Decades of researching and consulting with super-rich clients that have a net worth of $500 million or more show us that meaningful and weighty distinctions exist within this group.
While precision in these matters remains impossible, it is evident that the distinctions between those with self-made wealth and inheritors are quite pronounced.
For wealth managers, being aware of these differences is critical to being able to offer expertise and build solid relationships. Knowing that some qualities and intentions, for example, are more likely in one cohort over another is valuable for employing services quickly and efficaciously building rapport with clients.
Without question, the two cohorts share many core values. At the same time, how they approach endeavors such as wealth creation, philanthropy and even raising a family differs greatly.
When analyzing the emerging generation of super-rich inheritors, it would be a mistake to ignore several trends. This cohort is especially results-oriented in its approach to philanthropy. They tend to be more hands-on and “into the weeds” compared to the self-made super-rich, who are more inclined to delegate.
For most of the self-made super-rich, wealth creation often remains central and critical to their very identities and is habitually the primary focus of their business endeavors. A person will rarely amass such a Croesus fortune unless he or she is intensely committed to becoming extraordinarily affluent. Even after they become rich, amassing more wealth is “what they do.” For a great many of them, it is who they are.
Many super-rich inheritors are focused on proving themselves. It is about getting recognition for their actions as opposed to who they are.
Creating a momentous fortune generally eats up an enormous amount of time and energy. It can be difficult for the self-made super-rich to prioritize the family. The “triage” strategy for managing family affairs often differs from that used for super-rich inheritors, who are more likely very involved with all aspects of their families. This is due to the byzantine sets of twists, ailments and tribulations—and immense possibilities for the future—that vast wealth brings to these relationships.
Recognizing behavioral and attitudinal distinctions also helps to prevent clients from making bad decisions. Generally speaking, the self-made super-rich are exceedingly and justifiably confident in their abilities. They have a high sense of self-efficacy that is supported by the fortunes they created. The downside is that hubris or the like can sometimes play a starring role in the decision-making process. Super-rich inheritors may be more inclined to listen to outside advisors, but they sometimes lack the experience and expertise to select and engage qualified professionals.
Wealth managers wanting to work with the super-rich need to clearly understand in considerable depth their thought processes. While the most important means of developing such insights is a well-articulated client evaluation process, it can be quite useful to leverage the research that shows the differences between the super-rich based on how they became so wealthy.
Russ Alan Prince, president of R.A. Prince & Associates, is a consultant to family offices, the ultra-wealthy and select professionals.
