September 10, 2008
In Tough Times, Even the Billionaires Worry
By CHRISTINE HAUGHNEY
DO you have millions of dollars in the bank and still worry about filling up your gas tank? Do you fear that the housing slowdown may mean your sprawling beachfront property will face the auction block?
As the economy has soured, Lee Hausner, a psychologist at IFF Advisors Inc., in Irvine, Calif., who works primarily with wealthy families, has noticed rising anxieties about spending.
She has a test for such clients: she asks them to calculate their monthly expenses — from Botox shots to country club fees — and their monthly income from work and investments. Then she has them cut 10 or 20 percent off the income figure. If they can still afford their lifestyle, she tells them that they have enough of a cushion to protect them from a troubled economy. In most cases, she finds that her clients are fine.
“You control the wealth,” she said. “The wealth does not control you.”
But the combination of depressed financial investments and declining real estate values is a formidable burden, even for those who have accumulated the most. “Almost everybody is worrying, including people who are billionaires,” said Dennis Pearne, a psychologist in Framingham, Mass., who works with wealthy patients. He says lately he has noticed that “the worry increases with the size of the holdings.”
The bigger the amount, the more patients have to worry about losing, and these losses prey on their deepest fears about money, Dr. Pearne said. Either they feel that they did not deserve the money in the first place, or they feel entitled to their wealth and are angry when it is gone, he said. Dr. Pearne advises such patients not to make major decisions about their investments until they have a team of trustworthy financial advisers to guide them. Then he counsels them on their specific issues.
“To the extent that they have shame, then the shame multiplies with the size of the fortune,” he said. “The more they have, the more they’re afraid they’re going to act out with it.” This could include taking their children out of private school or selling homes at losses.
Kenneth Mueller, a Manhattan psychotherapist who counsels many wealthy people, agreed that patients can become overwhelmed by the magnitude of the numbers. For example, he said, their income may have shrunk to $2 million in 2008 from $20 million in 2007, or their $10 million in stocks may have lost 10 percent of its value. These declines can stir up insecurities, he said. “They remember any form of deprivation, physical or emotional.” He counsels that these are “old worries” to be worked through, not present realities.
In fairness, worrying about money is natural. It stems from the primal need to have enough food to survive through winter, says Robert A. Kenny, associate director of the Center on Wealth and Philanthropy at Boston College. “We have been worrying about having enough for thousands of years,” he said. Mr. Kenny is working on a survey of people with an average net worth of $50 million, and he said that about half of them think they have “enough” money.
Some worriers are learning a valuable lesson. Advisers like Anthony J. Guinta, the client service director at the wealth management firm Homrich & Berg in Atlanta, said he had clients who assumed that their stocks would appreciate endlessly. After warning them for years about spending, he is now watching them cut back on luxuries. “Even though we told them they should rein in their spending a little bit, their portfolio was covering that overage,” he said.
Psychologists and wealth advisers say that most wealthy worriers haven’t cut back on charitable giving. Dr. Hausner said that her clients see donating as part of their identities. “They’ve kind of gotten hooked on it,” she said of the satisfaction they derive.
Therapists are also reminding their clients that, like life itself, building wealth does not take a linear path. Elyse Goldstein, a psychologist on the Upper East Side of Manhattan, said that this was important for clients in their 20s and 30s — who have never worked through a major downturn — to hear. She tells them that life has a “certain ambiguity,” which makes it interesting.
She says that male clients are struggling with worries more than female clients. “Women are pretty used to fighting their way up the corporate ladder and almost expect adversity,” she said.
Advisers also remind worriers that, in many cases, they have benefited from the economic upheaval. Mr. Guinta points out to clients complaining about gasoline prices that their investments in energy companies and commodities have soared. When they complain about how expensive their trips to Europe have become, he shows them how much they have profited from the performance of their international stocks.
For moments of panic, there are mantras. Dr. Goldstein tells her clients — especially those working on Wall Street — to tell themselves, “I’ll deal.”
After all, she says, “When somebody has confidence that they can live on less, then it gives them a greater sense of power and comfort.”
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