Poor little rich kids?

There was a time when Ireland's rich only worried about how to pass their money on to their children without the taxman getting most of it. But when Esat's Denis O'Brien told the Late Late Show audience a few weeks ago that he didn't plan on handing most of his wealth to his children, he touched on a concern that many of the new rich have: could money turn good kids bad, or at the very least, rob them of initiative? America's wealthy are so concerned that top finance houses like Merrill Lynch are even offering their wealthiest private investors psychiatric counselling to counter "affluenza".

Bill Gates has said he will leave his two children only $100 million of his wealth, with the rest of the $1 trillion going to good causes. America's second richest man, Warren Buffett, has vowed to do the same, in the hope that his children will have the drive to do something themselves if he leaves them only a "paltry" amount. A psychologist who is also the granddaughter of a former president of General Motors has recently written a book looking at how achieving great wealth can often turn out to be a hollow achievement - accompanied by extreme anxiety and other psychological fears that get passed on to their heirs. We should have such "problems" - most of us might think. But any parents who have idly wondered whether or not to let their children know when they win the Lotto will be able to spare a moment or two of sympathy to families who find themselves in this position.

And there are a growing number here, Martina Gallagher and Deirdre Dunne of the Bank of Ireland confirm. Gallagher is head of financial planning with Bank of Ireland Priority Client, a company which advises the wealthy on all aspects of financial planning, while Dunne is estate planning executive with Bank of Ireland Trust Services. There most definitely are a lot of people in their late 30s and early 40s "who've amassed quite a lot of wealth, and they're concerned that their children might come into lots of money at an age when they can't handle it", Dunne says. Couples worry that, if they both die when their children are young, the inheritance could ruin them. Gallagher says the fear that sudden wealth will rob their children of purpose and ambition "is a prevalent fear of all wealthy people". And there is more or less a consensus that the worst thing is to let children have money too young.

Nowadays "21 is considered too young to give them all their inheritance - it is probably better to stage payments until they're about 30," Dunne says. So far, unlike in the US, our financial institutions confine themselves to giving financial advice rather than psychological assistance. Many customers choose a discretionary trust, giving the trustees of their fund the power to decide when and how much to release to their children; thus, if a child is an alcoholic, the trustee might hand over a basic income, but not much capital. (Parents write a letter of wishes to guide the trustees on the approach they want them to take.) In the States, some parents dribble out the money so that offspring don't get the bulk until they're 40 or 45. Others set up trusts that stipulate their children have to pass regular drug tests, or that tie payouts to past use of wealth, or to having lifestyles that conform to a "family mission statement".

Where might newly rich Irish parents turn for psychological advice? After all, people who have grown up in modest circumstances, as many of our young high-flyers have, have learned the value of money the hard way. How do you teach that lesson to children who know their parents are super-rich?

You could try the direct approach. Tell them - and mean it - not to expect an inheritance, or at least not a massive one.

Irish Times personal finance writer Margaret E Ward says in the US there is a practical emphasis on teaching young people financial skills - nearly to the point where you can study "Investment 101" in high school.

"First generation money will not transfer unless you give children skills," Ward says. Ward says parents and/or other family members can start teaching those skills quite young: for example, buy a Barbie-mad child some shares in Mattel, then send them information about the company from newspaper stories and so on. The aim over time is to help them build up a varied share portfolio.

EVEN IF you're not superrich, some basic financial training will never go amiss, if only to counter the doesn't-money-just-come-out-of-the-wall syndrome. Naturally, children will learn by example, by what you do as much as by what you say. And naturally, if you lead a Charvet-shirts-and-champagne lifestyle, they're quite likely to want the same.

If your attitude is that you've earned the right to the good things of life by your own hard work, make it plain early on that you expect them to earn their own rewards too. By the same token, if you're a rich person with a social conscience, how you use your wealth should influence your children's attitudes. If you set up foundations and trusts to improve the world around you, presumably they will get the message that money shouldn't be frittered away. And if you have ethical problems with inherited wealth and just give it all away, there's no problem at all - although your children might resent you for saving them from themselves.

It seems that the rich, after all, aren't different from you or me - it's just that their wealth throws up a whole new set of parenting problems.