Monday, August 29, 2011

Misconceptions About the Wealthy - Maybe Warren Buffett Didn't Know?

Early in the 20th Century, F. Scott Fitzgerald observed: “The very rich are different from you and me.” But in today’s landscape they don’t necessarily think so. Many of today’s wealthy come from middle class backgrounds and exhibit the values to match. They’ve amassed wealth from successful entrepreneurial endeavors, which is to say from hard work and sacrifice.

Apart from having more money, these newly minted million/billionaires differ from traditional old money. They have not had wealth handed down from generation to generation and often share working and middle class values such as hard work and thriftiness. Warren Buffett’s idea that these uber wealthy should pay their fair share of taxes may not jibe with their underlying middle class roots; to them a penny saved is a penny earned.

Recently I had the good fortune to work with an ad agency that studies and educates high end marketers and financial service firms on the behaviors of the super rich, to help them sell - um - pander their wares to this group. Since the ad firm represented even super competitors vying to reach this group, their data and insights were invaluable. Those that market to the group that includes Warren Buffett, have a unique vantage point and are somewhat of an authority on the wealth, living and giving needs of the high net worth consumer, and how to appeal to them.

Warren Buffett is a straight shooter and someone I greatly admire, but even he may not have been aware of the following seven misconceptions about the wealthy – when he wrote his op-ed piece in the New York Times:

The Top Seven Mis-Conceptions About The Wealthy

• Today’s wealthy feel they can take it easy when they have amassed a lot of money. NO! Today’s wealthy are imbued with middle class values such as thriftiness, a strong work ethic and a belief that they can survive even without all that money.

• For most wealthy people, acquiring luxury items is deemed a rite of passage to signify they have arrived. NO! Almost half of today’s wealthy (48%) believe that many luxury items are not prudent purchases. To them, such as expensive watches, cars and jewelry are a “waste of money.”

• Rich people lose concern for price, rarely shop online and prefer having personal shoppers get what they need. NO! More than 90% of today’s wealthy are new-media savvy and will never lose concern for price or the appreciation of a good deal. They shop online for top quality items at the lowest price. And men and women shop for different things online.

• Wealthy people today believe money does buy happiness. NO! Wealthy people appreciate their wealth, but are less likely to feel that they “deserve every penny” they earn. They know money is not synonymous with happiness.

• Today’s affluent see themselves as entitled and members of an elite upper class. NO! Members of today’s affluent households don’t see themselves as traditionally “rich people”. They look for bargains at Costco, worry about food spoiling in the fridge and fret over their financial security.

• Today’s wealthy are not nimble online. NO! Today’s wealthy use email, social networking sites and rely on web sites for information about news, politics, business and lifestyle.

• Today’s wealthy are generous once they start making their fortunes. NO! Philanthropy seems to be an acquired skill and wealth people get involved in these endeavors after a good 15 years of being comfortable having “money.

Maybe Warren Buffett’s heart and thinking are in the right place, but I don't get that the 200,000 or so Americans who make over a million dollars will voluntarily ante up more taxes to help the rest of us. At least that's what this data suggests. Maybe Warren Buffett was providing a kick-off for lobbying efforts for a fairer tax system with his NY Times op-ed piece. I haven't read about any studies about whether the super rich will support candidates who want to make the tax system fairer – but it is a nice thought!