Dimensions of Wealth: Reflections on Personal Wealth
By Thomas Twombly

Perhaps I’m just longing for cooler weather, but I’d like to return to the wealth-as-an-iceberg metaphor that I introduced in June’s newsletter. If our investment assets and bank accounts are the tip of the iceberg, what lies beneath?

That is to say -- if material wealth is the relatively small portion of our overall wealth that is exposed above the surface – easy to see, measure, quantify and define - and if the social wealth that we touched on last month is a broader, more hidden dimension that exists just below the surface, then what do we find at the bottom - the deepest, most hidden, and hardest-to-define dimension of wealth?

I believe it is the concept of personal wealth.

If the iceberg is stable, and not given to sudden turnover, that dimension is necessarily the broadest, heaviest, and ultimately most important component of all that we value and hold dear. Personal wealth is the ballast that helps keep all the other components upright, and the foundation on which all the others rest and are built. For this reason alone it’s crucial to explore what it means on an individual basis. It’s critical to be purposeful about building, caring for, and managing personal wealth along with all the other activities of social and material wealth-building, or you run the risk of creating instability.

Think about whom you love, and who loves you – who you’re responsible for, and the core obligations you are most compelled to fulfill. Think about your personal story – the lessons you’ve learned and been taught and the values you’ve come to hold dear. Consider the guiding principles you’d most like to pass on to the people you care about, the experiences that have shaped your life, and the hopes you have about how you will be remembered. Contemplate the emotional anchors that help keep you grounded, and the spiritual touchstones that help give you a sense of faith and continuity. Ponder the family legends and stories that give context and meaning to your existence. Think about your health.

These are the types of subjects that arise when we challenge clients to define personal wealth. They have little material value – you generally can’t sell them to a stranger, and they certainly don’t count as assets when you apply for a loan – but they often make up the core of who you really are, how you think of yourself, and what you would be most bereft to lose.

Albert Einstein once said: “not everything that counts can be counted, and not everything that can be counted, counts.” Why is it that after a disaster people search the rubble of their homes for remnants of old photographs and family keepsakes, and feel profound gratitude when they find them? Why is the yellowed wedding dress in the back of the closet so important? Why, after a death in the family, do people get so emotional about great-grandmother’s tattered quilt? Why does my grandfather’s split-bamboo fly-rod with the warped tip represent such a treasure to me?

The answer is that they’re all powerful symbols and important reminders of who we are and where we’ve come from. They’re also important compass points for where we hope to go and what we hope to pass on. They may not count to the uninitiated eye, but they are part of what comprises our sense of personal wealth and history, and they are powerful motivators for our future activity.

When my grandfather died 19 years ago, my father flew out to settle his affairs and begin the process of going through his personal possessions. Deep in the back of an old filing cabinet he discovered something that none of us had ever known about: five loose-leaf short stories my grandfather had written shortly after his own father’s death. They chronicled trout fishing trips they’d taken together and remembrances of personal traits and idiosyncrasies that some of our family can recognize in ourselves now. My father made photocopies, bound them under the title “The Limit – Aren’t They Beauties”, and distributed them to all members of our extended family.

Those tales are prized by all of us today, and for many years they were the preferred bedtime stories my kids asked me to read aloud as they grew up. How do you measure their value? How do you quantify the impact of that dimension of wealth and its legacy? To me, they’re invaluable. They connect me to the past – and now to the future. They remind my kids that they are important parts of something that is far bigger, and give greater context to their lives. Combined with my own experiences enjoying the outdoors with my grandfather, my kids, and by myself, they reinforce a sense of shared history and common values that go back a long way. They teach patience, persistence, and determination in the face of adversity – as anyone who has ever fly-fished can attest. They also convey a profound joy at the beauty that exists in the natural world, and the value of time in the wilderness for solitude and reflection. In short, they’re a crucial part of my sense of personal wealth, and I invest regularly in reinforcing their message in my own life.

And that’s why that fly-rod is so valuable to me.

Each of us has our own definition of personal wealth and our own stories to tell. Think about yours. Think about those you’ve gotten from your family. What are the important lessons to be passed on, values to communicate, and emotional touchstones to be preserved? Have you been fortunate, as I have, to receive a written, photographic, or painted legacy from a forbearer, or is it up to you to create a tradition? Think about other ways to build and maintain personal wealth – reinforcing close family relationships, pursuing a passion, exercising and eating well to maintain long-term health and set an example, investing your time, talent, and resources into the people, activities, and principles that are the closest to your heart – anything that reinforces your sense of who you are and what you stand for. In my experience, the happiest and most satisfied people - those who think of themselves as genuinely “wealthy” devote ample time to purposefully building and caring for this dimension of their lives, and they align their financial wealth-building activity with supporting it.

It’s been said that money is a wonderful servant but a vicious master. As the sole focus of attention, material wealth can become tyrannical – whipsawing it’s possessor between greed and fear as short-term events beyond our control affect the daily value of its components. It can create feelings of guilt, scarcity, inadequacy and anxiety that often result in an avoidance of money decisions altogether, or create an over-emphasis on the accumulation of material wealth as the exclusive driver of behavior.

Taken in balance, however, and integrated carefully and purposefully into a long-term philosophy that also gives attention to building and preserving social and personal wealth in equal measure, money takes on a different role. It becomes an ally and a valuable tool – something to be held less tightly and deployed with a bigger-picture perspective. It loses its destructive power to control, and gradually becomes an additional source of comfort and abundance – something to be stewarded with a sense of responsibility and gratitude for what it can do to augment a more holistic definition of a life well-lived.

For these reasons, the most effective individuals and advisors regularly explore all the dimensions of what they individually define as “wealth.” They challenge themselves to bring those dimensions into balance within one overarching wealth management plan, and they tailor their financial planning and investment decisions to support that vision.