Episode Transcript
LAUREN: Hey, thank you guys so much for listening to the Purposeful Planning Institute podcast. I'm Lauren Ferrara. I am the owner of Why Wait Stories, and I'm also your host for today. I'm super excited about this conversation. What happens when you finally arrive at the life you worked so hard to build, only to discover you don't quite know how to live in it? And what happens when your children grow up in a world that you had to fight your way into? We're talking about the hidden emotional cost of wealth, the challenges of raising the next generations, and what it means to leave a legacy that lasts. In his book, Dr. Jim Grubman compares the experience of becoming wealthy to immigrating to a new country. Parents are learning how to navigate this unfamiliar world, and their children are born into it. So, how do families bridge that divide and prepare the next generation to handle wealth with purpose? We're joined by Dr. Jim Grubman himself, wealth psychologist and the author of Strangers in Paradise: How Families Adapt to Wealth Across Generations, and Dr. Huong Diep, a clinical psychologist and financial therapist who brings a really unique perspective on how culture, family history, and identity shape our relationship with money. Hey, you guys! Thank you so much for being here today.
JIM: Thank you for having me. Very nice to be here, Lauren.
HUONG: So, thank you.
LAUREN: Thanks, Huong. So, can you both tell me a little bit about your purposeful journeys, how you wound up doing what you're doing, and how you two connected?
JIM: Well, I'll go ahead. Many people in PPI know me. I'm a psychologist who originally worked in the healthcare system as a neuropsychologist. After a successful career there, I transitioned to working with families of wealth and family businesses and enterprises. That was around the dot-com era, which seems farther and farther away at this point. For the past 30 years or so, I've been working in the field and have developed a variety of models and ideas. I've worked with families at every level, from the financial planning firm down the street up to global families that are ultra-high-net-worth. I'm actually beginning to retire a bit, with some difficulty, and am also very happy to be talking about the fact that I'm revisiting Strangers in Paradise, which is nearly 15 years old now, and bringing it up into the modern era.
LAUREN: You have a teenager.
JIM: I have a teenager as a book, yeah, and a 16-year-old granddaughter, which is even more. So yes, the book is a teenager at this point and needs to come into the modern world.
LAUREN: Well, Huong, can you tell us a little bit about your journey and also how you and Jim connected?
HUONG: Yeah, I'd love to. Thank you. So, looking back, I think my interest in financial psychology began long before I even knew that there was a field called financial psychology. I was born in a refugee camp after my family fled Vietnam, and my grandparents had actually been relatively prosperous business owners. But when we arrived in the U.S., we had to start all over. So I grew up with lots of stories about wealth, loss, sacrifice, and responsibility. Professionally, I became a clinical psychologist working with children and families across various settings. One thing I kept seeing was how money and wealth were intertwined with people's identities and relationships, but we rarely ever talked about it. That curiosity led me to the world of financial therapy, wealth psychology, and devouring books such as Wealth 3.0 and Strangers in Paradise. Then I cold-emailed Jim, and he generously connected with me, introduced me to PPI, and encouraged me to attend my first Rendezvous. I guess you could say the rest is history. Today, alongside my clinical practice, I've expanded into wealth psychology consulting, working with individuals and families to explore how culture, identity, and family history shape their relationship with money and wealth.
LAUREN: Well, that's the power of PPI, and that's actually where I met you over the summer at Rendezvous. So, it's so good to chat with you again. Jim, a lot has changed in the last 15 years since you wrote Strangers in Paradise. First, tell us a little bit about the metaphor in the book and what has changed over the years.
JIM: The metaphor originated when my wonderful colleague and collaborator, Dennis Jaffe, and I were working on what was the first really comprehensive article about the psychology of wealth back in 2005, approximately 2006. At that time, there were a lot of resources, but nobody had ever really drawn the field together. We were motivated to summarize a lot of things that had happened to that point and, ironically, to create a bibliography so that anybody who wanted to follow the breadcrumbs in the field had a collection of the resources. That's what motivated us. That article has become a classic, and everybody knows it as the "Acquirers and Inheritors of Wealth" article. It was during the course of that work, talking about the differences between acquirers and inheritors and understanding the statistics on the demographics of who is really wealthy, that we came upon the metaphor. Most people who are wealthy are not old money and inheritors; they are mostly new money and come to that wealth in their lifetime. It was during that interaction, sort of the magic of a great collaboration, that the idea sparked. If you grow up in one economic culture and, over the course of your life, change to a higher level of economic culture, you have, in a sense, migrated from one culture to another economically, which nobody had ever looked at before. During those conversations, we began to realize that a lot of what we had seen as consultants was that the family dynamics of wealthy families really had a lot in common with immigrant families, and so we wrote about it.
LAUREN: I love that. It's a super powerful metaphor. This is a question for both of you, but what do you think surprises people the most when they arrive in this unfamiliar world? Huong?
HUONG: Yeah, I think a lot of people are surprised that their internal experiences haven't caught up with their financial circumstances. And I think a lot about the concept of arrival fallacy, where we imagine that reaching a particular goal will finally give us the feelings that we've been seeking, whether that's security, relief, or freedom. But what I've seen is that many folks may reach that financial milestone and still experience anxiety, guilt about spending, or difficulty making decisions. I've heard a lot of folks who have, quote unquote, made it describe how, on the outside, others may see them as successful, but internally, they still see themselves as that scrappy poor kid from the wrong side of the tracks. In psychology, we know that when there's a disconnect between how others see us and how we see ourselves, that can create a lot of internal conflict because, as humans, we're often trying to make sense of the congruence between those different versions of ourselves. So, for me, I've seen that as part of the culture shock of entering wealth. Your circumstances and the way people relate to you may change faster than your sense of who you are.
LAUREN: Is that how you see it, Jim?
JIM: Absolutely. I think Huong put her finger on the central thing. Everybody focuses on getting to the land of wealth. They never think about what it's going to be like when they've actually arrived. As she said, there's a disconnect between what people imagine, which usually, if you come from more humble or difficult circumstances, is the offset of problems that you have. “I'm not going to have to struggle for money anymore. We're not going to have to have this. We'll be able to do that.” They don't think about the onset of new stressors that they did not anticipate and didn't even know about when arriving in the new culture and land. They're just looking at what they don't want to have from where they came from. So, again, there's the surprise, sometimes the shock, the culture shock, and what it leads to. After the "Acquirers and Inheritors" article, I was often asked, "Gee, I'd really like to hear more about this. Is there a book on this?" Eventually, it was like, "Not yet, but I guess I've got to write that."
LAUREN: Got to write that book [laughs].
JIM: I got to write that. And it actually took almost three years to write Strangers in Paradise at the time. It was to create essentially a book-length version of all the material and explain why cross-cultural psychology can really guide us as to what goes on and what can help.
LAUREN: And it's interesting because so many of the habits that help people build wealth, sacrifice, frugality, just good old-fashioned hard work, can also make it very difficult for people to enjoy it. Is that what you guys have seen?
JIM: Well, it can for some people. One of the things I talked about in the book, which turned out to be one of the main highlights, was pointing out the three main patterns that people can run into when making the transition from their heritage economic culture to the new culture of wealth. Some people don't really make much of a transition, and those are what I term, from the literature, avoiders. They avoid making the transition. The classic example is, "I'm just still a middle-class person. I just happen to have a lot of money." Their identity, behaviors, and perspectives stay rooted in where they came from. That's consistent with what you just asked about. These are people who really struggle to change what they do with spending and other things now that they're in different circumstances. There is another group that is kind of the opposite, almost an addiction pattern, where they're so focused on being freed from the constraints of where they came from that they're more than happy to spend extravagantly and enjoy their freedom and independence. Then I talk about the best of both worlds, which is the integrators, who are more grounded and thoughtful about blending the good values of where they came from with being able to accept the new culture where they now are. These are the three main patterns that I wrote about, and so many people said, "Oh my God, I can really relate to this."
LAUREN: And you know what I think is interesting? All three of us are the children of immigrants, and Huong, you're actually first generation yourself. So, what resonated most with you about this book?
HUONG: Yeah, definitely. I think something really clicked for me with Strangers in Paradise. The book has really set me on a completely different journey than I expected. For me, something clicked once I understood the framing of wealth as a cultural transition. As you mentioned, coming from an immigrant family, having served in the Peace Corps in Peru and having lived and worked in many countries, I could really relate to learning new cultural norms, code-switching, and navigating different worlds, both literally and figuratively. Once I was able to see that parallel, I think a whole new world opened up for me in terms of increased understanding and empathy for those folks. Regretfully, in our education and training as psychologists, there were no standards or guidelines, and I never took a single course on wealth and money and how that relates to mental health and well-being, which seems crazy. Thanks to Jim, the book, and PPI, it has really opened a whole new chapter of thinking for myself and made me question my own biases and assumptions about these new lands as well.
JIM: You use the term empathy quite well, and that was one of the surprising things that I really encountered after the book was published and over the last 15 years. People generally have seen the rich as other, as somebody else, not me, not us. When they read about the fact that 75 to 80% of the wealthy are new to that wealth and arise out of general society, a lot of people commented that, for the first time, it changed their view and they had much more empathy for people who are wealthy. They never realized the wealthy could be struggling with adjustment and adaptation and all of that. I was initially taken aback by how much of that came forward. Now, of course, it all makes sense, and we're used to it. But empathy for the wealthy is certainly often lacking, and I think the book has really helped that.
LAUREN: I would agree, and I also want to give a shout-out to PPI. I feel like my own empathy has grown from learning about this world. I think I used to come into it with this attitude of, "Oh, must be nice." But they don't have a lot of people to go to, and that's why I think what you guys do is so important, and what PPI does is so important. So, people who become wealthy sometimes feel disconnected from the communities and maybe even the families that they came from. How do you reconcile this personal success with loyalty to your roots, especially when wealth can change relationships?
JIM: Again, I think that's one of the unexpected things, where there is a lot of bias and stereotyping, and the term hostile envy, which I talk about in the book and originally came from David Bork and some others who came before me. People think that when you cross that threshold and now you live in the proverbial land of wealth, you've changed. There's even really, really bad psychological research that says when people have money and become rich, they lose their souls and become narcissistic. They have less empathy for others. There are all sorts of terrible things that people believe, and so it can create distance in important relationships from where you came from, which can be pretty disorienting. A lot of things can happen when people back in the old country think that you've gone away and that you're no longer like them.
LAUREN: Huong, how do you see that?
HUONG: Yeah, I think as a psychologist, we know that the sense of belonging and connection is so primal to who we are as humans. Back in the day, if you were cast out of your tribe, you couldn't just go to a new tribe and be like, "Hey, right?" You would get arrows shot at you. Even though circumstances in modern times have changed a lot, our brains are still pretty primal in wanting that tribe and community. I think that's something that even many first-generation Americans can relate to, even with vastly significant wealth. People may have opportunities that their parents or childhood friends never had, and I think that can bring up a whole host of emotions: gratitude, pride, and guilt. Financial success can definitely change your role within your family, and you may become the person that everyone turns to for help, or the person expected to make everyone's sacrifices worthwhile, especially if there was some kind of migration or war trauma. What I've seen is that part of the work is really acknowledging that things have changed. If you keep denying it or wanting things to be the same, asking why you can't hang out with your friends in the same way or return to the good old days, I think oftentimes you get stuck. From that place of acceptance, you can begin making more intentional choices about how you want to move forward and what it means to stay connected to your roots, whether that's supporting family, preserving traditions, or even wanting to create opportunities for others. I really try to help folks honor where they came from while developing their own relationship with wealth.
LAUREN: I love that. And so, Jim, I know the language has changed, but in the book, you describe wealthy parents as immigrants to wealth and their children as natives. What is the biggest misunderstanding between the generations, and why can it be so difficult for parents to pass down the values that help them succeed?
JIM: Well, it's funny because, again, since the book and in my work, actually before that, one of the nicest things that I found was that the metaphor was really helpful in getting the different generations to talk to each other. Going back to what Huong mentioned before and talking about empathy, in a lot of families, it's the wealth creator, the immigrant to wealth, who is put on a pedestal and even thinks that they know what it's all about. They're the ones who brought the family here, so they're at the top of the mountain, and everybody else should just sort of keep quiet, be like them, and do it their way. One of the things that I found was that it sort of leveled the playing field, and the rising generation and the natural-born citizens of the land of wealth kind of had a seat at the table, saying, "Yes, you got us here, but this is where we live. This is our land, and we've been born and raised with it. We know it pretty well, and, in fact, we know it in a different way than you do. So, we have a perspective that is just as valid." For a lot of wealth creators, having that perspective, sometimes expressed during family meetings, really turned things around. They realized that they knew wealth from their perspective. It wasn't that they knew wealth, period, and it opened up conversations. I can remember one family in particular I worked with. At first, it got a little contentious, but then the patriarch said, "You know, I never thought about it that way. Tell me more. What is this life like for you?" For the first time, he listened. What was interesting was that the family spoke up and talked about the fact that, yes, they have more security, yes, they have this, and yes, they have that, but they also have a lot of dilemmas. For example, wealth and relationships. At what point am I supposed to tell anybody that I come from this family? How do I tell them? How do we navigate this? How do I navigate parenting? How do I do it? It led to a much more broadly based conversation. At the end of the meeting, the patriarch said to me afterward, "I never realized what their lives were really like. I only saw it through my eyes." It was one of those powerful moments.
LAUREN: Yeah. Well, so many parents want their children to have an easier life, but they also want them to have resilience, gratitude, and independence. What are ways to protect children from financial insecurity without depriving them of those experiences that help them grow? Jim?
JIM: Well, I think it's funny. It goes to how the field has really matured and changed in the last 20 years, in particular, moving away from education as financial education and financial literacy, and what we have to teach the rising generations, to preparation across all the roles and responsibilities. It's not just financial, like how to be a good beneficiary and whatever. Recently, I had an inquiry from somebody writing an article who was a little bit—how shall I say it—skeptical about these so-called wealthy billionaire families who put their kids on an allowance. Isn't that just sort of a sham constraint? The kids know that they're going to have a lot of money. How don't they see through this? And what good is that really for teaching? What I explained, which the journalist was actually surprised about, was that it's more of a financial apprenticeship and a learning situation. By putting children and grandchildren in situations where they are constrained and have a limited amount of money to work with, it teaches them decision-making, and decision-making is the most important thing. It's not passing the wealth on; it's passing on decision-making, and you have to put people in situations where they have to make decisions. So, to answer your question, the idea is that people may not necessarily live with a lot of financial insecurity like immigrants, but they need to understand financial accountability and responsibility, as well as the circumstances and values for managing wealth well. It's a lot of preparation to do that.
LAUREN: Huong, is there anything you'd add?
HUONG: Yeah, no, I agree with Jim. As a trained child psychologist, I also remind parents that children need opportunities to develop competency, mastery, and a sense of agency. Oftentimes, the challenge I see is for parents to tolerate their own discomfort when they have the resources to make their children's problems go away. I just remind them that kids need responsibility, contribution, experience frustration, make mistakes, and discover what they're capable of. So, really, how do we scaffold and support children through age-appropriate challenges while giving them room to develop confidence in their own abilities?
LAUREN: And Huong, let's talk a little bit about sharing, or perhaps oversharing, as some would see it, on social media and elsewhere. How do you see that play out among the immigrants to wealth and the natives to wealth?
HUONG: Oh boy!
JIM: How long do we have here?
HUONG: Oh my gosh. I think social media just adds a whole other layer to Jim's cultural metaphor because the culture of wealth is so much more visible. In the past, I remember the only time I saw it was on that show, The Lifestyles of the Rich and Famous, or something on TV. But now we have unlimited access to how celebrities or wealthy families live through all these social media platforms. We can see what they're buying, where they're traveling, and how they're spending their time. For younger generations, and even for us, social media is sometimes how we share experiences and maybe even compare experiences, which is a very natural human emotion. I also remind parents that one of the central tasks of adolescence and being a young adult is figuring out who we are in relation to our peers. Sharing online can feel like a very natural extension, especially when everyone around you is doing it. Parents, grandparents, or whoever may have different expectations about privacy and discretion, while young people are still developing their cognitive, prefrontal lobe, and executive functioning abilities to anticipate long-term consequences. For some of the youth I work with, when I ask them, "What do you think a potential employer might think about this post?" or "What do you think your peer might think about this post about this piece of jewelry you bought?" it really doesn't compute. They're not thinking long-term because that's not how their brains are wired. I think it adds another layer for family offices and advisors to be aware of: how to develop a family culture and governance structure that allows for some freedom of expression, creativity, and social development, while also thinking about the family's values and how they can act in a values-aligned way.
JIM: Yeah, if I can insert something here, what we're talking about now is also one of the reasons why I'm doing the second edition update. A lot has changed in 15 years, including the rise of social media. When I went back and reread the book, I realized it was starting to get dated in some ways and that there were things that were missing, particularly around the digital realm and social media. I talked in the original book about parents having to teach their kids to write big checks for college, and now it's like, who writes big checks for college? It's all online. Some of the anecdotes and examples needed to be updated to the modern era. But what Huong just mentioned is also the tremendous influence of social media in all sorts of ways that have to be understood in the land of wealth.
LAUREN: I have one final question for you both. What is one question advisors should be asking families that they often are not?
JIM: Well, it's funny because it's a great question. The one thing that I really teach advisors, when we boil it all down, is to ask about the journey. They look at the person sitting across from them as an account size, or assume they've always been rich, or whatever. The whole concept is that this person has a backstory. Most of the time, advisors do not know that. I talk about when the client comes into the room, there are three things: the person, the money, and the story. Most of the time, for advisors, it's about the money. If you ask about the story, it's a way to understand the person. All of a sudden, it becomes a much more complete picture, and people feel understood.
LAUREN: Huong, anything you want to add?
HUONG: Yeah, I agree with Jim in terms of the stories being so important. I think, in general, it's about staying curious, even if you've been working with a family for many years, decades even. I also think it's really important for us as professionals to recognize our own biases and assumptions because we're bringing those into the room as well. It might not be conscious, but we have subconscious beliefs about wealth, privilege, and what we think, quote unquote, healthy financial behaviors look like. We're all humans in one room, so we're going to bring our own stuff into it. But the more we can recognize our own stuff, the less we're going to project that onto our families, and we can really meet our families where they're at.
LAUREN: A hundred percent. Thank you so much, Jim. When can we read the updated Strangers in Paradise?
JIM: Oh, tough question. I thought it would be ready probably within another month or two, but circumstances this year have made my life complicated around work and a few other things. So, I'm looking at maybe the first quarter, maybe the beginning of the second quarter next year, in 2027. I will keep everybody in PPI posted because you guys know very much about all of this, and you are the community that I'm writing it for and that we're all a part of.
LAUREN: Well, if we're going to, we're happy to push your retirement back a little bit more, Jim and Huong, thank you so much for sharing your wisdom with us today. And PPI community, thank you, as always, for listening. We'll see you next time.
