Joe Reilly:  What inspired this thoughtful follow-on to your previous book Strangers in Paradise? 

Jim Grubman: Strangers in Paradise has turned out to be so helpful to families and advisors in understanding those who come to wealth versus those who are raised with wealth.  Our “immigrants and natives” metaphor immediately touches people and helps them feel understood.  But, as Dennis and I have each worked with business families achieving success in non-Western cultures, we were struck by additional factors that seemed to challenge certain families.

Dennis Jaffe:  As we gained experience with families and advisors around the world, we came to learn more about the influences of each family’s “culture of origin” that Western perspectives did not capture.  We both are research thinkers and academics, as well as practitioners. We were intellectually curious to understand what we were seeing and experiencing, including the failure of Western models to sometimes help Asian, Middle-Eastern, Indian, or Latin American families, for example.

Joe Reilly:  Could you briefly describe the three different global cultures which provide the foundation for your book?

Dennis Jaffe: New research in cross-cultural psychology and anthropology suggests that there are three broad cultural styles around the world.  For convenience, we call these Individualist,  Collective Harmony, and Honor cultures.  Most people have a general sense of the first two – Individualist culture is roughly akin to Western culture, while Collective Harmony culture is relatively synonymous with Eastern culture.  The understanding of Honor cultures has been the breakthrough, plus all the detailed ways the cultures differ from each other.

Jim Grubman:  Individualist culture is prominent in Northern Europe, the UK, North America and Australia, with colonial history leaving elements in some developing nations. Individualist culture is steeped in the principles of self-sufficiency, rationalism, individual achievement, and the elevation of personal freedom and dignity above all else.  The purpose of the family is to help each individual member develop a fulfilling life, maximizing his or her potential.  Children are praised for their individual achievements and expected to seek their own path in life.

Leadership in Individualist culture can take many forms, from a strong individual leader to a committed team that collaborates; there is no one best model, we can draw from many models including highly consensual decision-making models.  The leader’s authority is tempered by the overriding rule of law that guides decision-making, insures fair dealings, and counters overzealous attempts by any one individual to grab power.  Other cultural principles include the idea that people are to be treated equally and fairly, that men and women are assumed to be equal, and that people can speak up and have their voices heard, no matter their age or position in life.  Communication is direct, open, transparent, and forthright.  Business and financial dealings must be transparent, specific, and orderly according to rules and regulations.

Individualist culture has many great strengths and is gradually spreading into other cultures.  But we have to keep in mind that the very strong focus on the individual has also weakened the “glue” that has traditionally provided a stronger sense of community and family cohesion.  It also can weaken our ability to put our personal agendas aside in service of the greater good.

Dennis Jaffe:  Collective Harmony cultures encompass South and East Asia, with elements in places like Japan and Indonesia.  Harmony culture is built on essentially Confucian principles elevating loyalty and obligation to family, respect for parents and other authorities, knowing one’s place, respecting one’s legacy and ancestors, and supporting the whole group rather than one’s individual position.  The concept of “face” is central to Harmony culture – “face” contains elements of prestige, honor, respect, reputation and influence, but it is much more socially determined than our Western equivalents of self-worth, shame, embarrassment, or social position.

Identity is defined by family and role, not so much by individual achievement.  One’s task in life is to honor one’s family and live one’s assigned role elegantly.  Every son and daughter has an obligation to protect and nurture the family as well as to respect the long history of traditional wisdom.  Elders are venerated.

Anything that disrupts or threatens family relationships is to be avoided.  Communication and behavior tend to sustain relationships and mutual respect.  Indirect, relatively ambiguous communication allows everyone to feel comfortable and avoid undue conflict.  Direct assertive, explicit communication risks tearing at the bonds between individuals and their social network if not handled carefully, especially in families.

The strength of Collective Harmony is its connectedness.  It also creates its greatest challenges, which are slow innovation and change.  Elders may hold too tight to their traditional ideas and discourage the open communication and collaboration so necessary for adaptation in a rapidly changing world.  The younger generation may in turn be reticent about speaking up and sharing feelings or ideas with parents and elders.

Joe Reilly:  What about the third culture you mentioned, Honor Culture?

Dennis Jaffe:  Honor cultures around the world are an extension of tribal or clan society, marked by fixed, elaborate, and ordered social hierarchies based on relationships.  It is common in Southern and Eastern Europe, Latin America, the Middle East, Africa, and India, with elements in places like Indonesia and Russia.  The family is the social and economic focus of life, with strong leaders who may be loved but are as likely to be feared and certainly obeyed.  Women are respected and worshiped, but until recent decades women have often had a limited role in leadership and executive positions.

What you need to understand is that many Honor societies contend with instability in the society surrounding them. With unstable and frequently shifting governments resulting in wavering rule of law, families and tribes learned to manage themselves and their vulnerable members.  As a result, they provide stability, trust, authority, and accountability within their environments of risk.

Honor families often have a highly political culture based on one’s relationship with those in power.  They root their trust in their family and allies, and distrust outsiders.  Career choice, academic achievement, and, in traditional families, marital options are evaluated by the impact on the collective family.  Excessive self-determination and independence are seen as potentially dishonorable and disrespectful to the family.

Transparency is actually a danger in Honor cultures because the rule of law is shaky and families are vulnerable to outside threats.  That’s part of why the Common Reporting Standard and FATCA are causing such consternation around the world. Knowing who owns what may be great for tax-collection purposes, but it takes away the privacy of families who may have a legitimate need to be protected from prying eyes and unscrupulous competitors.

Honor culture helps families and clans build and preserve wealth across generations.  But the indirect communication, hierarchical leadership and decision-making styles, and slow pace of change often create problems in a fast-changing world of greater transparency and adaptation.

Joe Reilly:  In the book you discuss the journey up the wealth ladder that many families make, but there is often also a journey across these cultures.   Can you talk more about this idea of making a “journey across?” What does it mean?

Dennis Jaffe:  While every newcomer to wealth migrates up the economic scale, this journey takes different forms depending on the culture where they live – the US, for example, compared to Latin America or the Middle East or Asia.  But as their wealth increases, they begin to encounter other cultures.  An entrepreneur from a poor Chinese village may move to an urban area where people come from several cultural traditions, not just from within China but from around the world.

What’s more, their children are “natives” within a more global community and – due to education and travel - their friendships and experiences include elements of other cultures.  For example, in Western schools they may be required to be less ambiguous and more direct in their communication, or asked to form bonds of trust with a work team whose background differs sharply from theirs.

Thus, the “journey up” to wealth no longer takes place within a single ethnic cultural tradition lived in and accepted without question.  Greater wealth and success in the family enterprise is complicated by the “journey across,” to a multicultural, pluralistic world with markedly different traditions.  The family then must understand, learn about, and make decisions and agreements that blend elements of different cultures, not struggle against them.

Joe Reilly:  Jim, you once said that we should remember wealth is a culture, not just a class.  How do you understand wealth to be a separate culture?

Jim Grubman:  People typically frame wealth in terms of social class and then have various positive or negative opinions about it.  “Class” is a very emotionally and politically laden term, especially in today’s environment.  My comment was that people often forget that wealth is also simply a culture, one that is foreign to those 80 per cent of current wealth-holders who start life in middle-class or poor circumstances.  Many families are simply trying to adjust to a radically new life and are not focused on its political or social implications.  They just want down-to-earth help in raising good kids and grandkids.  They are coping with the change in relationships with their middle-class friends and family, and adjusting to the jargon and complexity of things like wealth management.

As one client couple put it, “we are worried about the ‘law of unintended consequences.’  We know we are guessing half the time about what to do with our new wealth. We don’t want to do something in good faith that still leads to mistakes. We want help to do the right things from the start.” They were looking for help in navigating the new culture they found themselves in, not anything about their new socioeconomic class.