The Amateur Financier

One of the advantages of being a blogger, particularly in a field with as many talented writers as personal finance, is that occasionally, you have the chance to read and review a book before it is published.  I was able to read (and now review) the book Living Richly by Myra Salzer of the Wealth Conservancy recently, a book aimed at a rather different group than those I belong to (namely, people who have inherited multi-million dollar sums).  When I realized whom the book was aimed at, two questions came to mind, ‘What advice does the author offer these rarefied few?’ and ‘How relevant will the advice given be to me (and my readers)?’  To find out, we’ll have to look closer:

Summary: Living Richly starts with an introduction from the author, pointing out that it can be a lot of work to inherit a large amount of money, but that when you get a handle on it, it can be enjoyable and liberating.  The first chapter opens with the fact that in seventy percent of cases, inherited wealth is gone within two generations of when it was generated (That is, by the time the wealth originator’s grandchildren took up the helm).  It expands on the idea that a high net worth can gives you many options, but also presents its own troubles.  The chapter also introduces three high net worth inheritors whose stories about coming to terms with their inheritance and learning to use it are shared throughout the book.

The second chapter looks at the burden that inherited wealth can place on the inheritor, from society’s view of inheritances as ‘unearned’ money to the expectation that you DO something with your inheritance (besides follow the lead of Paris Hilton and spend your time partying, of course).  The third chapter considers another potential burden: learning where your family’s wealth came from, and possibly discovering some less than savory sources.  Both chapters focus on the idea of taking ownership of your inheritance, understanding where it came from, and accepting that it is now in your power to control how it is used.

Chapter four gets into how to do just that, by assembling a team to help you manage your inherited wealth.  A key component is a wealth coach, someone to guide you in using and managing your wealth.  The chapter also provides a guide to numerous other figures who are likely to be part of managing your inheritance, from trustees to attorneys to accountants, and some advice on managing them all.  (There’s also a suggestion to ensure that your wealth coach, and anyone else on your financial team, is a fiduciary, that is, legally obligated to put your best financial interests first and foremost in any advice or services they provide.  It’s definitely good advice.)

The fifth chapter covers some of the basic strategies of wealth preservation.  It notes the risk of volatility when your goal is preserve your wealth, and the added difficulties that arise when you’re trying not only to manage the money to last your lifetime, but also leave a fortune to your descendants, as well.  Chapter six looks at the basics of managing your wealth, by determining where you and your fellow inheritors currently stand financially, how you can have your ‘nut’ (that is, the money you need to lead the life you want), and how to pass on what is now your fortune to YOUR heirs.  It also addresses the importance of philanthropy, both as a means of spreading your values and a way to look ahead to the future.

The final chapter covers how to use your inheritance to seize the potential you have in life, how inherited money can be used to leave your mark on the world and enrich your life in the process.  It also includes a wrap up of the three inheritors whose lives were described through the book, how they have come to terms with their inheritance and how they are using their inherited money to live richly.  The book concludes with a selection of other books to give inheritors guidance.

Pros: Very optimistic, supportive, and uplifting, with plenty of good humor.  It’s fairly insightful without being overwhelming.  For someone like me who’s not going to inherit a great fortune, it provides an interesting look into the problems of people whom I would have thought ‘had it all made’.

Cons: Takes a while to get to the nuts and bolts of managing an inheritance.  Doesn’t get very deep into the technical issues involved in inheriting, even the ones mentioned during the course of the book (at times, acronyms are dropped with no attempt to explain what they mean, or where to look for a definition).  The target audience, those people who have inherited multi-million dollar sums, is highly limited.

Overall: Let’s be honest; there’s a good chance that Living Richly isn’t a book aimed at you (unless there is a contingent of high net worth inheritors I don’t know about who follow my blog).  It does, however, provide an interesting insight into the nature of inherited wealth and how you’d get a handle on such wealth, and includes quite a bit of advice that you can apply to improve you own financial knowledge, regardless of your net worth.  It would definitely make a good book to pass on to your children, along with the vast wealth you’re going to accumulate as a result of reading The Amateur Financier.  (At least, that’s my hope for all of you.)