What has changed about the wealthy

Inheritors are shaking off the stereotype of the do-nothing trust fund kind

Star Trek actor William Shatner (left) getting a “welcome back” hug from space company Blue Origin’s billionaire founder Jeff Bezos on Oct 13, after his space flight.
Star Trek actor William Shatner (left) getting a “welcome back” hug from space company Blue Origin’s billionaire founder Jeff Bezos on Oct 13, after his space flight.PHOTO: AFP

(NYTIMES) - I began writing the Wealth Matters column in December 2008. The column was conceived earlier that year, when the US economy still appeared to be running high. But by the time the first one ran, the economy was deep in crisis, and Americans were worried about their investments, their savings and, in many cases, their homes.

It took years for many Americans to recover. As for the wealthy, they have flourished in those 13 years.

I'm writing my last column - No. 608 - as the coronavirus pandemic has highlighted how stark income inequality has become in the United States. We have multiple billionaires blasting into space on their own rockets, high above the economic, financial and health problems of the rest of the world.

So for this Wealth Matters column, I called a group of people who work with or study the wealthy, people I've leaned on repeatedly over the years for insights, and asked them this open-ended question: How has the perception of wealth changed from 2008 to today?

"I got death threats the first time you mentioned me in your column and the last time, too," said financial therapist Brad Klontz whom I had first quoted in February 2009 and most recently last month in a column about whether US$400,000 (S$538,000) in annual income qualified someone as rich for tax purposes.

He was one of my go-to sources to explain why there was often such a visceral hatred of the wealthy in America - for which he was thanked by online attacks.

"There's this psychological drive to disparage those who have more money than us," he said. "Yet if you make US$50,000 a year, you're one of the top 1 per cent richest human beings who has ever walked the earth. But my question is: Do you feel rich?"

That line, said on a CNN show, got him "an e-mail about building a guillotine and stacking financial therapists like firewood", he said.

(Recently, after I wrote about the private aviation industry dealing with a surge in demand in the pandemic, I received this e-mail from a reader: "Mr Sullivan, What may I do to help these private jet owners suffering so in these terrible times? I look forward to hearing your insights on assistance to these troubled parties.")

So from one perspective, the columns attracted readers critical of my efforts to describe the actions and concerns of the wealthy.

But psychologist James Grubman, a consultant to rich families, said those negative sentiments about wealth were shared by wealthy people and their advisers.

"We've been told rich people destroy their children and families, and it's taken as a truth," Dr Grubman said. "But fears are not outcomes." In particular, he said, the belief that someone's wealth will be squandered in three generations - the shirtsleeves to shirtsleeves story - isn't supported by more recent research.

If anything, many inheritors are shaking off the stereotype of the do-nothing trust fund kid, said Dr Dennis Jaffe, who consults with rich families and has collaborated with Dr Grubman on research.

"The biggest thing is younger generations have stepped out of the shadows," said Dr Jaffe, a sociologist. "The story of wealth today is second- and third-generation leaders and innovators not being a pale imitation of their parents."

If there is one thing that the wealthy and the middle class have had in common since 2008, it's the memory that a crisis can shake perceptions of wealth. The years since have given them time to put a financial plan together.

"I reflect back on that period of 2008 and 2009 quite a bit," said Mr Michael Liersch, head of planning and advice for Wells Fargo's wealth and investment management division. "For many, it felt surprising. And it was a surprise, but it allows people to learn. Something unexpected causes people to update their beliefs." People are now more open to talking about wealth, he said, asking questions like: "How did you make that trade-off? How much did it cost?" And investors realised that they needed a plan to protect what they'd earned, whether they were a tech billionaire or a tech worker.

The perceptions of wealth as it relates to taxes and investing have also changed. Now, many more people believe that the wealthy have advantages over everyone else, and even the accountants and lawyers who service the wealthy accept some of that criticism. Take the report in ProPublica in June that Mr Peter Thiel, tech entrepreneur, has US$5 billion in a Roth IRA, on which he will pay no taxes when he withdraws the money. Individual retirement accounts were created by Congress to help the middle class save for retirement.

"I'm convinced that changes to planning tools are on the cards," said Mr John Dadakis, a partner at the law firm Fox Rothschild. "Look at the Roth IRA and what happened there. It's great for some people, but the concept of creating a US$1 billion Roth IRA or even a US$100 million Roth IRA where you don't have to pay any taxes is clearly the wrong result."

Mr Michael Sonnenfeldt, founder and chairman of Tiger 21, an investment club for people who have at least US$10 million in assets, said he had seen a marked shift in the group's membership. Besides skewing younger, many members perceive their wealth as a way to effect change, not a chance to sit back and relax.

"People aren't retiring no matter how wealthy they are," he said.

Yet that isn't driven by a feeling that they're going to lose it but more by what they can do with it.

"I can only speak for myself," said Mr Sonnenfeldt, who has built and sold three companies, "but my assets allow me to be more consequential in making climate-related investments."

Putting money into climate-change investments is something any investor can do. And that was my original goal for this column - to give readers a look at what the wealthy are doing and apply it in their own financial decisions.

But over the years, some of what I wrote about - super yachts, US$31,000-a-year personalised workouts - were totally inaccessible to even the merely rich. I saw them as an anthropological look at wealth in America, or at least some wealth voyeurism. But those columns set off some readers.

One of the most memorable was Mr Harris Lirtzman from Yonkers, New York. "I really find your column disgusting," he wrote in one e-mail. "This is what YOU earn YOUR living writing about in this freaking economy?" Well, Mr Lirtzman, if you're still reading, I bid you farewell.