As part of its ongoing Why of Wealth campaign, US-based provider of integrated wealth management, trust, and private-banking services Boston Private Wealth has released a report that unveils the psychological factors that play a role in how Americans interact with their wealth.
“We wanted to discover what wealth really means, the emotional aspects that the investment management industry has largely overlooked,” said David Murphy, head of Wealth Advisory at Boston Private Wealth. “Putting aside specific asset classes or investment decisions – we wanted to better understand the root motivations that drive people to build and achieve wealth.”
The report was based on an online survey of 300 respondents in the US, spanning all generations (millennials, Gen Xers, and Boomers) with a minimum of US$1 million in investable assets.
High-net worth clients focused on the psychological benefits of wealth, ranking peace of mind (65%) and happiness (54%) as the top two definitions or measurements of wealth. Older generations were more likely to correlate wealth with peace of mind, while millennials and business owners leaned toward the view of wealth as a gateway to happiness.
Other meanings attached to wealth were affluence, power/influence, potential, legacy, and success, all of which tended to be more important to business owners than non-business owners.
Respondents also shared their thoughts on the different positive life aspects enabled by wealth. Seventy per cent identified financial independence and freedom as most important; 49% focused on the importance of a happy family life, which tended to be valued most by ultra-high-net-worth millennials (those with between US$15 million and US$20 million in assets). Other life aspects included the opportunity for expensive travel (44%) and better quality of life (40%).
Looking at the emotions triggered by wealth, the survey found more than half of respondents tended to experience feelings of satisfaction (59%), responsibility (55%), and gratitude (54%). Nearly a third of respondents also reported feelings of excitement and inspiration, particularly as it relates to the potential use and realizations of wealth.
Sixty per cent survey participants also reported that their wealth priorities have changed over time with business owners being more likely to have shifted priorities (77%) than non-business owners (47%). In addition, 70% of respondents overall cited their family as the most important driver of change.
The survey also uncovered some downsides to having exceptional wealth. Almost 42% of respondents said they regretted not spending more time with their family as they pursued their wealth; the feeling was most pronounced among UHNW individuals (64%) and business owners (55%). Other negative associations included anxieties over people’s expectations (31%), the prospect of losing wealth (31%), and the possibility of being judged for their status (30%).
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