Is your financial future in your DNA? - MoneySense

Is your financial future in your DNA?

Your family history may determine your financial fate.


If you happen to have $5 million or more in net worth, Northwood Stephens Private Counsel will be happy to tend to your every financial need. But once you’ve discussed your investment portfolio and your tax strategies with the exclusive Toronto firm, get ready for some far more personal questions—like why your Aunt Maggie won’t speak to her sisters, why there seems to be an unusually high divorce rate among your uncles, and how cousin
Ronald’s drinking problem alienated half the family.

Tom McCullough, president of Northwood Stephens, started asking such questions two years ago, when he realized that a potent tool for family therapists called a genogram can also be used for financial planning. A genogram is a schematic diagram of your family history that allows you to see recurring patterns of behavior at a glance. It lets you analyze your financial situation not only in terms of your own life, but also in terms of all the generations that came before you.

A genogram looks a lot like a family tree, except it’s packed with all the stuff that’s usually never talked about. Genograms tell you what a family is really like—who’s divorced, who isn’t speaking to whom, who has a history of bad relationships, and who has alcohol problems. Patterns of behavior often recur in families and those patterns can foretell your own financial future.

“How you deal with money is a family trait,” says Fredda Herz Brown of Relative Solutions, a firm in Cresskill, N.J., that uses genograms to help wealthy families resolve conflicts. “Attitudes are taught emotionally, sometimes without words. Kids learn by what they see people doing, so every interaction you have with money teaches your kids your attitude towards it.”

Sometimes the behavior spotlighted by a genogram can be as simple as a refusal to talk about money. Sometimes it can be as dramatic as a tendency to clinical depression. In many cases, though, the patterns are more subtle. “In one client’s case, there was a history of strong parental favoritism and conflict in the family,” says McCullough. “So whenever a financial issue came up, our client was first and foremost concerned that her children were treated completely fairly.”

Not all the news that’s turned up in a genogram is bad, McCullough says. In fact, a genogram can help give your kids a sense of your family’s accomplishments and build a sense of pride in the legacy they’ve inherited. “Imagine if the last three generations of your family were very generous to a particular cause. You may want to
expose your kids to that.”

Creating a genogram is a lot of work, says McCullough. But if you’re willing to go through the process of interviewing family members and inquiring into family history, you’re nearly certain to have flashes of self-discovery. You may realize, for instance, that your tendency to hoard money is a characteristic that has run in the family for generations—and by achieving that insight, you can gain the power to break the pattern.

The goal, says McCullough, is to allow people to lead the lives they want to, rather than the lives their family background has pushed them into. “If there are strong patterns in your family, you may decide to avoid them if they’re negative, or reinforce them if they’re positive. But the first step is understanding that these patterns do exist.”