Defining Wealth -- Revisited
At the beach
This is the last in a 3 article series written in 2011 by Thomas. A prologue and an epilogue have been added to this one.
by – Thomas Twombly
artist - Daisy Lopez
Prologue
The following piece was originally published in August of 2011, as the third monthly installment of some of my musings on the nature of wealth. Aside from a few minor edits due to the passage of time and the need to update historical references, it remains almost exactly as it was when it was first written. I have added an epilogue that touches on some experiences my three siblings and I had with our parents very recently, as we gathered together to talk about what we treasure most.
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Personal Wealth
I’d like to return to the wealth-as-an-iceberg metaphor that we reintroduced in January’s newsletter. If our investment assets and bank accounts are the tip of the iceberg, the mere 10% that sticks up above the surface and easily catches your attention, what lies beneath?
That is to say -- if material wealth is the relatively small portion of our overall wealth that is exposed above the surface – easy to see, measure, quantify and define - and if the social wealth that we touched on last month is a broader, more hidden dimension that exists just below the surface, then what do we find at the bottom - the deepest, most hidden, and hardest-to-define dimension of wealth?
I believe it is the concept of personal wealth.
If the iceberg is stable, and not given to sudden turnover, that dimension is necessarily the broadest, heaviest, and ultimately most important component of all that we value and hold dear. Personal wealth is the ballast that helps keep all the other components upright, and the foundation on which all the others rest and are built. For this reason alone, it’s crucial to explore what it means on an individual basis. It’s critical to be purposeful about building, caring for, and managing personal wealth along with all the other activities of social and material wealth-building, or you run the risk of creating instability.
Think about all the people you love, and who love you – who you’re responsible for, and the core obligations you feel most compelled to fulfill. Think about your personal story – the lessons you’ve learned and been taught, and the values you’ve come to hold dear. Consider the guiding principles you’d most like to pass on to the people you care about, the experiences that have shaped your life, and the hopes you have about how you will be remembered. Contemplate the emotional anchors that help keep you grounded, and the spiritual touchstones that help give you a sense of faith and continuity. Ponder the family legends and stories that give context and meaning to your existence. Think about your health.
These are the types of subjects that arise when we challenge clients to define personal wealth. They have little material value – you generally can’t (or wouldn’t) sell them to a stranger, and they certainly don’t count as hard collateral assets when you apply for a loan – but they often make up the core of who you really are, how you think of yourself, and what you would be most bereft to lose.
Albert Einstein once said: “not everything that counts can be counted, and not everything that can be counted, counts.” Why is it that after a disaster people search the rubble of their homes for remnants of old photographs and family keepsakes, and feel profound gratitude when they find them? Why is the old, yellowed wedding dress in the back of the closet so important? Why, after a death in the family, do people get so emotional about great-grandmother’s tattered quilt? Why does my grandfather’s split-bamboo fly-rod with the warped tip represent such a treasure to me?
The answer is that they’re all powerful symbols and important reminders of who we are and where we’ve come from. They’re also important compass points for where we hope to go and what we hope to pass on. They may not count to the uninitiated eye, but they are part of what comprises our sense of personal wealth and history, and they are powerful motivators for our future activity.
When my grandfather died in 1992, my father flew out to settle his affairs and begin the process of going through his personal possessions. Deep in the back of an old filing cabinet he discovered something that none of us had ever known about - five loose-leaf short stories my grandfather had written shortly after his own father’s death. They chronicled trout fishing trips they’d taken together and remembrances of personal traits and idiosyncrasies that some of our family can recognize in ourselves now. My father made photocopies, bound them under the title “The Limit – Aren’t They Beauties”, and distributed them to all members of our extended family.
Those tales are prized by all of us today, and for many years they were the preferred bedtime stories my kids asked me to read aloud as they grew up. How do you measure their value? How do you quantify the impact of that dimension of wealth and its legacy? To me, they’re invaluable. They connect me to the past – and now to the future. They remind my kids that they are important parts of something that is far bigger than they are, and they give greater context to their lives. Combined with my own experiences of enjoying the outdoors with my grandfather, with my kids, and by myself, they reinforce a sense of shared history and common values that go back a long way. They teach patience, persistence, and determination in the face of adversity – as anyone who has ever fly-fished can attest. They also convey a profound joy at the beauty that exists in the natural world, and the value of time in the wilderness for solitude and reflection. In short, they’re a crucial part of my sense of personal wealth, and I invest regularly in reinforcing their message in my own life.
And that’s why that fly-rod is so valuable to me.
Each of us has our own definition of personal wealth and our own stories to tell. Think about yours. Think about those you’ve gotten from your family. What are the important lessons to be passed on, values to communicate, and emotional touchstones to be preserved? Have you been fortunate, as I have, to receive a written, photographic, or painted legacy from a forbearer, or is it up to you to create a tradition? Think about other ways to build and maintain personal wealth – reinforcing close family relationships, pursuing a passion, exercising and eating well to maintain long-term health and set an example, investing your time, talent, and resources into the people, activities, and principles that are the closest to your heart – anything that reinforces your sense of who you are and what you stand for. In my experience, the happiest and most satisfied people - those who think of themselves as genuinely “wealthy” devote ample time to purposefully building and caring for this dimension of their lives, and they align their financial wealth-building activity with supporting it.
It’s been said that money is a wonderful servant but a vicious master. As the sole focus of attention, material wealth can become tyrannical – whipsawing its possessor between greed and fear as short-term events beyond our control affect the daily value of its components. It can create feelings of guilt, scarcity, inadequacy, and anxiety that often result in an avoidance of money decisions altogether, or it can create an over-emphasis on the accumulation of material wealth as the exclusive driver of behavior.
Taken in balance, however, and integrated carefully and purposefully into a long-term philosophy that also gives attention to building and preserving social and personal wealth in equal measure, money takes on a different role. It becomes an ally and a valuable tool – something to be held less tightly and deployed with a bigger-picture perspective. It loses its destructive power to control, and gradually becomes an additional source of comfort and abundance – something to be stewarded with a sense of responsibility and gratitude for what it can do to augment a more holistic definition of a life well-lived.
For these reasons, the most effective individuals and advisors regularly explore all the dimensions of what they individually define as “wealth.” They challenge themselves to bring those dimensions into balance within one overarching wealth management plan, and they tailor their financial planning and investment decisions to support that vision.
Epilogue
I was 50 when I wrote this. I’ll be 63 in a couple of months - certainly older, but also, hopefully, wiser, more nuanced, and well-aged in the interim - “Anejo”, as aged tequila is selectively venerated. I’m incredibly fortunate that both of my parents are still alive. My father will turn 89 in May, and my mother will turn 88 in August. My three siblings, the youngest of whom will turn 57 this fall, are also doing well. And from us, my parents have seven grandchildren, all of whom know each other like brothers and sisters, and all of whom stay in touch like close friends. We have my parents to thank for that. Each of them is thoughtful, impressive in the way they conduct themselves, and well on their way to leading principled lives of consequence – each on their own unique paths. It’s amazing, and wonderful.
Just last month, my siblings and my parents and I had a family meeting. My folks are updating their wills and estate plans because so much has changed since the last time they updated them. It was a powerful experience of coming together, talking about what is most important to us as an extended family, hearing my parents voice their hopes for us, and for their grandchildren, in the coming decades, and having them share how they hope the financial legacy they expect to leave behind will be used to support and reinforce the precious social and personal legacies they have also created in their lifetimes.
In that meeting, as he was talking about what mattered the most to him, contrasted against all the stuff that didn’t, my father said something that struck me. It quickly distilled an answer to a question that I have pondered since writing these newsletter muses 13 years ago. What distinguishes certain things that you can easily decide to buy or sell, from certain other things you could never willingly sell, and which you could never fully replace if you lost them? He said: “there’s a very important distinction between ‘property’ and ‘possessions.’ Property you can sell. Possessions possess you.”
That is a notion we should all explore as we contemplate the rest of our lives… What possesses you?
Thank you for your confidence and trust,
Thomas Twombly
President