company entrepreneur killed four people in a drunk-driving wreck in Texas. His lawyer, using the “affluenza” defense, argued that the 16-year-old had been so pampered, he didn’t know the difference between right and wrong, and the presiding judge sentenced the teenager to 10 years’ probation with no prison time. After he violated the terms of that deal by participating in a beer pong game, he and his mother fled to Mexico, where they were apprehended two weeks later.
Earlier this year, a different judge sentenced him to two years—180 days for each of the four people killed in the crash. Perhaps the thorniest conundrum for CEOs isn’t forming a successful corporate strategy, getting along with the board or meeting quarterly projections. It’s raising their kids in an environment of affluence—how to bring them up to be productive, self-confident, generous and just plain good people. “This is a topic of great concern among many of my clients,” says John Nersesian, senior managing director of Nuveen Investments, who works with high-net-worth families, many of them headed by current or former CEOs. In fact, a 2014 study of 3,000 wealthy families conducted by Withers LLP and Scorpio Partnership found that their greatest fear, after serious health problems, was, “My children will lack the drive and ambition to get ahead.”
That’s not a misguided concern. Ensuring your children benefit from your financial success without becoming spoiled, dependent, entitled brats biding their time until their trust fund kicks in is no easy feat. Yet avoiding the “silver spoon syndrome” is possible, say experts who work with wealthy families. “The families I work with that are the healthiest understand that their financial capital is the least important thing they can give their children,” says Anne Hargrave, senior consultant with the Family Business Consulting Group. “What’s important is how they develop their children.”
“I created a platform for them to find out what they’re interested in and then supported them in those interests.”
The general rule of thumb is that the lessons begin and end with you, starting when your kids are very young. That means you need to be the model for whatever behavior and values you want to see in your children. “Children learn by what their parents do, not what they say,” says Dr. Kyle Pruett, professor of child psychology at Yale University.
“They’re watching you with great interest.” That’s particularly true for how you act with strangers in everyday interactions—people from whom there’s no expectation of getting something in return. If they see you going out of your way to help a homeless person on the street, say, or talking politely to the telemarketer (yes, that’s a hard one), you send a clear message about respect and empathy. On the other hand, if you only talk a good game, your kids will notice, and the older they get, the more cynical they’re likely to become about the discrepancy. “Teenagers tell me, ‘My parents say I should do community service, but the only people they have time for are people who can do things for them,’” says Pruett.
Because consistency is crucial, another prerequisite is that you and your spouse discuss what you’re going to do beforehand—and back each other up. “You have to be on the same page,” says Andrew Glincher, CEO of Nixon Peabody, the Boston-based mega law firm, and the father of three kids who are now in their 20s. When their kids were little, he and his wife decided on a number of steps they would take, such as insisting their children get jobs when they turned 14—babysitting or working at the local supermarket, for example—and not paying for unnecessarily expensive clothing. (The kids had to make up the difference if they wanted to buy pricey brands.)
Even more basic is examining exactly what values you want to convey. Scratch the surface and many CEOs may realize they’re not really interested in “good.” In fact, Pruett says that while he’s often asked by top execs what they can do to help their children be successful, he rarely hears much concern about guiding them to be good people. The point is, if that’s really not what you’re after deep down inside, your children will detect it in a heartbeat.
Once you’ve done that soul-searching, your focus should be on developing a sense of competency and self-worth in your children. That’s especially important for children of successful, high-achieving parents, who often fear they won’t measure up, according to Hargrave. She’s not talking about encouraging your kids to build the next Apple. Instead, it’s about helping your kids find their strengths and areas of interest—occupations and pastimes that will give their life meaning, help them to define themselves by something other than their wealth—critical elements in developing their own true north.
ENABLE, DON’T DIRECT GROWTH
She points to a successful entrepreneur and father of seven who, starting when the children were little, set up stations in the basement for each one to pursue his or her particular interest—painting, say, or chemistry experiments. If a child’s inclinations changed, he went with the flow and helped set up activities related to that new interest. Hargrave reports that they’re all grown now and, with one exception, are all successful entrepreneurs.
Or consider a former telecommunications CEO in the Northeast. The father of three kids, now between the ages of 20 and 27, says, “I created a platform for them to find out what they’re interested in and then supported them in those interests.” For example, when his youngest daughter was in the eighth grade, she saw the play The Curious Incident of the Dog in the Nighttime, which is about an autistic boy, and became fascinated by the subject—so interested that she saw the show 10 times. As the years went by and she continued to display a passion for learning about the condition, her father made a point of supporting her interest by, among other things, showing her articles about research into autism in the bulletin of MIT, his alma mater. She’s now majoring in psychology and planning to work with autistic children.
What’s more, he made sure not to get in the way, even when he wasn’t sold on a child’s particular passion. He didn’t object when his oldest, an avid traveler, decided to take a gap year, even though that option wasn’t popular at the time. Only when he feared for her safety in her destination of choice—Sierra Leone, which had recently ended a gruesome civil war—did he step in and insist she select another location. Ultimately, her travels to different developing nations led to her studying hydrology. “She went to so many places where access to water is difficult, she learned how important that is,” says her father.
AVOID THE OVER-ACHIEVER TRAP
While that all sounds like a good idea, it doesn’t necessarily come naturally to every CEO. Fact is, many top executives are hardcharging, high-achieving types who may not realize the pressure their kids feel living in their shadows. On top of that, they often give their children lots of things to compensate for all the time they spend away from home.
“Parents use money as a substitute for being there,” says William Messinger, an attorney who also works with children of affluent families struggling with drug addiction. That stress can be particularly devastating for children who aren’t top students or athletes and assume they just don’t measure up. Messinger points to the daughter of a CEO, now in her 20s, who developed a serious substance abuse problem while she was in high school, where she fared poorly as a student and hung out with other low-achieving stoners. “She attended a private school, and there was a lot of pressure to do well,” Messinger says. “She ended up getting in trouble a lot, embarrassing the family.” Then followed a period where she was in and out of rehab facilities.
Eventually, the parents turned to Messinger, who had to hire a private detective to track her down and then took her to a different treatment center. There, diagnostic tests revealed she’d been struggling with a learning disorder her whole life. “It’s very hard to be part of a successful family if you have a learning disability,” he says. In some cases, it’s when children of high-achieving CEOs leave for college that the pressure they’ve been under explodes.
Handled intelligently, however, that can lead to positive results, says Stacy Allred, managing director of the Center for Family Wealth Management and Governance at Merrill Lynch. She cites a CEO whose college-age son announced he wasn’t interested in school and wanted to drop out. Instead of forcing him to stay or allowing him to drift, his parents encouraged him to take time off, but to do something constructive in the process. Eventually, the son moved to a different state, supporting himself with the earnings from a job he found there and, two years later, returned to school.
Reining in your fears and expectations can be challenging. Lee Hausner, who worked as a psychologist at Beverly Hills High School for 17 years, recalls a CEO who came to see her about his son. The boy was underperforming in school and his father feared his kid was repeating the mistakes his old man had made at the same age. Hausner pointed out that the man had turned out pretty well, running three successful companies, and she was sure his son would be just fine. That seemed to calm him down.
Ultimately, it’s a matter of flexibility: listening to your kids and forcing yourself to be open to ideas different from your own. You’re looking for engagement in your children, not perfection. “Your role is to be a cheerleader,” says Hausner, now a wealth advisor and psychologist in Los Angeles who specializes in psychological issues involving wealth. “You follow the interests and passions of the child you have, not the child you imagine you would like to have.”