How Does It Feel To Be Rich?


July 16, 2018

Once upon a time those achieving success through the accumulation of wealth were generally admired, and even envied. Over more recent years that same group has increasingly faced criticism to the point of derision, unless of course you happen to be a successful athlete or tech guru. But how do the rich really feel about themselves? Boston Private, a wealth management and private banking firm, recently published a study of 300 high net worth Americans which sought to understand their priorities, feelings, and goals. The results confirm much of what we might expect, including identifying a level of conscience and awareness which suggests that the rich might be human after all.

One of the most significant findings of the survey was that people most commonly pursue wealth to achieve emotional goals, particularly ‘peace of mind’ and ‘happiness’. Older people tend to be more focused on peace of mind, while the younger generation saw wealth as a path towards happiness. Maybe peace of mind begins to equate to happiness with advancing years? The more controversial drivers of wealth accumulation, such as a desire for affluence, power and influence, ranked lower down the list. The respondents also identified wealth as being key to having quality of life, financial security and freedom, with a happy family life being another significant factor.

The survey, however, did not simply portray the rich as enjoying lives of unending hedonism. Along with positive feelings of satisfaction and even excitement, came emotions such as gratitude and responsibility. There was a strong sense that the rich do not take their status for granted, and recognize that having wealth brings responsibility to future generations and to society. High net worth people tend to suffer some feelings of guilt and regret, particularly in relation to sacrifices they have made, such as not spending enough time with their families. The sense of guilt may also be one of the drivers behind a desire to give back to society.

The conflict between the positive and negatives emotions around wealth was most pronounced for business owners. The analysis of the survey results even suggested that the reality for wealthy business owners was a type of “illusory happiness”. The downsides of the process of accumulating wealth cover not just loss of family time, but having an inappropriate work/life balance and failing to take care of health issues. Moreover, business owners tend to be concerned about what others think of them, and are worried about losing their hard-won assets. Some of these feelings might be driven by the fact that business owners are likely to be involved in work that involves higher levels of risk, with less clear outcomes, as compared with non-business owners

All in all, the Boston Private survey confirms that it is positive to have wealth, even at the risk of catching some level of affluenza. The survey also suggests that the effective emotional management of wealth may be helped by developing clear financial goals and plans to improve understanding of issues such as when enough is enough.

Richard Rushton


Financial Education for the “Next Generation”


CR 1

July 9, 2018

Our firm is committed to helping young people increase their understanding of money and investing. This is best illustrated by the annual program we run each summer at Cambridge in the UK. Recently we were lucky to have an opportunity to provide some of the Cambridge information to a group of students from Costa Rica. The 14 students and their teachers were visiting Atlanta to obtain some exposure to the financial world, along with enjoying some of the other more obvious attractions offered by our city.

The students attend La Paz Community School which was founded in 2007 to address socio-cultural gaps prevalent in a region with an economy based on agriculture and tourism. The school is small with some 330 students from preschool to 12th grade.

During our session we examined the power of compounding, which according to Einstein is the eighth wonder of the world. The great man noted that: “He who understands it earns it, he who doesn’t pays it”. We also examined credit cards and debt, the investment world, and the dramatic impact of thinking long term. Lively discussions ensued. You could see minds being challenged with new thoughts, reflecting on the consequence of a dollar spent versus a dollar saved, and understanding how essential it is to be fiscally disciplined.

We asked the head of the program if she would provide feedback on how the students felt about their brief financial immersion. Her comments were informative “They talked about the fact that when we went shopping after the workshop they put more thought into what they were buying. They also were starting to think of ways that they could begin to make some investments. They understood that the stock market would give them higher returns over time but they know that they should have access to a bank account. And the most important thing they learned was the power of habits. To create a habit of saving now will make a difference in the future.”

Our firm puts a lot of weight on helping train the next generation to ensure that, as potential beneficiaries of hard-earned capital, they are equipped to be responsible trustees of that wealth for their families, for their communities, and ultimately for those that succeed them.

One of the tools we employ is simply sitting down one on one with our clients’ children and going over the basics. This could include explaining inflation linked bonds, or growth oriented stocks such as Berkshire Hathaway, Microsoft, or Apple. When significant funds are at stake, we might use involvement in Family Limited Partnerships or Foundations to help educate family members. These are wonderful tools as teaching instruments.

The simple fact is that we have moved from a time when few families had any capital outside the equity in their home, to an era where significant sums will be passed across generations. Moreover, employers have moved away from defined benefit plans to defined contribution plans, such as 401(k)s. The onus is now firmly on the individual to make smart investment decisions, and it pays to start the learning process early!

Nick Hoffman

CR 2