Why Australia’s wealthy hide their true riches from friends and family

Australia has experienced a boom in family offices over the last decade, with the country now estimated to host over 2000 of the often secretive financial entities as decades of economic growth enriched the nation’s wealthiest families.

“Wealth and money are sensitive and sometimes taboo issues to talk about socially,” said Richard Milroy, PWN’s founder and executive director. “It’s not socially acceptable to talk about challenges, positive or negative, relating to very significant wealth. It’s uncomfortable. It can be awkward for people, it can be isolating.”

Nearly 71 per cent of respondents said they tried to hide their wealth, a response Mr Milroy said “really jumps out”.

“Respondents said that they feel that people treat them differently because of their wealth [and] that it’s harder to have genuine relationships,” Mr Milroy said. He added that members were also concerned about the effect of their wealth on their children. “They have concerns about [their children] growing up in an environment where they feel judged or it’s hard for them to make real friends.”

Mr Werdiger said such attitudes were common because of the impact wealth could have on children. “It makes it a hell of a lot harder to raise your kids with a decent attitude, that’s for sure,” he said. “[It’s a question of] how can I instil my child with a sense of purpose and mission and perhaps ambition? And even though they never have to work a day in their lives.”

Eighty-eight per cent of those surveyed said it was possible to give too much wealth to one’s children, which Mr Werdiger said was because people wanted to protect their offspring, but this could also lead to a “cycle of distrust” when children or relatives found out about the wealth.

“I’ve seen other extremes where parents have gone to the nth degree to hide their wealth from their children and live way below their means and make it a big secret,” he said. “[Then] the parents died, the children learn in their ... age 60s and 70s. ‘Oh, wow, I’ve suddenly inherited all this money. And I think, hang on ... why didn’t you help us when we needed it? We don’t want to be inheritors of it at age 70. What’s the point of it?’”

Instead, families needed to find a middle ground. “The more families are open, the more they can create an environment of trust ... and allow that wealth to be a force for good in the family,” Mr Werdiger said. Eighty-three per cent of respondents said they felt a duty to society as a result of becoming wealthy.

The survey also revealed evergreen issues about preparing the next generation to inherit wealth. Fifty-four per cent of surveyed PWN members have a family office, while just 36 per cent of members have a documented succession plan.

Until COVID-19 hit, Australia experienced the longest period of growth without a recession among developing countries since World War II. Australians are the fourth-richest citizens globally, according to UBS data, and account for more than 3 per cent of the world’s millionaires.