Does talking about wealth in the current climate leave a sour taste in your mouth?   If you happened to be driving through Montreal on Christmas Eve mid-afternoon, you might have heard yours truly on The Natasha Hall Show talking about finances.   The host pointed out that in the time of COVID talking about wealth does not seem to make sense, other than how best families can navigate to the other side of this crisis. 

Yet like so much of life right now, the COVID-era really is a tale of two cities.  Certainly, there are many families hurting deeply from the pandemic – whether health-related or job-loss related issues.  This piece is not an attempt to minimize this very real suffering.

Conversely, there are many families who have seen sizable growth in their wealth in the last 12 months.  The S&P 500 was up a breath taking 18.4% last year.  For those over-weighted towards technology focused sectors, the Russell 1,000 Growth index was up 38.5% in 2020.  Moreover, interest rates fell precipitously – making mortgage refinances even more popular.  Between low interest rates and the massive amount of private equity capital that has been raised, there are many family-owned businesses transacting for record multiples. 

While it may feel odd to talk about wealth right now – given stress, uncertainty, and suffering – for many folks this is the exact right time to be having the conversation.   Knowing that vaccines are approved and shots going ‘in-arm,’ we are in a unique window of time where the light is growing at the end of the tunnel, but we are still isolated at home.   This is a unique window time for families to draw up ‘their financial blueprints.’  

The power of having done this type of work is easily seen in the tremendous example of MacKenzie Scott.  If you are not familiar with Ms. Scott, she is the ex-wife of Amazon.com CEO, Jeff Bezos.  Post-divorce, Scott became one of the richest women in the world.  She has not sat idly by with her new financial reality.  In July of 2020, she gave away $1.7bn in the form of 116 grants – dramatically increasing the size of the endowments of several historically Black colleges. 

Alone, such gifts immediately establish her in the pantheon of the philanthropic greats.  Yet in mid-December, Scott announced that she had given a further $4.1 bn in gifts to 384 organizations to assist with the on-going COVID-19 crisis.   To determine where to give, they screened 6,490 possible organizations and did due diligence on 822.  The scope of such work is impressive.

Contrast this with The Atlantic’s 2018 essay called “Paul Allen Shows It’s Hard to Give Away $10 Billion.  The Atlantic profiled the philanthropic work of the Microsoft co-founder.  Allen signed The Giving Pledge in 2010.  In 8 years, he gave away $2bn – while his net worth grew a further 48% to nearly $20bn. 

Scott just 3x him in 6 months.

So, what can glean from Scott’s example?

I would offer that she has been able to super-charge her giving because she has wrestled with and answered the questions around her wealth such as how much is enough? What is her responsibility to others?    

These are weighty and seemingly impenetrable topics for many.  Where and how to begin thinking through these key dynamics is critical.  I would offer that a place to begin is by breaking the problem down into its constituent elements – what I refer to as Wealth Structure, Wealth Identity and then using those to build Wealth Strategy around the specific choices around consumption, legacy gifting, philanthropy, and investment.  My forthcoming book, When Anything is Possible, out January 12, 2021 provides a process and tools for considering each of these dimensions.

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