Are there any other options that fall somewhere in between? Well, actually, as multi-family office professionals, when we think about sound management, we do so without losing sight of the enjoyment we’ll derive along the way, nor of the need for appropriate growth. Option 2, therefore, strikes the right balance and covers sufficient ground between the two extremes.
To make the mistake of taking Path 1 is to irretrievably squander one’s fortune in a short space of time. It is a choice from which only the person themselves and their close circle will benefit for a very limited period. The return to the original situation (or one far worse…) is usually difficult and leads to overwhelming personal dissatisfaction, with self-reproach and criticism from others for the mistakes made. Furthermore, the aftermath of such indulgence often leads to numerous social and family problems, contrary to what one might expect.
As for the mistakes that are usually made if we opt for option 3, they are even more regrettable, if that is possible. It is common for a large part of the fortune to be lost in investments and business ventures despite self-imposed austerity, as greed also prevents sound management. Extreme frugality also tends to come to an end with the death of the fortunate individual, and it is common for their heirs to enjoy these fortunes; they will likely opt for option 1, having witnessed their predecessor’s behaviour. In other words, it swings from one extreme to the other, ultimately bringing the fortune’s legacy to an end. Wealth can also be experienced in an unhealthy way, with dangerous tendencies towards gambling addiction, drugs and other vices that will turn the fortunate individual into a human wreck, surrounded by relationships that are unhealthy and destructive both for the person themselves and for their family and wealth.
In fact, it is extremely difficult for someone who hasn’t built up a fortune to manage it properly. I would say it’s almost impossible without the right advice. The coexistence of vast wealth with people who did not earn it but were given it (in the form of a lottery win, an inheritance, certain windfalls, etc.) is an unnatural phenomenon with a very poor prognosis.
For some time now, we have been referring to that artificial, almost always short-lived coexistence as Jurassic Park syndrome. And only with competent and honest advice (which is very hard to come by) will they be able to choose option 2 – that of sound management – from which the fortunate few, as well as future generations, will benefit, without in any way neglecting personal and material enjoyment.
A notice to beneficiaries of inheritances, winners of various lotteries and those who have come into sudden wealth in general: You have three paths before you, and your future and that of your heirs depends on which one you choose now. There is no turning back, nor are there any second chances to correct mistakes.