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A lot of people think "the wealthy" are a homogenous bloc – a bunch of people who act the same, think the same, and live the same.

Turn on the TV and you can see what I mean: a collection of trust fund babies, robber barons and ego-fuelled athletes, all of them spending money without a care in the world, all of them generally clueless about how normal people live.

Of course, these are ludicrous caricatures. The vast majority of wealthy people are nothing like what Hollywood makes them out to be. Nor are they all cut from the same cloth – in terms of their spending habits, or anything else for that matter.

In actual fact, where your wealth comes from can make a big difference to who you are. It can also make a difference to your behaviour and your thinking on subjects as diverse as parenting, charity, or even politics.

I came across some interesting research by Dr. James Grubman (a psychologist) and Dr. Dennis T. Jaffe (a sociologist) that affirms this observation. The research proposes the wealthy can be categorized in three broad groups. "Immigrants" are newly-arrived to wealth, while "natives" were brought up in a wealthy environment. "Blended" families are a combination of the two.

This psychological insight is of obvious interest to anyone who works with the wealthy – accountants, estate lawyers, wealth advisors, etc. But I think there's something of interest here for the broader population as well.

Simply put, there will be a lot of people who come into wealth in the next decade or so as the baby boomers receive the largest inheritance in history (U.S. consulting giant Accenture estimates the figure to be close to $12-trillion in U.S. and Canada).

Of course, not every one of those transfers is going to involve millions of dollars. Even so, I think it's fair to say we're likely to see a lot of new "immigrants" to wealth over the next several years. The children of those immigrants may well end up being "natives" to wealth. What are some of the challenges (financial and personal) those new immigrants are likely to face? How will their "native" children and grandchildren deal with wealth? How will "blended" combinations behave?

These are important social questions, and the answers can have broader implications on our economy, and our society as a whole.

"Immigrants"

Most high-net-worth individuals (60-80 per cent depending on the country) earn their wealth, either through business ownership, or by being highly paid professionals. Most of these people "immigrate" to wealth from a different class or lifestyle. They typically espouse the values of frugality and hard work, and tend to resist the personal transformation and lifestyle changes brought on by wealth.

The primary challenge for immigrants is managing the life changes that wealth brings. They often struggle with ensuring children and grandchildren remain motivated to work in the face of material abundance, and worry whether their kids will grow up materialistic or self-absorbed. They often have to deal with strained relationships with friends and family who have less wealth than they do.

From an investment perspective, immigrants sometimes struggle making the mental switch from wealth accumulation to wealth preservation . After so many years concentrating their wealth in a single business asset, they can often find a well-balanced, diversified portfolio antithetical to their financial values.

"Natives"

These are individuals who were brought up in an environment of affluence. While they may or may not be wealthy themselves, they will almost certainly be affected by the wealth that has been part of their lives.

The challenges facing wealth natives are distinct from those facing immigrants. Natives can have a hard time establishing independence (either financial or personal) because of the dominant role wealth has had shaping their identity. Some natives struggle with trying to live up to the lofty expectations of highly successful parents – that can have profound implications on their personalities and their ability to find meaning in life.

When it comes to investing, natives tend to value stability and security, and tend to think of risk in terms of danger instead of opportunity. Because they often have less experience in creating wealth, they often put the bulk of their assets into "safe" investments such as bonds and GICs, sometimes to the detriment of long-term goals.

"Blended" families

Families that bring together the wealth immigrant and the wealth native might be considered "blended" families. Such pairings often experience unique stresses and pressures.

The combination of distinctly different attitudes and identities into a single family unit can cause significant friction. The immigrant can sometimes feel like an "imposter" in the wealthy world, while the native can sometimes feel uncomfortable making financial and lifestyle compromises.

Financially, blended families face a number of challenges. One partner may have radically different spending habits from the other; one may have established advisory relationships while the other may have never discussed money with a professional. All of these may end up creating conflict if left unaddressed.

I have learned over the last 25 years of my professional life to make sure I fully understand my client's individual history and background, so that I can relate to each family member through their "lens."

Thane Stenner is founder of Stenner Investment Partners within Richardson GMP Ltd., as well as portfolio manager and director, wealth management. Thane is also Managing Director forTIGER 21 Canada. He is the bestselling author of ´True Wealth: an expert guide for high-net-worth individuals (and their advisors)'.www.stennerinvestmentpartners.com(Thane.Stenner@RichardsonGMP.com). The opinions expressed in this article are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Ltd. or its affiliates. Richardson GMP Limited, Member Canadian Investor Protection Fund.

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