Why a wealth event can lead to chaos in your home — and how to fix it
Is your household unmanageable? Check out 3 mistakes that lead to chaos in a high-net worth household, and how to avoid them.
Let’s say you’re a Silicon Valley tech founder who’s just sold your company. You’ve poured years of your life into an idea that you started working on in a shoebox apartment, and then suddenly, it all pays off. You’ve achieved your dream — and overnight, you’ve reached a level of wealth you never could have imagined.
You might start by buying a house or two. You want to keep living a “normal” life, but it’ll be nice to have a mountain house or a beach house for weekend getaways, so you can enjoy all your new free time.
Next, you bring in a contractor to help you turn the house into your dream home, and you hire a property manager and a couple of housekeepers to help you take care of it.
But now, when you finish your work day, your inbox seems to be flooded with questions from your contractor, your interior designer, your property manager. You’ve hired all these people, but you wonder what’s getting done, and why you’re spending so much time managing your home.
You thought your hard work had paid off, and that now life (at home, at least) would be easier — so why isn’t it?
You’ve arrived at a stage Rebecca Maguire calls unmanageability.
As the Founder of EFO Advisory Services, Rebecca encounters this story all the time. She helps high net-worth individuals and families set up and run their family offices, and she’s constantly meeting people whose lives at home have fallen into chaos after a wealth event.
“A lot of people have wealth advisors and a team around them, and it’s really easy to make large purchases, like homes and boats and cars, but nobody has slowed down and said, how are we going to manage this going forward?” says Rebecca.
Unmanageability sets everyone up for failure. So, how does it happen, and how do you fix it? Below, we’re breaking down the path to unmanageability, and in a new on-demand webinar, 5 Steps to Overcoming Unmanageability and Streamlining a Chaotic High Net Worth Household, Rebecca shares how to fix it. Watch to get her tips today!
Mistake 1: Not treating your property as an investment
Whether they’re working with a wealth management firm, joining a multi-family office, or setting up their own single-family office, most people who go through a major wealth event turn to professional wealth advisors to handle their investments. But, even when they invest in high-value real estate, they don’t seek out the same level of professionalized care for their homes.
“I think the general thought amongst the families is, ‘this is just our life, these are just our homes,’ and it’s not structured in a way that you would structure a property management firm,” says Rebecca. “But some of the values of these homes are competitive with something like a real estate investment trust that’s on the stock exchange.”
She compares this scenario to Class-A office buildings, which are seen as assets and taken care of as such. A $25M house with smart technology and complex mechanical systems isn’t something the average person knows how to maintain.
“When you’re thinking of putting commercial grade systems into a home, you then need to consider commercial grade property managers or maintenance people, because they understand the annual maintenance and potential problems,” says Rebecca.
Failing to treat these properties and the systems within them can lead to damage and chaos, but also serious risk. One of Rebecca’s clients had put in a pool with a geothermal heating system, but without a way to control it, the pool kept overheating, and they had to decommission it. Unfortunately, this wasn’t easy, and they ran the risk of turning their geothermal pipe into a geyser.
Rebecca says the most common risks come from simple things like failing to regularly replace the HVAC filter. Professional estate managers and property managers know to get ahead of these tasks, but if you’ve never owned a home — let alone a 5,000+ square foot house — how would you know?
Which brings us to…
Mistake 2: Hiring household staff, without giving them structure or direction
Soon after buying a large home, most families will bring in housekeepers, property managers and other household staff and contractors to help them manage it, but they rarely give staff enough structure and direction to help them be successful.
She points to three common issues here:
- No one has a job description, so everyone’s confused about what their roles are.
- There’s no structure, so no one knows who’s in charge, and everyone is afraid of making decisions because they’re not sure if they have the authority.
- There’s no direction, so everyone’s guessing about how things should be done.
Many families who are new to private service will hire a housekeeper and assume they’ll know what to do. But the problem is, every household is different. Housekeepers need information about the principal’s preferences and about the home’s fixtures and surfaces so they can meet expectations and take the best possible care of everything in the home.
The confusion only gets worse when you add multiple staff members. Without an estate manager or clear direction on who’s in charge, things slip through the cracks, and staff may start placing blame on each other. Plus, without a manager, the family ends up being the main point of contact for everyone — suddenly using all their free time to manage a team in their own home.
“I think people hire people thinking it’s going to be easier,” says Rebecca. “But unless you’ve really taken the time to go through your personal preferences, covering exactly how you like things to be, and hand that over like a bible with everything they need to know about the family and the houses, you’ll just be answering nonstop questions.”
Mistake 3: Quietly allowing the chaos to endure
Over time, these problems feed off of each other and the chaos gets worse and worse.
As the household becomes more complex, a lean household staff might quickly become overworked and overwhelmed. As the family starts to host events (board meetings, dinners with celebrities or politicians), the work continues to grow, and a lean staff might feel uncomfortable asking for help.
Without clear direction and team harmony, the best household staff members may seek out new positions, leading to costly, time-consuming turnover. Meanwhile, bad apples might stay, because they recognize that they can fly under the radar and do less work.
Meanwhile, families are taking risks they don’t even realize they’re taking, like missing important information around taxes or spending, paying people incorrectly, or hiring without proper background checks.
“You’re under duress, so you’re just throwing people at it,” says Rebecca.
By moving too quickly, families leave themselves vulnerable to liability and security risks.
How to avoid (or fix) an unmanageable household
The sooner you can overcome unmanageability, the better, because you don’t want these problems to snowball. The good news? If you put in the time up front to hire the right people, build the right structure, and communicate clearly with your team, you’ll get that time back in spades moving forward.
In a new on-demand webinar, Rebecca outlines 5 steps to overcoming unmanageability, so your household can run smoothly, and you can get back to whatever you’d actually like to spend your time doing:
- Clarify your family’s mission and vision
- Outline your priorities, preferences and expectations
- Assess your property, assets and systems
- Assess your staffing needs
- Create structure
Whether you’re looking to create structure in your own home, or you’re looking for inspiration for a family you support, this webinar will give you practical tips for creating a smoothly running household. Watch today!