The psychology of family harmony

Guest contribution

Dr Katherine Hunt

BPsychSc  BCom(FP)  BFin(Hons)  PhD(Law and Economics)  JP(Qual)  GAICD

Ardentura Consulting

Dr Katherine Hunt

Every ‘grow wealth’ book on the planet in effect says: to build wealth and businesses, you must apply Psychology. To products. To services. And most importantly, to what consumers will want next year. But when it comes to wealth preservation, most of what we hear is about insurance, the tax man, and legal structures. How bizarre, when it is the Psychology of the family which will determine wealth preservation through the generations. Not tax.

If family wealth preservation is purely psychology, as I am claiming here, then there are two underlying components. These are: Harmony & Habits.

But first, let’s pause for a moment and consider the current Murdoch family succession nightmare, exhibited in the media like underwear due for a wash. And Rupert hasn’t even passed to the next world yet. Long may he reign. Regardless of our relative wealth, which might even be as small as 10% of the Murdoch’s, we all recognise that this type of family will not be ‘The Murdochs’ in a generation. We also recognise that some of that is avoidable.

The first, Harmony in the family, rests heavily on the shoulders of human interaction. Our ability to disagree entirely with someone, and still maintain open communication, trust, and care, are all skills which are learned and modelled. Not even the best communicator was born as-is; they have observed, learned, and practiced.

You’ve met those families with harmony. They teach the next generations how to actively listen, how to have constructive conflict, how to apologise, and how to put unity first. You’ve seen how the flow-on effects of skills in creating harmony result in lifetime marriages, family holidays with multiple generations, siblings who are business partners and friends. You’ve seen how the flow-on effects of these skills mean that everyone in the family has their own strong social network, and as a result there are less challenges with mental health or addiction – other avenues for intergenerational wealth destruction.

Schitt's Creek (CBC) - a tale of two children learning to break their own habits of family financial dependence and forge a life of their own

The second, Habits of family members, rests heavily on expectations. I’ll never forget hanging out with the ultra-wealthy young adults of my age in Guayaquil (Ecuador) who I met while on summer break one year from uni. It was great fun - we danced every night and they took me around in their sports cars. The strange thing for me was that none of them worked, nor even studied. A dozen 25 year olds who got a massive stipend from Dad, and spent their days lunching and dancing. If you could imagine the habits of the next generation who would squander the entire familial wealth, that is it.

The passing on of values like work ethic, curiosity, fitness, education – and the tangible habits to live out those values, are likely to be the best insurance a family can have. And as we know, one day at the gym does not create that six-pack anymore than that one conversation with the next generation instils a value of work ethic. As with Harmony, Habits similarly are one of those things that are passed on through observation, education, modelling and practice.

Play the game of Psychologist for the next few months. Do what I do – observe without judgement some of the different ways families interact with each other. Listen closely to the words elders use – they will fall on the spectrum from “We spent a lot of time together making sure that little Jonny….. “ (took responsibility to pass on skills in Harmony and Habits)   to  “Oh, they are this and that …. “  (Let the next generations pick up skills in Harmony and Habits from social media).

It's a fun game to play, and maybe you can pick something up about your own conversations and habits. Even better, apply your insights to create Harmony and Habits in your own family, and avoid a Murdoch ‘situation’. 

Dr Katherine Hunt is a psychologist, keynote speaker, financial planner, non-executive director and published researcher and academic.

This article has been written for Canopy East.