Understanding wealthy families is critical to advising them.

One key to grasping the psychological complexities of wealth is to realize that approximately 80% of families with wealth were not raised with wealth, according to expert and author Dr. Jim Grubman. In his new book "Strangers in Paradise: How Families Adapt to Wealth Across Generations," Grubman compares wealthy families who came from working class and middle class backgrounds to immigrants settling in a new country with a new culture.

"Like immigrants, they have to raise children in a culture and surroundings they didn't grow up in," says Grubman, a psychologist whose practice, FamilyWealth Consulting, is based in Massachusetts. "It's a major undertaking, involving new rules, new responsibilities and even a new language, all of which require a special knowledge."

Like immigrants adjusting to a new culture, families who have become wealthy adjust in different ways, according to Grubman. Some create a bubble, trying to maintain their old way of life and shielding their children from the enticements of the new environment. "They don't want to tell children about how much money the family has, they think it will contaminate them," Grubman says.

But other families embrace their new culture enthusiastically, eagerly abandoning - and perhaps embarrassed by - their more humble background. This group tends to overdo it, Grubman says, over-compensating for their success with ostentatious purchases and extravagant behavior.

There are plenty of variations between the two extremes, of course, but the dilemma for newly wealthy families is the same, "Strangers in Paradise" stresses: "How do I raise children successfully in a culture in which I myself was not raised?"

How can financial advisors help?

Be the voice of reason. "Remind families who are in denial about their wealth that 'protecting' their children isn't really helping them in the long term," Grubman suggests. "And diplomatically tell parents who aren't practicing restraint that their approach can also be short-sighted. Children need to be actively prepared to manage their wealth and taught the skills necessary to do so. Advisors can connect with specialists in wealth education and financial literacy and responsibility."

Facilitate family communication. "It's easy for busy, wealthy families to become distracted, isolated and lose track of their identity," Grubman notes. "Family governance and meetings are critical for communication and as a forum to share values and ideas. Wealth managers can become invaluable facilitators for families."

Advocate integrating roots and rewards. Combining the best of wealthy families' old and new cultures is an ideal solution, "Strangers in Paradise" maintains, comparing the process to acculturation for ethnic immigrants, "what cross-cultural psychology refers to as integration or biculturalism."

"Advisors can help clients reunite with their roots without denying their current success," Grubman says. "Remind them of the virtues of the hard work, perseverance and restraint that facilitated their accomplishments."

When successful, the book states, this integrated approach helps cultural newcomers "feel whole, empowered, and confident they will make the best decisions for themselves and their families."

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