Is there love in money? How families put wealth into perspective

The way individuals and families perceive their wealth has a profound impact on how money is valued and used.

Authored by the Merrill Center for Family WealthTM


We think about money—and wealth—in different ways, and those ways matter. That's why when we dismiss perspectives that differ from our own, it's more than just a missed opportunity. This lack of awareness can also create unintended consequences and hamper our ability to effectively use family wealth.

Don't dismiss the different ways we think about wealth: They matter.

Consider a father who insisted on buying his daughter a luxury sports car when she graduated from college and began her career in education. The father believed that gifting his daughter a nice car would free her from the worry of using her teacher's salary to pay for the vehicle. But he failed to realize that his daughter didn't want an expensive car. She wanted a practical car to get her to and from work, one that didn't stand out among her colleagues' vehicles. So, instead of unifying the parent and child, the car put a wedge between them.

What the father considered a source of financial freedom and fun, the daughter saw as a source of anxiety and tension. Instead of discussing their different perspectives, both remained silent. The daughter couldn't understand her father's intent; and he failed to grasp his daughter's values. As a result, the father was confused as to why his daughter did not appear more grateful, while she was confused by his desire to impose a car on her.

An individual's wealth framework has a profound impact on outcomes,from distributions to saving and spending.

Who was right? Maybe both, suggests a survey of wealthy families conducted by Merrill (“Reframing Wealth,” Merrill, published 2016).1 The survey found that different people perceive the same wealth, or money in general, in vastly different ways.

This perception is a way of "framing" wealth, which is to say that individuals build their own awareness, or framework, that helps them think about their values and goals for wealth. The survey findings were striking: An individual's framework for their wealth has a profound impact not only on their thoughts and feelings about wealth, but also on the outcomes of wealth—for instance, on how money is distributed or spent.

Sixty-nine percent of survey respondents across all generations and asset levels said they believed that initiating a conversation about wealth created an opportunity to clarify how wealth decisions should be made. And 51% responded that conversations empower those facing these decisions. Putting the right framework in place can help families make decisions better aligned with their desired outcomes, from distributions to saving and spending goals.


Communication is an opportunity, not an obstacle

The majority of survey participants saw communication about wealth as a chance to gain clarity and empower decision-makers. That said, millennials were much more likely to say that initiating wealth conversations were a sign of disrespect or were only for those interested in inheriting wealth.

Source: “Reframing Wealth,” Merrill Lynch Private Banking and Investment Group.
Data compiled February 2016.


Consider that research showed 69% of older respondents saw monetary gifts as expressions of love, while only half of the generations that came of age after the turn of the century—millennials—did. Millennials were also more skeptical about gifts than other generations: 30% of them saw gifts as a way to exert influence, as compared with just 10% of those aged 51–69. Interestingly, there was the same level of acknowledgment (38%) that gifts were a tax optimization strategy.



Most consider monetary gifts as an expression of love

However, seeing gifts as love varies markedly by age, and millennials were more likely to see gifts as a way to influence family members.

Source: “Reframing Wealth,” Merrill, published 2016. (Latest data available.) 


Rethinking, or reframing, your (and your family's) perceptions of wealth may help you avoid the type of confusion the father and daughter felt about the car. The way you perceive wealth may not only become the default framing for your children and grandchildren, but it can also impact financial outcomes for generations to come.*

Perceptions can affect financial outcomes for generations.


I. What Is Framing?

One of the most well-known examples of framing is the glass-half-full scenario. When shown a glass that is filled to the midpoint with water, you can describe it as half full or half empty. The example is often used to help explain the differences between optimism and pessimism, but it can also apply to how information is positioned (i.e., framed).2

Survey methodology

For the Merrill Lynch Private Banking and Investment Group “Reframing Wealth” survey, 609 high-net-worth (HNW) individuals, with assets of $3 million or more, completed an online survey in October 2015. In addition, 23 respondents who completed the survey participated in one-on-one online conversations with a moderator about how HNW individuals think and feel about their wealth, what it actually represents and how much discussion there is in their inner circle about their wealth. The sample for the qualitative interviews was 23 men and women aged 18 or older who have $3 million or more in household assets.


Think about whether you'd drink from that glass. If someone describes it to you as half empty, would you be more or less inclined to drink from it? What about half full? A half-empty glass may have been sipped from, whereas a half-full glass may have just been filled. Taking it one step further, you also might ask yourself:

Is the person who chooses to describe the glass as half empty intending to warn me not to drink from it?

Framing is not just about how individuals perceive their own wealth

Certain kinds of framing may be more effective than others, based on your objectives or desired outcomes. For instance, if you were giving money, would you ask yourself: How much is too much to give? or How much is too little to give? The question you ask may result in a completely different outcome, as our own research on giving suggests.3


II. Framing and Wealth


Once you're aware that you see the world through a particular lens, you may become more curious and intentionally seek out information in terms of other people's perspectives— rather than confirm your own. That's the kind of framing shift that can help us permanently change our views for the better.


Respondents felt empowered by their wealth

Overall, respondents had positive attitudes toward “wealth” more often than negative ones, though there were generational differences. See “The Words of Wealth” chart below for the terms different generations associate with wealth.

Source: “Reframing Wealth,” Merrill Lynch Private Banking and Investment Group.
Data compiled February 2016.

Consider a millennial who receives an annual exclusion gift of $15,000 from his grandfather, the family patriarch. How might that young man feel about the money if his grandfather told him it was an expression of love? Would he feel the same if he were told that the $15,000 was an annual exclusion gift? Positioning the gift as a tax-efficient strategy changes his feelings about the gift significantly.

What if there was zero communication about the gift? What would the young man think if he simply received a $15,000 check in the mail? If there was silence about the intent, the grandfather might assume the gift would be received warmly, but the young man might view it as a tax move. In turn, the grandson may spend the money freely, and the grandfather may see his grandson's seemingly glib financial choices as a lack of appreciation. Each decision is based on how they are framing wealth.

Once similarities and differences in framing are highlighted—in this case across generations—it starts to become clear why explicitly communicating about individual perceptions surrounding wealth in families can be essential.

Without dialogue about the intent or purpose of wealth, individuals tend to base choices and assumptions on their own default framing, which can skew their understanding of the big picture.


Communication can be empowering

When asked if they regretted discussing wealth with family members, the vast majority of respondents said no.

Source: “Reframing Wealth,” Merrill Lynch Private Banking and Investment Group.
Data compiled February 2016.


Understanding each other's viewpoint

There are generational differences in how people think about their wealth.

Just 1% of 51–69-year-olds associate wealth with feeling guilty, while 16% of those 18–34 feel that way. Perhaps not surprisingly, while only 2% of those 51-69 say wealth confuses them, 18% of 18–34-year-olds said they were confused by wealth.


What’s your view?

In this iconic magazine cover, notice how a New Yorker frames the world: Everything between 9th Avenue and the Hudson is amplified, while the rest of the United States is minimized. Alternately, an individual across the world might perceive their hometown as the center of their universe, and New York as a tiny dot on the horizon. While our default framing may always feel most natural, looking at the same map— or situation—from a different perch can ultimately shift our framing, and change our perspective permanently.



What's more, when asked what words come to mind when thinking about wealth, 51% of respondents 50 and older said "gratitude," compared with 36% of millennials. Fifty percent of those over 50 also chose the word "happiness," compared with 39% of millennials. For millennials, terms such as "tension" (29%) and "silence" (27%) figured prominently.


The words of wealth

When thinking about wealth, terms like trust, gratitude and happiness came to mind most often, particularly for older generations.

Source: “Reframing Wealth,” Merrill Lynch Private Banking and Investment Group.
Data compiled February 2016.


Without communication, misunderstandings can easily occur. However, thoughtful communication can also help widen frames of perception, which could lead to new and collaborative alternatives. If the grandfather disbursed the money without framing it at all, how is anyone to know what the context is for the gift? By definition, this would drive more misunderstanding relative to focused communication about wealth.

III. Communication Is Key

When people want to get an urgent and important message across, they tend to make a lot of noise. So when families remain hush-hush about wealth, it's easy to misinterpret their silence as peaceful status quo. When breaching the silence, families may face obstacles, but it is possible to work through them and open the lines of communication.

There are generational differences in how people think about their wealth.

Silence is an obstacle

When one survey respondent's father was diagnosed with dementia, she and her siblings agreed that they should broach the subject of estate planning and inheritance. But, even as the father's mind began deteriorating, they all backed off. Each was afraid of being seen as disrespectful, so no one continued the conversation. In this case, silence masked an undercurrent of tension and uncertainty running beneath the surface.

When a family's default framing is silence, it holds a strong and toxic message: Communicating about money choices and decisions isn't important. In this case, it also created a disconnect between distributions that the father made, and his adult children's expectations. Though all three children received equal distributions, they didn't feel that equal was fair, given that they contributed to their father's care much differently and their financial situations varied widely. Their confusion and resentment were just a few of the many unintended consequences of their father's silence.

About one in four individuals surveyed said their families do not communicate about money decisions at all, and just under a quarter said that their family discussions about wealth were held in a collaborative way.

"My upbringing, and that of my spouse, is that it would be gauche to ever talk about money," said one respondent who framed communication about wealth as taboo. "Even my daughter has no idea of the extent of my financial resources. I'm only comfortable in discussing the issues with my spouse and with our financial professional."

The irony is that initiating a discussion about money is typically helpful. Talking builds a safe space for further communication. And the discussion may need to be initiated by the older generations, who reported feelings of gratitude and trust more often than millennials when it comes to talking about wealth. The younger generation's fear of appearing greedy can be a roadblock in their feeling comfortable initiating the conversation.


How do you talk to your rising generation?

Respondents had varying ideas about how to be constructive in communications with their families.

Source: “Reframing Wealth,” Merrill, published 2016. (Latest data available.)


Two percent of respondents selected “Other” when asked how they communicate about wealth with their families.


Starting conversations is not easy

Many families still remain reticent to talk about wealth, even though 56% of survey respondents said, as their top choice, that they'd be more encouraged to do so if they knew respectful, open and honest communication could help sustain their wealth.

Talking about money doesn't mean disclosing sensitive financial information; wealth conversations do not have to start with balance sheets. Across the board, respondents felt that the best starting points for discussions of family wealth were financial behavior (62%), plans for unexpected circumstances (58%), and shared family values and the family decision-making processes (53%).

The vast majority (77%) of respondents saw initiating the wealth conversation as the responsibility of the wealth creators, yet 42% also said that those same wealth creators are the people who most prevented the flow of information about wealth.

The benefit of knowing this information is that wealth creators can, if desired, reframe their approach by asking themselves: Is my communication style creating an opportunity for open or closed dialogue? Have I designed a collaborative atmosphere in which all voices are valued and heard?

Don't feel that you must tackle communication on your own. In fact, research participants indicated that Private Wealth Advisors and other professionals can help.


Equality is what respodents consider most fair when dividing an estate among family members

Millennials place more value on the financial needs of recipients and how much time was put into the family.

Source: “Reframing Wealth,” Merrill Lynch Private Banking and Investment Group.
Data compiled February 2016.


Talking about the end of life is hard

Survey respondents put off talking about end-of-life decisions because they don’t want to confront their mortality, they feel overwhelmed, and they fear losing control.

Source: “Reframing Wealth,” Merrill Lynch Private Banking and Investment Group.
Data compiled February 2016.


Conversations must match your family

Sometimes changing a preposition is all that needs to happen. Instead of framing the discussion in a way that suggests that the older generation handles the family wealth for the rising generation, they can reframe it as handling the family wealth with the rising generation. This reframing may allow more voices to be heard—and multiple perspectives can reveal a bigger, more inclusive picture that will build skills, trust and accountability, ultimately leading to a family's desired outcomes.

Wealth conversations do not have to start with balance sheets

And not everything needs to be overly positive. Some survey respondents felt that negative framing worked best for their families in some situations. Slightly more than half of the respondents (54%) reported that their families were motivated after they learned how often money runs out by the second or third generation of wealth.

Others were more positive about their motivations. Top motivators for wealth creators to start the wealth transfer process included maintaining unity and family continuity after their death (57%) and thinking of the positive ways their children might use the wealth after their death (47%). People tend to procrastinate about their estate planning, and identifying these key motivators can create a crucial catalyst to starting the process.

What motivates communication?

Knowing that money and wealth is kept in families because of open communication can encourage families themselves to talk. 56% of people believe that money and wealth is kept in families because of open and honest communication. 20% believe that money and wealth is lost in families because of a lack of communication. 14% believe that very few families find it easy to communicate about money and wealth. Lastly, 10% believe that others find it challenging to communicate about money and wealth. 

IV. Five Steps to Start Reframing Wealth

Change is hard, and reframing the way you think about wealth is a big change. As one research respondent said: “Confronting your weaknesses is difficult business; it’s easier just to do what you know you’re good at—working and making money.”

Instead of framing this as a big change, reframe and try to take just one small step at a time toward communicating with your family. We've provided some ideas for the initial steps you can take below:

1. Add purpose When families reframe wealth as something that can help them pursue their passions and purposes, money takes on new "currency," so to speak. With purpose comes greater clarity about how wealth can be used by families to enhance growth, foster development and give back. Ask yourself: What is the primary intent, or purpose, for my wealth? Ask your family members, and share that information with each other.

2. Discuss values Ultimately, you have to address charged subjects like inheritance. But starting with questions that reframe wealth as a means of expressing personal values helps set a foundation for productive conversations in the future. Ask yourself and your family: How can I/we use our wealth in a way that reflects my/our values?

3. Establish accountability Evaluating the benefits of a monetary gift was considered the best anchor point for determining how much to give by 62% of respondents across all wealth levels and generations. Both younger and older generations want to be held accountable to use their wealth in productive ways, and thus share responsibility as a family. Ask yourself and your family: How do we hold ourselves accountable to use wealth/money in the most productive ways? For some families, it's a regular family meeting to discuss financial decisions and get feedback.


The wealth holder as a green light

The majority of respondents said that wealth holders should drive communication about family wealth.

Source: “Reframing Wealth,” Merrill Lynch Private Banking and Investment Group.
Data compiled February 2016.


Despite reality, the perception among the majority of respondents is often that wealth creators are preventing the flow of wealth-related information.

Source: “Reframing Wealth,” Merrill Lynch Private Banking and Investment Group.
Data compiled February 2016.


4. Show leadership Families want leadership to come from within. Seventy-seven percent of respondents said the wealth creator should be the initiator of conversations about wealth. Families can outsource management to trusted professionals and advisors, but not the actual leadership role. Ask yourself: What leadership role can I play in my family? 

Families want leadership to come from within.


5. Build empowerment Reframing the belief that talking about money is not gauche but rather a way to empower rising generations is a big shift away from negativity. For instance, the top areas where respondents felt their choices could "make a difference" were in education-based giving (56%) and philanthropy (55%), or in other words, a focus not on what wealth can buy, but on how it can make an impact. Ask yourself: How can our family collaborate to make a positive impact on our family and/or the community?

Reframing prenups and allowances

Sixty-six percent of respondents considered prenuptial agreements a starting point for communication about wealth.

However, when prenups drive the conversation, people first think of communication from the worst case scenario, rather than starting with their shared financial values and goals.

Ideally, the prenup conversation should become an extension of their overall approach to money, and the culmination of wealth discussions, not the starting point.

The same could be said for allowances, which are often used as incentives, rather than tools. The research revealed that 36% of respondents felt that the purpose of an allowance is to pay for chores, yet parenting experts say that linking duties to money is not an effective approach.4 Rather, by instilling a sense of financial responsibility and empowerment parents can teach their children as early as possible that money is not an end in itself, but a means to pursuing their passions and purposes. The principles of save, spend, share and invest would be intrinsic to their financial upbringing.


Perceived purpose of prenups

Prenuptial agreements are viewed primarily as a way to drive communication about wealth prior to marriage.

Source: “Reframing Wealth,” Merrill, published 2016. (Latest data available.) 


Perceived purpose of children’s allowances

Allowance can mean a lot of things; here are the top responses from survey respondents.

Source: “Reframing Wealth,” Merrill Lynch Private Banking and Investment Group.
Data compiled February 2016.


V. Framing for Your Family's Future

One goal of reframing wealth is to refocus it on ways to empower future generations. That's exactly what the father and daughter who initially disagreed about the luxury car did.

Once conversations begin about reframing wealth, they tend to keep going.

When the daughter reframed the gift and focused on the intent of the giver, and in turn the father reframed his gift in light of the preferences and values of the receiver, parent and child were able to reach middle ground.

This awareness not only changed how the family communicated about wealth. With the guidance of their advisor, they also transformed their actions, and in turn their outcomes, around family wealth. What's more, the father, a prominent business owner, saw framing as a powerful tool that could be leveraged in other areas of life. He began to see additional business opportunities he might have missed without reframing.

Things began to change in different and unexpected ways—ways that ultimately really mattered.


Best starting points for approaching a conversation about family wealth

Conversations don’t always happen organically, so it’s best to consider the right moment to start talking.

Source: “Reframing Wealth,” Merrill, published 2016. (Latest data available.)



Family conversations should be ongoing and a place for both parents and children to build skills, express their concerns and address issues. But there's a time and stage for every conversation, and talking about a shared vacation home to a child may not be as productive as talking about allowance. Every family is, of course, different, but here is a rough guide to what stages you may want to start discussing some key topics about family and family wealth.

A private wealth advisor can help you get started.

Our advisors can help you follow your passions, build a legacy and have a positive impact on others.

* The example is a true story from one of the author's experiences with a family a handful of years ago. The ending is a happy one: Father and daughter decided to turn the tension into an opportunity for a broader articulation of values and aligning financial decisions to those values. Their experience served as the inspiration for this research.

1 Source: “Reframing Wealth,” Merrill, published 2016. (Latest data available.) 

2 Amos Tversky and Daniel Kahneman. "The Framing of Decisions and the Psychology of Choice," Science, 1981. Latest available data.

3 Of a $100 million legacy gift to one child, $63 million was considered too much and $26 million too little. These amounts can provide anchor points and may dramatically affect the final decision: You may give more if $63 million was your anchor point versus $26 million. (Merrill "Reframing Wealth" survey, published 2016.) (Latest data available.)

4 Eileen Gallo, Ph.D., and Jon J. Gallo, Silver Spoon Kids: How Successful Parents Raise Responsible Children, McGraw-Hill Education, 2002. Latest available data.