What is the easiest way to deal with friends and family asking you for favors when you are ultra-wealthy?

Through a combination of hard work, prudent saving, money management, personal sacrifice, and smart investing, self-made millionaires justifiably feel that they have a right to enjoy the fruits of their labor without guilt or regret.

Awkward Requests for Handouts

Unlike those who have inherited wealth, whose philanthropic commitments are often pre-established, self-made millionaires often find themselves targeted by family and friends for favors and handouts. Perhaps the maxim, “familiarity breeds contempt” is true, and Karl Marx’s writings about “class struggle”, which influenced Kamala Harris’ assertion that “we all need to end up in the same place” are the underlying sentiment behind these requests. 

A well-to-do Reddit poster finding himself on the receiving end of repeated requests of these types, recently asked for advice on dealing with friends and family in those awkward situations.

The post pertained especially to when the following requests came from family and friends:

• How to deal with requests for “favors”, which could range from asking for a job in a company you worked for or own, asking for a deal, for an investment, for a loan, etc.
• How do you handle it if your spouse had given advanced notice or was also caught by surprise?
• If the request came from a relative on the spouse’s side, did it have an effect on the relationship? 

“Why Ask Me?”

Drake’s large entourage is a result of his loyalty to his friends, but if his career were to falter, the entourage expense could bankrupt him.

The Chinese word for it is guanxi. Arabs refer to it as wasta. In English, the term for insiders is connections, while outsiders refer to it as nepotism. People of perceived wealth and influence who are self-made can frequently become the target of requests for “favors”, particularly from those family and friends who recall the past years of mutual humble beginnings.  This is especially a problem for pro athletes who suddenly strike it rich and then feel obliged to support family and friends. A number of them go bankrupt from poor financial planning prior to retiring from pro sports. 

There is nothing inherently wrong with giving special treatment to friends and family if one is so inclined. From farms to Mom-and-Pop small businesses to even large multinational corporations like the Walton family’s Wal-Mart and Rubert Murdoch’s News Corp., family members have long depended upon each other for assistance in all sorts of matters. Due to the implied trust developed through years of shared experiences, the presumption of “connections” is common and not unexpected. While direct requests for an investment or loan are frequent, there can be several reasons for requests, and not all of them for a direct benefit.:

• Sometimes, the request may be on behalf of a son, daughter, or cousin for a job.
• There may be an impression of insufficient acknowledgment of aid given to the successful party in the past from the petitioner.
• The petitioner may be attempting to impress his or her own circle of contacts by flaunting a relationship with the successful party. 

The Approach That Works is Subjective

Any investment request should have a business plan or summary in writing for proper analysis and review. Any idea not articulated in writing should be considered incomplete and risky.

The poet John Donne created the quote, “No Man is an Island.” For the poster to ignore all requests would inevitably create too many negative repercussions among his or his wife’s family, and could result in strife to their marriage. However, diplomacy and common sense are the keys to maintaining peace in delicate situations. I would suggest the following replies for the corresponding scenarios:

For loan requests – 1) Weigh the use of proceeds objectively. If, for example, it’s for a medical emergency, that should rate a higher urgency than a request to pay for a vacation the supplicant wants, but can’t afford.  2) If the request comes from in-laws or a spouse’s family member, a discussion with the spouse on the politics of the request and the family dynamic impact, if any, should the answer be yes or no. 

For investment requests –  Respond that you and your spouse rely on objective analysis from third parties to review business plans. Anything not in writing for review cannot be considered sufficiently planned to warrant further deliberation. Privately, weigh the investment proposal on its own merits.

For job placement – If the request is for a relative or extended family member, try to get a C.V. and employer background referrals. If there are family obligations to comply, placing them in a ground level position is the safest bet. If the expectation of the relative is for a position where the proper qualifications or skill sets are lacking, agree to put in a word  to the HR Department with the understanding that the head of HR would have the final say.

This article is intended to be read as opinion only. A corporate professional should be consulted if more in-depth information is being sought.