The more money you have the more demanding you need to get with discipline in managing it. I remember a client with Rs. 200 crores of investible surplus once making a very very stupid investment of Rs. 5 crores in a PMS run by a foreign bank. I was aghast because he never did anything without at least telling me about it. When I met him later he said “I want to do some business in that bank’s home country, so I have opened an account and gave him some money to manage…it will help me in getting a good reference letter when I try to buy something there…this Rs. 5 crore is like a visiting card sent in advance”.

Now if you are his adviser you are fretting and fuming about this, but hey it was a business decision, not an investment decision!

People have to realize that it is only the real rich guy who will have real big problem and it is for the IFA to ask him unpleasant questions like “If your son lost Rs. 50L in a cricket betting game…will you pay or run the risk of your son being kidnapped and then pay”? Obviously a person investing Rs. 5000 in sip will not have to answer this question. So different people, different problems! Like Morgan Housel says “Personal finance is more about personal than about finance”.

Now if you are a Rs. 50,000 crore market capitalization business group the problems could be even more different. You will need to make rules and regulations regarding where you can spend, where you cannot spend (for e.g. Casinos not more than US $ 10000), what assets you can buy. One group has a rule that the kids cannot sell the shares to buy any asset – so the BMW will have to come out of dividends, not from capital sales. A skeptic reader would ask how a billionaire  — could possibly run into financial problems. The answer is that it’s probably not possible to dissipate a fortune like that by overspending on baubles in a generation or even two. However, if you see the Singh brothers, they blew Rs.15000 crores in 3 years did they not? “Just because you can doesn’t mean you should” spend on things that are difficult to understand! For example it is not difficult to blow a couple of crores on poor options buying or options writing. You have a lot does not mean you should dissipate it. Fear is a big factor – the people who made it are worried that the next gen could blow it.

I know of another group where the patriarch has asked each family member 5 heads under which they can spend the money (investing is different, so even buying 100 shares of a company go through a different process). The expense – including gifts for other family members – have to be clearly defined. So whether it is charity, vacations, on whom to spend, whether it can be spent by cash or credit card, travel, HAVE to be pre approved! He said something so sensible – a kid in the family will get everything needed to live like a billionaire (ovarian lottery, socialism at home). Nobody will ask you ‘whether you deserve it’. However, when the kid comes to office, he will have to answer questions like what has he done to earn it (Capitalism, you have to deserve what you want). Makes sense, this group controls 4 listed entities and has many professionals working for it.

Well, poor people don’t have money. Middle class has to worry about whether it is enough. Real Rich have to worry that money does not corrupt the kids – or worse does not get them into trouble with the law and/or ruin their brain and health.

Ha, money!