Leave Fiscal Inequality Behind by Addressing Economic Diversity

Journal of Financial Planning: May 2019​​​​

James Grubman, Ph.D., is a consultant to multigenerational families and their advisers about the issues that arise around wealth. He is an author who has been quoted extensively by The Wall Street Journal, The New York Times, CNBC, and other media, including Malcolm Gladwell’s 2013 book, David and Goliath. His global consulting practice, Family Wealth Consulting​, is based in Massachusetts.

Nearly a decade ago in my work as a family wealth psychologist, I was engaged by a couple who opened my eyes to a new way of thinking about money and relationships. This couple, in their late 40s with several young children, consisted of a mother from a multigenerational family of wealth and a father from a hardscrabble, working-class background. They had contacted me for guidance about preparing their children for the wealth that would eventually be passed down through their maternal line. As I worked with this family, I quickly came to admire how well the parents collaborated with each other, handled money conflicts, and were open and caring toward their children about money.

This couple didn’t seem to struggle with the commonly cited challenges of being “fiscal unequals.” Particularly when the wife has the money, some studies have suggested that the power dynamics, traditional gender roles, and social stigmas associated with “cross-class” relationships can become hurdles to a successful relationship.¹ We are also frequently presented with dramatized examples in movies, TV, or books.² Many financial planners, and society in general, are convinced it’s hard to overcome this type of disparity when it comes to wealth in relationships.

Economic Diversity

Curious about this couple’s adjustment, I asked, “How is that you have been able to navigate so well what others find to be difficult?” Their answer immediately made great sense. “We see our relationship as having economic diversity, just like other relationships that may have religious, racial, or ethnic diversity. Our different backgrounds add a richness to our marriage and to the family, which we use to our advantage in dealing with each other and with our children. In fact, we see it as a benefit, not a risk.”

This couple went on to explain how they approached the economic diversity woven into their marriage:

• It forced them to listen to each other and recognize the different perspectives they brought to so many issues.

• It forced them to build their skills of collaborating and negotiating in healthy ways.

• It allowed them to model to their children how people respect diverse views and backgrounds by handling relationship conflicts productively.

• It contributed an enhanced level of awareness about others’ economic lives they would have lacked on their own.

For example, when shopping with their 8- and 10-year-olds for holiday gifts, each parent took time to explain what the holidays were like in their own families growing up. Working-class Dad spoke of having little but feeling loved and cared-for, and that frugality was a necessary part of the household. Affluent Mom told of the warm memories she had of shopping with her grandmother, who preached focusing on the value of one’s purchases more than any extravagance. Both learned money skills through loving, disciplined relationships, which is what they wanted to impart to their own children.

Focus on the Positive

This couple’s optimistic framework was consistent with recent trends in psychology emphasizing a positive strengths-based perspective rather than the pathological.³ This includes a shift in focusing on the benefits of diversity, rather than the drawbacks or difficulties.⁴ Each parent epitomized how money differences can be used to foster resilience and adaptive coping within the family. By rejecting negative stereotypes inherent in the “fiscal unequals” label, they taught me to view couples’ economic differences through an inclusive lens rather than the supposedly inevitable challenges.

Within the financial advising profession, we must be careful about bringing biases into our work with clients who may have wealth disparity or fiscal inequality as part of their relationship. Remember that diversity enters many—if not most—relationships in one form or another. Economic diversity can be handled productively, just like any other difference in backgrounds, culture, or current situation.

It can even make things better.

Endnotes

1. ​​See, for example, “Reflections on Fiscal Unequals,” by James E. Hughes Jr., Esq., Joanie Bronfman, Ph.D., and Jacqueline Merrill, first published in 2000 in The Chase Journal and available at jamesehughes.com/articles/FiscalUnequals.pdf. See also “Gender Identity and Relative Income within Households,” by Marianne Bertrand, Jessica Pan, and Emir Kamenica, May 2013 NBER Working Paper No. 19023, available at nber.org/papers/w19023.

2. See, for example, Crazy Rich Asians (2018; Warner Brothers; John Chu director) where a female inheritor has a husband who struggles with his adjustment to her wealth and position.

3. See Flourish: A Visionary New Understanding of Happiness and Well-Being​, by Martin Seligman (2011).

4. See “A Look at the Bright Side of Multicultural Team Diversity,” by Gunter Stahl, Kristiina Makela, Lena Zander, and Martha Maznevski in the December 2010 issue of the Scandinavian Journal of Management, available at sciencedirect.com/journal/scandinavian-journal-of-management​.