 | « Back to article | Print this article |
Having real money doesn't mean you stop worrying. No, really.
Sure, you don't have to think about whether you'll be able to pay your electric bill or balance your checkbook.
But the rich do fear being cheated by an unscrupulous financial adviser, being a victim of some other financial fraud, having their identity stolen, being unjustly sued or violence against themselves or their families.
"They have all sorts of security issues. . . . because they have more at stake,'' says Russ Alan Prince, who has studied the wealthy for more than two decades.
During the course of 19 surveys conducted in 2005, 2006 and 2007, his Redding, Conn., firm, Prince & Associates, asked about 2,500 high net worth individuals what issues were of the greatest concern to them. Survey participants earned their own fortunes, which totaled at least $500,000, with most participants being millionaires many times over. Heirs and heiresses weren't included.
Security concerns grow with the size of the fortune, according to Prince's data. For example, only 17.6% of those polled with a net worth between $500,000 and a million dollars say they feared being unjustly sued. In the highest bracket--net worth above $20 million--83.5% say they feared suits. Identity theft? That's a biggie. At the bottom level, 45% fear it. At the top level 74% say they're concerned.
The other big area of worry: Duh, money. But perhaps not the way everyone worries about it.
The financial challenges of the rich "have repercussions," says Christopher Keating, vice president and consumer strategist for Minneapolis research firm Iconoculture. "It affects their companies, their employees, their families, communities and charities."
Managing a large fortune composed of liquid and physical assets, scattered in various geographic locations, can be a time-consuming
"There actually is work in overseeing that,'' she says. "People might be surprised about the extent to which wealth can be a burden. It doesn't take care of itself and those who are wealthy and have a sense of responsibility about that wealth, take that responsibility very seriously.''
Another common theme of concern: balancing family and business interests and teaching their children how to be philanthropic and to manage their money properly.
About 30% of those in the $1 million to $5 million bracket worry about teaching their children how to manage money. That number doubles at the highest tier. Balancing family and business interests worried 23% of those in the lower range and 60% in the highest.
"They are concerned that [their children] be in control of the money, rather than let the money be in control of them,'' says Jon Gallo, co-author with his wife Eileen Gallo of Silver Spoon Kids and The Financially Responsible Parent: 8 Steps To Raising Successful, Generous, Responsible Children.
Children in affluent families often "have a tendency of confusing self worth with net worth,'' Gallo says. "Parents don't want kids to grow up thinking that the qualities of their friendships with others are a function of the brands of clothes they wear and the cars they drive.''
Strikingly, what most concerned those polled was not being able to maintain and improve their current status and get ahead. This might come as a surprise because, well, they already are ahead.
Overall, 91% call "the luxury lifestyle" a key issue, 94% say the same was true of "the lifestyles of the exceptionally wealthy." These exceed the 81% who say "not being able to meaningfully enhance" their current lifestyle is important, which is about the same level as "making sure your heirs are taken care of."
As Russ Prince describes it, it's the mindset of "I have the $5 million jet. I want the $10 million jet." But he doesn't see it as greed. Rather, he says, it's simply a reflection of what everyone at every income level wants: something more.
'Greedy' is the wrong word,'' Prince says. "This is not a bad thing. This is the capitalist model. The desire to keep moving up, to enhance their lifestyle, is critical to having this entrepreneurial society.''