I recently read a book called "Legacy" by Dr. Richard J. Orlando. Orlando specializes in helping families manage their wealth and its transition. According to Orlando, there are many different types of wealth and each one is important when discussing financial wealth and family matters. This made me think about all the different people I have met, the unique abilities they possess, and how these unique abilities demonstrate our "wealth."
I also started to think about the impact these different types of “wealth” had on my life. As I have said in the past, there are two types of economics – financial economics and behavioral economics. In my experience, I’ve learned there are also 12 silos of wealth. Each silo has its own value system and impact potential. Over the next few months, we will dive into how each silo of wealth can add value to our lives, and discuss why integrating them together can enrich our own impact.
I remember attending two funerals in one week a few years ago. The first was for a very wealthy person. The crowd was small, the minister didn’t seem to know much about him, and the music played from a recording. The second was for someone who was a milkman by trade. The church was filled, the minister was visibly emotional during the service, and his grandchildren performed the music. It was obvious these two men led very different lives. There’s nothing wrong with either – but they each had a different impact.
The first four silos we’ll discuss are:
1. Financial Wealth
2. Health Wealth
3. Family Wealth
4. Moral Wealth
As I said, there are two types of economics – financial and behavioral – and there are 12 silos of wealth. Only the first silo deals with financial economics, while the next 11 silos relate to behavioral economics – how we think and feel.
1. Financial Wealth: Financial Wealth is exactly what you think of when you hear the word “wealth.” Just like Financial Economics deals with the numbers, so does Financial Wealth. What does your balance sheet look like? How much is in your 401K plan? Financial Wealth is easy to evaluate – you just look at the number at the bottom of your statement. The main problem when dealing only with Financial Wealth is deciding when enough is enough. That is, when do you feel fulfilled? Well, the other 11 silos define what “enough” is. So, grab your balance sheet and let’s take a look. The next three silos deal with who you are as a person.
2. Health Wealth: I had a client tell me, "If I knew I was going to live this long I would have saved more money and taken better care of myself.” WOW – this certainly highlights our first two wealth silos, doesn’t it? Here’s an interesting question I have discussed with my age-80-and-older clients: Would you rather have more money or better health? The answer is always a resounding “better health.” My senior clients would rather play on the floor with their grandchildren than check their bank balance. With that in mind, take care of yourself. Watch your diet. Do not be sedentary – a body in motion will stay in motion. Set small goals like taking a walk every day or drinking more water. Who knows? Maybe you’ll lose 10 pounds – it’s one less bowling ball to carry around.
3. Family Wealth: Someone once asked Warren Buffet how he measures success. His response? "I measure success by how many people love me. And the best way to be loved is to be loveable.” Do not ever miss an opportunity to tell your family you love them and you are very proud of them. I knew a man who never said that to his children – he said no one raised him that way. I think he regretted that when he died. You cannot take your money to heaven with you, but you can take your family. My family’s safety, health, and happiness are more important to me than my portfolio.
4. Moral Wealth: Do you understand the difference between right and wrong? Do you act accordingly, even when no one is looking? Doing the “right thing” is more than just looking like a good person in front of others. If you are a person of principle then your values align with your actions. My retired partner Dave found a $500 error in a closing statement from a property we bought a few years prior. It was in our favor. I said we need to send it to the previous owner. He said, "I already did." There is a saying, "you can’t cheat an honest person” – how true.
Next month we will explore four silos that deal with how we interact with society. Subscribe to our newsletter below to get updates on the 12 Silos of Wealth series.
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