June 1, 2015

Should Money Be Protected At All Costs?

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If you should happen to get rich quick, most financial advisers agree on just one thing: sprint to a financial adviser for help. Don’t spend it, they say. Slow down and ask for help.

It’s not that I disagree with the wisdom of that suggestion. It’s that I disagree with the assumption behind the suggestion. The assumption behind the recommendation to turn over your money to a financial adviser or a tax accountant is that money is to be protected at all costs.

I fundamentally disagree with that assumption.

Money is not meant to be protected but leveraged and optimized like any other asset. 

In my experience, one of the blind spots in our society is that individuals of high net worth live within financial structures that constrain their giving and limit their risk taking. I’m particularly concerned about this tendency among followers of Jesus. Why? Because in some things a follower of Christ should demonstrate a “different approach.” After all, that is the upside-down message of the Sermon on the Mount.

Wealthy followers of Jesus are often convinced to take their money and start a foundation. “Give off the interest,” they’re told. “That way, the principal is never touched, and you’ll always have something to give.” Sounds smart. That’s how foundations and university endowments survive. And that is the only way you push forward a pile of money to last well after you’re gone.

I understand the rationale and emotion tied to this. And I totally get being wise and sustainable versus impulsive and wasteful. But over the years I have come to believe that we stop two steps short of the full four-step cycle of revolutionary stewardship.

A deeper dive into the Parable of the Steward (or Talents) a few years ago opened my eyes to a broader understanding of traditional stewardship (see Matthew 25:14-30). What are the four steps of revolutionary stewardship?

  1. Assets are passed out by the owner of all assets. In the Parable of the Talents, the owner comes to town and passes out assets to people according to his discretion. The owner is Jesus. He is the one who gives us everything listed on our personal life and work balance sheet. Keep in mind that there are all kinds of assets including money, experience, relationships, time, wisdom, muscle, determination, and creativity. Money is just one kind of asset.
    This starting point is crucial. Do I see that I am a recipient of the Giver who distributes assets to people for their stewardship? Or do I really think my assets are mine because of my hard work or my ability to be lucky? Or do I see them as mine as a result of an inheritance or shrewd maneuvering? Often we get focused on what others have compared to what we don’t have and we lose the power of the distribution principle. Read back through the Parable to get a clear understanding on this.
  2. My simple job is stewardship.  If my resources are God’s, then they’re merely on loan to me. Stewardship is the posture that holds things … but not too tightly. Responsible but not possessive. The Owner has laid out some general principles, and He expects us to use those principles to spend / invest / save accordingly. At any point, He could reallocate them elsewhere and then you and I are left without them. And don’t be naïve … that can happen regardless how many zeros or commas you have connected to your assets.
  3. Stewardship assumes leverage. This is the line that separates traditional understanding of assets and stewardship from the revolutionary steward. People who have a pile of money will say, “Well, I am to be a good steward.” This is true. But what does that really mean? Let’s revisit the Parable. A wealthy landowner leaves town and puts his estate under the control of three employees. When he returns, he enthusiastically praises the two employees who leveraged their portion to gain more, and he forcefully rebukes the employee who protected his wealth at all costs. We don’t know all the backstory or the internal emotional framework of each of the three employees, but we do know what was driving the third—fear. Fear of losing control. Fear of failure.
  4. Leverage implies more risk, not less risk.  Yes … you read that correctly. Stewardship includes an element of risk that triggers something called faith. And that is my challenge to high net worth individuals (actually, to all stewards). It is very easy to create framework and structure that boxes faith out of your daily life. I remember a mentor years ago looking at me in an elevator in Memphis (TN) and asking me what I was trusting God for that right then … that if God did not come through I would be sunk. When a follower of Jesus is not exercising daily faith, we are practically sidelining God’s greatest agenda in our life. And that is way bigger than whatever my balance is on my net worth sheet. If we’re on autopilot with our wealth, something is likely wrong.

It’s not bad to create a structure with our wealth, but wealth is meant to be used just like every other asset passed out by the Owner of all assets. You wouldn’t work for years to afford a five-bedroom beach house in Cabo just to be bound to the 10’ X10’ mudroom your whole life … just so you can pass it to the next generation, after all. 

I talked with a friend recently who is worth hundreds of millions of dollars, but it’s all locked up in various structures and investments. He wants to be generous, but he ends up giving away a very small portion of his net worth.

You know what’s going to happen to a guy like that? He’ll get closer to his earthly end and feel more and more urgency to get rid of his money. He’ll be 88 years old and giving money to some cause that he doesn’t really care about. Or he’ll leave his money to children or grandkids who will have the same struggle. Or he’ll spend it on more and more luxury for himself and forget the bumper sticker, “He who dies with the most toys … still dies.” 

Don’t hear me wrong. It’s wise to get advice, it is caring to provide for your family’s future, and it is smart not to spend recklessly. Structures are not bad; I love structures. But create the structures and containers that allow you to pour and direct “your” assets for optimized return. Some set their wealth on a certain year trajectory to give / invest it down. I recently heard of a family that is going to give down $100mm before they die. Some people commit to giving away half of their income. Others live off 10% and give away 90%. My friend Daryl has committed his life to helping others understand and embrace revolutionary stewardship: 

Regardless, you should avoid a structure that handcuffs you because only a portion is reachable and the rest is locked up in a structure. Attorneys have the job to protect and maximize your wealth all the while minimizing the risk, so they won’t advise you on the last two steps. It runs against their code in some regard. That’s not their job. But at the end of the day, God didn’t entrust your assets to your attorneys; He entrusted them to you. 

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