“Let me tell you about the very rich,” wrote F Scott Fitzgerald in a 1925 short story. “They are different from you and me.” Well – up to a point, if a new survey is to believed.
Whenever the topic of the vast – and constantly expanding – wealth gap comes up for debate, it seems as if someone is always itching for the opportunity to resurrect those words, culminating in Fitzgerald’s observation that the wealthy “think, deep in their hearts, that they are better than we are”.
The evidence, alas, is growing that the Jazz Age author may have been deadly accurate in this latter assessment. A growing number of studies certainly show they’re convinced that it’s their inbred talents that make them wealthy and successful – and that if the rest of us don’t share their status, it’s simply because we don’t share their traits.
A firsthand example of that attitude was captured in the video that came to dominate Mitt Romney’s doomed presidential campaign: the moment when Romney described the 47% of Americans who would vote to re-elect President Barack Obama “no matter what” because “they believe they are victims” and that the government has a responsibility to care for them. And there were Ann Romney’s comments about not needing to head off on foreign vacations like the Obamas, because the Romney family had their “own places for that” – at least three lavish main homes at the time the comment was made.
That’s the ugly side of the wealth gap in action. The unnerving part of it all, of course, is that to the extent to which those shaping public policy are millionaires (or dependent on them), they will create a world that mirrors this circular reasoning.
But, in practice, as a new survey from US Trust (the wealth management arm of Bank of America) reveals, the day-to-day concerns of the rich aren’t all that different from those of the rest of us. True, none of us will have to worry about just how to finance that private plane purchase, and it’s unlikely that 93% of ordinary Americans would report ourselves as feeling “financially secure”, as did those in this study (the fifth annual survey of its kind) that polled 640 rich Americans with at least $3m in investable assets.
It turns out, however, that we all tend to worry about the same kind of stuff – and to be more or less unprepared to confront the same issues. And we can even learn from what the rich do – and what they don’t do – in our own financial lives, even if we sometimes struggle to keep our own net worth in the thousands of dollars, while their bank balances come with many, many more zeroes on them.
Consider this: 62% of the survey’s respondents hold more than 10% of their portfolio in cash, while 8% now have more than 50% in cash – in spite of the fact that, as US Trust officials note, they’re actually becoming more positive about the outlook for financial markets.
That fact alone should help prove that America’s richest didn’t necessarily get that way by being tremendously smart. Cash, notoriously, is a big drag on investment returns; if you want your retirement nest egg to do a decent job of keeping you comfortably in your golden years, look on it with wariness, and even extreme suspicion. Cash is a drag on your portfolio, no less a figure than investment guru Jack Bogle has pronounced. And he’s a lot richer than almost everyone surveyed by US Trust. So, when it comes to investing, the rich aren’t infallible.
You can also figure out what not to do by studying their attitudes to guarding themselves against health-related risks. Most of the respondents to the US Trust survey placed a tremendous importance on health. “For baby boomers and those even older, it’s what matters most” in ensuring that their life is well-lived, says Brian Wineke, a market executive with US Trust in Seattle. And yet, Wineke says, when it comes to thinking about how to plan around health issues, they’re falling behind. “Of those surveyed, 91% are willing to spend more than they do on their health,” he says, and clearly this group isn’t constrained by a lack of resources. “But only 60% have planned for long-term care; only 49% have made a plan in the event of a loss of income due to a health care crisis.” Among millennials, only 20% have made plans for how they might help their parents as the latter age. “There are a lot of opportunities for them to do more planning here,” Wineke says.
One of the areas in which companies like US Trust see a lot of potential is in helping affluent families craft some kind of legacy: whether it’s philanthropic, related to a family business, or in some other area. On the surface, this might seem as if it has absolutely zero relevance to the average American, who is more worried about whether he’s going to outlive his nest egg than whether he’ll leave a “legacy” for his children. Not so fast.
“Any family can create a mission statement,” says Wineke. In fact, given that only 10% of the survey respondents actually have one (although half think they’re important), it may actually be that more “ordinary” Americans have thought about the values that bind them together and how those values are reflected in their everyday decisions, from how they celebrate holidays to how they organize their charitable giving.
And if you still think you have nothing in common with the rich, ponder this: more than half of the survey’s respondents (56%, to be precise) say that they are struggling to balance all the different elements in their lives.
Nor, the wealthy themselves acknowledge, does wealth buy happiness. A full two-thirds of respondents to the survey say that to have a more fulfilling life, they’d have to give up some of their wealth, while more than half (53%) say that the price of their riches has been their health, whether physical or emotional. US Trust didn’t follow that up by asking the logical next questions – whether they had any regrets about those tradeoffs, or whether they planned to make that exchange of money for fulfillment. But then, that wouldn’t be in the company’s interest: its goal is to keep clients affluent (and keep collecting fees for managing their money).
Sure, the rich are different – as Hemingway noted trenchantly, in response to Fitzgerald’s statement, they have more money. But while those dollars make a lot of decisions easier – Facebook’s chief operating officer, Sheryl Sandberg, clearly won’t have to worry about childcare costs or how the mortgage will be paid after the recent tragic death of her husband at the age of only 47 – they don’t change some of the fundamentals. The rich can fail to develop sensible long-term financial plans of the kind that all of us can and should do; they still have to cope with the emotional fallout of personal tragedies like Sandberg’s.
Dig into surveys like this, and the truth starts to make its way out. The rich may like to believe that their wealth makes them distinctive and “special”. I’m in Hemingway’s camp. They’re not all that. They may lack empathy and compassion, but that doesn’t mean they are all that different from the rest of us in other respects – and that we can’t learn from them, both in terms of what they’re doing right, and what they’re getting wrong.
