Keep Your Kids Out of the Entitlement Trap

Want to know what keeps the owners of the most successful family businesses up at night? The dread that their kids will grow up to be entitled.

This is the concern of most parents, but among the very wealthy, the anxiety can be sometimes paralyzing:  Will their children and grandchildren end up lazy, good-for-nothings, who are not contributing to society?  In other words, “trust fund babies,” the kind whose scandalous antics fill the pages of the New York Post.

That’s not paranoia; the fear is grounded in reality. In business families, it’s quite common for the next generation to grow up in a much wealthier environment than the current generation.  The problem is not limited to them.  A study of over 3,000 families found that when wealth is passed from one generation to the next, a whopping 70% of it is squandered. Speaking generally, wealth is a very difficult thing to manage well.

That said, in reality, money turns out to be a less important factor than one might think in the development of entitlement. Some very rich kids turn out to be highly motivated and engaged – we see this in our work every day. Our experience also suggests, however, that kids don’t mysteriously end up entitled; there are some common choices parents – all parents – make to a greater or lesser degree that substantially increase the odds that kids end up feeling that the world owes them a living. These choices are often made with the best of intentions, but they work against the long-term interest of our children.

How do you avoid the entitlement trap?  There are no pat answers. What we learned from our work with family businesses is that you can start by asking yourselves questions.  This is not a scientific formula, but the more “no” answers that are scored, the greater the likelihood that you are putting your children on the path to entitlement:

Much more can be said on many fronts, and we look forward to your comments on this issue.  But one last word:  in our experience, the way that the most successful business families curb the next generation’s sense of entitlement is by staying involved in their kids’ lives.  If they fail to get some quality time, your children turn to money as the next best substitute. That sounds trivial, trite, perhaps even a platitude.  But every child is entitled to love. The rest is gravy.

First published: Feb 18, 2014, Harvard Business Review