Decades of statistical research and hands-on work with the super-rich have given us a clear sense of how the members of that population are similar to each other yet different from the rest of the world. In truth, there are a number of factors that make the super-rich different from one another as well, and the source of their wealth is one of the most influential. How a person became wealthy has long played an important role in how that individual thinks and acts on a variety of matters.
We’ll look at five topics—wealth creation, family interactions, their desire to control, the way they find experts and the way they lose wealth—that illustrate the key differences between self-made wealth holders and inheritors and the implications for advisors.
For most self-made millionaires or billionaires, wealth creation is a central and critical part of their identities. Our research shows that vast fortunes are rarely built or amassed without the corresponding level of intensity, focus and ambition on becoming wealthy, to the near exclusion of everything else. Like many things, this can have a snowball effect—what we refer to as the wealth creation high—which, in turn, fuels the desire for more assets and more success. A self-perpetuating cycle, if you will.
By contrast, inheritors typically have more expansive personal and professional agendas that may include greater wealth creation but also include other priorities that demand their resources, time and attention.
One of the more common end-of-life laments among the self-made super-rich goes hand in hand with their focus on wealth creation: insufficient family time. While business dealings are given priority, everything else is pushed to the back burner, including personal relationships and the well-being of the family unit.
The reverse is often true for very affluent inheritors. Many find themselves wrapped up in family relationships and issues that are further complicated by the presence of operating companies, trusts and foundations. Inheritors frequently profess that they are drawn to family matters like a magnet, only to feel constrained by the age-old dynamics and protocols that can impede the effectiveness of family members.
Desire to Control
The large majority of wealth creators identify themselves as classic type A personalities. Conviction in what they believe and want to attain, coupled with confidence and decisive action, are cited as contributing factors to their outstanding success. Control over their lives, their environment and, to some extent, the people around them is frequently a defining characteristic.
Super-rich inheritors are usually less interested in pervasive control, choosing instead to exert it only in matters of importance to them. This is most evident when managing family enterprises or their own business ventures and in the pursuit of meaningful philanthropic results.
Regardless of the source of wealth, the ultra-affluent rely on advisors they trust to introduce them to other professionals and experts. Most view this as a form of risk mitigation in that it keeps their personal circumstances private and allows them to tap into the knowledge and network of people they have already vetted—people who know their financial circumstances and their working preferences and can tailor any recommendations accordingly.
The primary difference between the self-made and inheritors is that the latter group are inclined to also rely on peers for introductions. The underlying rationale is twofold: Their peers have likely had similar experiences and issues and therefore may know the specialists who can help, and they trust their peers to be forthright and candid in ways that a financially motivated professional might not be.
Loss Of Wealth
For centuries, the trials and tribulations of the super-rich have been told in literature and legends. More recently, the topic has consumed the attention of the public through tabloids, gossip bloggers, reality programming and movies. So it’s no surprise that great wealth has profound and confusing effects on people and has been known to dissipate and vanish. Sometimes, fortunes are obliterated because of unforeseen factors. Other times, fiscal disasters can be avoided or ameliorated with the right type of planning and counsel.
For both wealth creators and inheritors, human error can play a starring role in the disintegration of a great personal fortune. In the case of the self-made, it is hubris that most often leads to poor decisions. For inheritors, disaster is more likely to be the result of their inexperience or apathy. In both cases, having an objective set of eyes and ears can make a big difference in the outcome.
While these assessments miss many nuances and don’t apply to all rich people, they provide some important insights into this highly desirable but exceedingly private group of people. By understanding their key differences and priorities, advisors can tailor their interactions in ways that resonate more fully with each discrete audience. For instance, first-generation wealth creators value opportunity and control and rely on their carefully constructed inner circle of trusted professionals for information and guidance. Inheritors, on the other hand, are heavily connected to family and friends and will more readily turn to them for assistance as they navigate business, and personal and philanthropic endeavors. Knowing and accommodating these preferences can help an advisor build strong and effective working partnerships with new high-end clients.