Hedge fund founder pays the ultimate price in shakedown by son. There’s a lesson to be learned in this tragic event.
On Monday Thomas Gilbert Sr., founder of Wainscott Capital Partners Fund, a New York-based hedge fund with $200 million in assets, was found shot to death in his New York City apartment. Charged with second-degree murder, criminal possession of a weapon and criminal possession of forgery devices, is Gilbert’s 30-year-old son, Thomas Gilbert Jr.
Made to look like a suicide, New York City police have determined that the father and son argued about money just before Gilbert Jr. shot his dad in the head. The son apparently was in debt and hadn’t had a job of any description since graduating from Princeton with a degree in economics in 2009.
According to the New York Post, Gilbert Jr. received $2,400 per month in rent from his father as well as $400 per month for spending money. The disagreement – Gilbert Sr. lowered the monthly stipend by $200.
Not exactly a good reason for shooting your dad in the head.
The issue of entitlement when it comes to wealthy families is a serious one that’s been ongoing since the beginning of time. Both Warren Buffett and Bill Gates have chosen to leave only a fraction of their wealth to their kids.
Buffett’s son Peter discussed
his dad’s philosophy about money in a 2011 interview with Daily Finance. He emphasized that his only inheritance was $90,000 in cash that his dad gave him in 1979 from the sale of his grandfather’s farm. Peter said about the cash gift: “My dad didn’t believe in misallocated capital and he didn’t believe in inherited wealth… it was kicked in my head that it would be all I would get.”
Of course, it didn’t hurt that Peter Buffett rolled the cash into Berkshire Hathaway stock. Today, that $90,000 is worth approximately $68 million.
While it might seem absurd to the average person that a grown adult would still need an allowance, the issue of entitlement can become a hornet’s nest if not dealt with appropriately. This case should be a lesson for wealthy parents on what can go wrong when you become overly protective of your children.
Advisors working with ultra-high-net-worth investors, those individuals with $30 million or more in net assets, often find themselves dealing with “soft” issues such as entitlement.
WP reached out to Northland Wealth Management CEO Arthur Salzer for his view on the subject of allowances for adult children. Salzer runs one of the largest independent family offices in Canada and spends a lot of time dealing with multi-generational wealth.
Salzer responded in an email: “As for adult children receiving allowances, there are many families whereby adult members receive a distribution from their trust. In some cases the money is utilized for a positive end, in others it is simply expected and the money is not used wisely… The expectation that others must provide for you without giving anything in return – the sense of entitlement whether it is from a family or society is a very dangerous expectation that can cause great harm to many.”
So, the next time you’re meeting with one of your ultra-high-net-worth clients and a discussion ensues about the children, you might want to revisit their plans for the distribution of wealth to the next generation.
The well-being of all those concerned depends on it.