Paris Hilton syndrome and how to avoid it
At 7.30am at the University of California–Irvine campus, a stream of Land Rovers, BMWs and Mercedes pulls into a car park. A collection of tired-looking twentysomethings shuffle out of their cars, file into a class-room and introduce themselves over Diet Cokes and doughnuts.
Among the first to arrive is Kyle Circle, a spiky-haired entrepreneur in jeans and a T-shirt, who mentions that his father is California’s strawberry king. Tina and Lisa, platinum-blonde sisters, say their grandfather made a fortune in real estate. A tall, earnest young man named Tim, wearing a green polo shirt and khakis, says his dad owns a farm in Minnesota. (“It’s a pretty big farm,” he admits.)
Several other attendees belong to a family that made its money from an electrical contracting business. Rounding out the group are Kelsey and Kara, willowy brunettes whose family runs a garbage-hauling empire. All together the kids in the room represent family wealth of more than $3 billion.
The kids are asked why they are there. “My dad kind of suggested that I come,” says a developer’s daughter. “Actually, he more than suggested. He said it was kind of a requirement for my inheritance.”
Tina says: “My grandmother said if I did this, she’d give me money to go to Vegas.”
They are attending a two-day course called the Financial Life Skills Retreat, a new kind of summer camp for the sons and daughters of today’s multimillionaires and billionaires. The entrepreneurial rich of the 21st century have created Richistan, a virtual country within their own country. Beyond worrying about money, Richistanis also worry about their kids. Their fears can be boiled down to two words: Paris Hilton.
Richistanis want to give their children luxuries that they themselves never enjoyed growing up. Yet they also want them to have a strong work ethic, which can only come from struggle. To help reconcile these two urges, and teach the next generation how to handle all that money, they are turning to summer camps like the Skills Retreat.
For two days in July, and another two days in October, young Richistanis gather at the University of California Irvine campus to learn how to manage the vast fortunes they’re about to inherit. They talk about portfolio theory, price-to-earn-ings ratios and debt management.
They learn how to convince their intended to sign prenups and how to ask their dads for loans. They learn basic “life skills”, such as how to control their spending, how to work with others and how to interview for a job. Most of all, they learn how not to squander their fortunes.
Lee Hausner, a psychologist who has become one of America’s top advisers to children of the new rich, gets things rolling with a lesson on families and money. After 19 years as the senior psychologist in the Beverly Hills school system, Hausner is an expert on talking to rich kids, especially about family problems. With her broad smile and pastel business suits, she’s the model of a cheery, supportive west coast therapist.
The class is divided into groups and told to answer a series of questions.
“How important is money to you today?”
One group answers: “Really important.”
“It’s important but it’s not who we are,” says another group.
“Very important for, like, survival,” says another.
Hausner asks: “How was money used in your family?”
“Education, vacations, and a way to get control.”
“Rewards.” “To buy love,” says one group. “Like Disneyland dads, where they confuse money and love.”
“Very good,” Hausner says. “Did you hear that? Disneyland dad. That’s a very important concept. I want you to get in touch with that.”
She moves on: “What do you remember your father saying about money?”
“Nothing is free,” says one student. “Money doesn’t grow on trees,” says another.
Hausner asks about the dangers of money.
“Drugs,” says one group. “You become lazy. You don’t want to work because you don’t have to.”
“Other people’s perceptions. If they know you come from money, they think you’re spoilt.”
“Or if you’re dating, you’re always worried about someone taking advantage of you. And on dates you have to, like, pay for things all the time. You’re worried that they like you for your money.”
“People come out of the woodwork to be your friend,” Kyle says.
Turning a group of privileged southern California youths into savvy investors and professionals represents a triumph of hope over history. Yet it’s a hope that IFF Advisors, the company that runs the Skills Retreat, finds increasingly common among Richistanis who are about to entrust their children with millions.
The American wealth boom has created a boomlet of rich kids and a new generation of anxious Richistani parents. Based on average family size, there are now more than 4m children of American millionaires. And all those silver spoons are dipping into a record amount of disposable income and inherited wealth.
Up to $15 trillion will be passed down to the children of millionaires between 2002 and 2052, according to a study by the Boston College Social Welfare Institute. Much of that will be passed down from baby boomers (and even younger parents) to their kids. While economists differ on the exact amounts that will be passed down, few doubt that the wealth boom of the past decade will create a cascade of cash flowing to the next generation.
A survey by Prince & Associates, a wealth research firm, found that most millionaires today plan to leave at least 75% of their estates to their children. The number is highest for families with households worth $25m or more, disproving the widely held notion that wealthier families are more likely to leave a greater share to charity.
Today’s rich are also indulging their children now. With little time and plenty of disposable income, nearly 40% of today’s millionaires give them unregulated access to money. All that spending has helped create a new economy built around a new set of kiddie elites.
High-end resorts are building five-star kids’ centres and playgrounds. When Ellen Perry, a wealth-education expert, went to the Four Seasons in Scottsdale, Arizona, the staff greeted her four-year-old daughter with a child’s bathrobe and a platter holding a freshly baked cookie with her named inscribed in icing. Each day at 4pm the staff delivered coconut popsicles and smoothies to the children’s pool, and the resort’s restaurants had child-sized silver cutlery.
In Palm Beach, one of the fastest selling lines at Aristokids, a children’s clothing shop, is crocodile-skin deck shoes with deerskin lining and gold eyelets. The price: $899 a pair.
Television is filled with images of young wealth gone wild, with pouty heiresses demanding new Mercedes and $200,000 birthday parties. Paris Hilton kicked off the trend with The Simple Life, a reality show where the doe-eyed sex symbol slums it on an Arkansas farm. MTV’s Rich Girls chronicled the shopping expeditions of Tommy Hilfiger’s teenage daughter Ally and her friend Jaime Gleicher, while the channel’s other teen-spending fantasy My Super Sweet 16 shows the sons and daughters (mostly daughters) of the newly rich vying for the title of most profligate birthday party.
All that extravagance has created new parenting problems – and new industries to solve them. A spate of recent research studies is shedding more light on how wealth, in addition to giving kids advantages, can become a family curse. Without the need to work, children develop little sense of motivation or drive. They have trouble developing basic life skills – cleaning up, managing money, working with other people – since they’re used to relying on house staff and parents.
“You don’t learn basic skills that are fundamental building blocks for the rest of your life,” says Ellen Perry, founder of Wealthbridge Partners, a training organisation that caters to families worth $100m or more. “The privilege gets in the way of healthy maturation”.
“Money gives people the ability to buy their way out of life experiences. The parents may think they’re helping their child, but they’re actually robbing them.”
A private banker in New York told me the story of the 11-year-old daughter of a real-estate magnate who grew up flying on the family’s private jet. For her birthday, the girl asked her father for a ride on a commercial flight.
“But we have our own jet” the magnate told her.
“I know, but I want to ride on a big plane with other people,” she said. “I want to see what an airport looks like on the inside.”
Other side effects are more serious. Research by Suniya Luthar, a professor of psychology and education at the Teachers College of Columbia University, finds that today’s affluent kids are just as prone to “rule-breaking” behaviour as inner-city kids. While the most common delinquencies among inner-city kids involve weapons and fights, affluent kids are prone to stealing from parents and friends.
Luthar also found that one in five affluent American kids is clinically depressed – far more than the national norm. A study of private schools found that alcohol and drug use among affluent kids is even higher than that of inner-city kids. One reason the rates are comparable: absent parents.
Wealthy kids today are often raised by a revolving door of nannies and house staff and see little of their parents. “They tend to be more isolated from their parents physically and emotionally,” Luthar says. Yet she added that the pressures to succeed for affluent kids also play a huge role.
Before the 1980s, inherited wealth was largely confined to blue-blood families that taught their children the importance of keeping a low profile, never embarrassing the family and choosing careers that were respectable without being mercenary. Richistanis, however, want their kids to be strivers. They want them to make money. Or at the very least, not to lose it.
The result is a booming new industry in courses for rich kids like the Skills Retreat in California. As the day goes on there, the kids start to talk openly about their lives and money. Some have turned into drifters and spenders, others are hard-driven professionals and entrepreneurs. Few want to follow their parents’ footsteps – either in business or life.
Two are artists, two are teachers and one woman is a chef. Tina and Lisa, who have already blown the first instalment of their inheritance, are starting their own beauty salons. Kelsey and Kara, who live in Malibu, are still searching for careers. Kelsey writes songs part-time and is looking to break into the music business. Kara, who’s still in college, is a top competitor in the show-horse circuit.
Like many Richistani offspring, the sisters have an ambivalent view of wealth. Growing up in southern California, they had all the comforts of a wealthy family. Kara drove a Mercedes to high school. They had nice clothes. When she was eight, she got her first horse and now she has about 45.
The sisters don’t “act” like rich girls and have the laidback, down-to-earth air of regular college kids.
Watching their parents work 14-hour days – their mother is the general manager of the company – the sisters gained a strong appreciation for hard work. Yet they also know they don’t want their parents’ workaholic lives and they don’t want to run the family business, at least not yet.
“I would like to do something on my own and make my own impact first,” Kara says.
They’re also growing tired of the hedonistic culture of Malibu, which they say is filled with young heirs and heiresses spending money and passing the time.
“It’s so materialistic,” Kara says. “It’s all these people strung out on drugs and drifting from one thing to the next. It’s not normal. I want to live in a normal place and have a normal life.” Autor: Robert Frank