As inequality continues to rise both globally and in the United States, understanding the psychology of the ultra rich is more important than ever. After all, the super rich influence our lives in many ways.
The ultra wealthy fund major college education initiatives, cultural and art exhibitions, the day-to-day lives of their workers, expansion of religious institutions, the housing market, and in extreme cases, are responsible for creating a major drug epidemic killing more nearly 50,000 people in the US annually.
They also spend billions influencing America’s government and public policy. We gave them trillions in return. In the last 5 years alone, the 200 most politically active companies in the US spent$5.8 billion influencing our government with lobbying and campaign contributions. Those same companies got $4.4 trillion in taxpayer support — earning a return of 750 times their investment. And the bottom 90% of society? The preferences of the average American appear to have only a miniscule, near-zero, statistically non-significant impact upon public policy. This affects virtually all sectors of American policy.
The wealthy clearly control or influence many aspects of society. So why did I title this article “The Paradox of Wealth?” Despite all of this privilege, control, and access to nearly every possible necessity or luxury, my experience (and much emerging research) suggests the ultra wealthy are not happy. Many are paranoid, mentally unstable, and increasingly retreating from mainstream society —making them even less in touch with the realities most Americans face.
Many people think they know the lifestyles of the ultra elite but studies consistently show middle and lower class people vastly underestimate the level of income and wealth inequality in the United States, despite the topic having gotten more coverage in recent years.
But The Ultra Rich Live Stress Free, Fulfilling Lives?
Not quite. Based on my interactions with a wide range of Ultra High Net Worth Individuals (UHNW) and Very High Net Worth Individuals (VHNW), it is clear that wealth has an insidious effect that alters an individuals mind, perception, relationships, emotions, aspirations, and values.
In my experience, one of the greatest paradoxes of becoming wealthy is that while many people associate wealth with freedom (which is true to some extent), many people who become truly wealthy find themselves a “prisoner” of their own wealth. They also maintain a scarcity mentality, despite their success, which encourages them to wring the last 5% of public coffers, sometimes jeapordizing all of their accumulated wealth (and the rest of society’s well being) in the process.
Below are just a few of the fears (some rational; others seemingly irrational) that consume the thoughts of the wealthy.
Fear of Losing Their Money
One of the last issues you would expect the wealthy to worry about is money, let alone becoming poor, but these are common fears of the wealthy.
A study conducted by Business News Daily found that “the main source of stress for most people is money.” And, the findings of a recent study by GoBankingRates.com showed that financial fears took the lead ranking among four out of the top ten fears:
- “Always living paycheck to paycheck”
- “Falling into serious debt”
- “Becoming homeless”
- “Losing my job”
Of course, if you are living on the financial edge, you are going to worry about money and it will inevitably take its toll. This seems obvious. But what is not so obvious is that this fear is not limited to the poor. According to a 2014 article in US News and World Report, even rich people worry about money. Maybe more so. We are talking about the top 10% of the wealthy people. It seems that having more does not cause less anxiety. 48% of well-off Boomers, who have more than $1 million saved for retirement, fear not having enough for later in life and many cite chronic sleep issues over such fears.
This also true among the super wealthy. In a study titled “The Joys and Dilemmas of Wealth,” 165 wealthy households were surveyed. The average household net worth of those surveyed was $78 million and 120 of the participants had a net worth of more than $25 million.
The respondents turn out to be a generally dissatisfied lot, whose money has contributed to deep anxieties involving love, work, and family. Indeed, they are frequently dissatisfied even with their sizable fortunes. Most of them still do not consider themselves financially secure; for that, they say, they would require on average one-quarter more wealth than they currently possess. (Remember: this is a population with assets in the tens of millions of dollars and above.) One respondent, the heir to an enormous fortune, says that what matters most to him is his Christianity, and that his greatest aspiration is “to love the Lord, my family, and my friends.” He also reports that he wouldn’t feel financially secure until he had $1 billion in the bank.
In Jamie Johnson’s Documentary, The One Percent, Chuck Collins, an inequality researcher and heir to the Oscar Meyer fortune (who gave up his inheritance) notes:
“I do meet people today who say it’s hard to get by on 50 million…and I think those people are sick”
Fear for Their Physical Security
Many of the wealthy are fearful of social unrest in response to unprecedented inequality, which will only be exacerbated by future trends such as automation. Giving the ever growing divide between the monied elite and vanishing working class in America, I would say this fear is at least somewhat justified. Some alarming facts about inequality in America:
- In 2018, three men — Jeff Bezos, Bill Gates, and Warren Buffett — held combined fortunes worth more than the total wealth of the poorest half of Americans (approximately 160 million people)
- One-quarter of American workers make less than $10 per hour. That creates an income below the federal poverty level.
- There are 750,000 Americans who are homeless on any given night, with one in five of them considered chronically homeless.
- In the United States, 21 percent of all children are in poverty, a poverty rate higher than what prevails in virtually all other rich nations.
This had led to a trend in wealthy enclaves,, such as silicon valley, where the wealthy have begun spending millions on doomsday apocalypse bunkers and remote second homes to flee to in the event of massive social protests and civil unrest.
As discussed in a recent Bloomberg article:
“We live in a world where some people have extraordinary amounts of wealth and there comes a point at which, when you have so much money, allocating a very tiny amount of that for ‘Plan B’ is not as crazy as it sounds.”
At three recent Silicon Valley dinner parties, guests discussed bugging out to New Zealand if there’s trouble, according to attendees who asked not to be identified because the events were private.
At one, a prominent venture capitalist was said to have told fellow diners of his escape plans. In the garage of his San Francisco home, he told guests, is a bag of guns hanging from the handlebars of a motorcycle. The bike will allow him to weave through traffic on the way to his private plane, and the guns are for defense against encroaching zombies that may threaten his getaway.
He intends to fly to a landing strip in Nevada where a jet sits in a hangar, its sole purpose to whisk him and four billionaire co-owners to safety. Their destination: New Zealand — or Aotearoa, which means “Land of the Long White Cloud” in Maori.
In the event of a pandemic, Sam Altman, president of Silicon Valley startup incubator Y Combinator, plans to escape to New Zealand with Thiel, the New Yorker reported in 2016. Now he says he was just joking.
“The world is so interconnected now that if anything was to happen, we would all be in pretty bad shape, unfortunately,” Altman, 33, said in a phone interview. “I don’t think you can just run away and try to hide in a corner of the Earth.”
Still, Altman said biological warfare is the biggest threat to civilization and that people aren’t “as scared enough about that as they should be.”
He has a go bag stuffed with a gun, antibiotics, batteries, water, blankets, a tent and gas masks.
This trend is not just seen in Silicon Valley.
Just as boutique finance houses, family offices, lawyers, private tutors, butlers and nanny services have sprung up to cater for the ‘needs’ of London’s super-rich, an army of James Bond-type ‘Qs’ now develop and sell the kind of safety systems and gadgets that 007 could only dream of.
To protect the exterior of their homes, some townhouse owners add a blast film to their window panes, which means they don’t shatter in an explosion and are all but impenetrable. Inside their mansions or lateral living apartments, most of the super-rich have two codes that open their safe(s) — one if everything is normal and another if they are what security folk call ‘under duress’. Key in the duress code and armed private security guards will arrive at the house in less than three minutes.
Other tricks of the trade are sneakier — and almost impossible to detect. In many homes, CCTV cameras are not just mounted discreetly on the ceiling or the wall, miniature cameras are also hidden in the eyes of sculptures, picture frames and light switches. Some are so sophisticated that they learn behavioral traits and alert monitoring services to unusual or suspicious movements.
This fear or expectation of inequality leading the massive conflict is perhaps best reflected in Jamie Johnson’s Documentary, The One Percent.
In a brief clip, the founder of Kinkos, Paul Orfalea states:
“The whole history of mankind is that similar to geology. The center of the earth is all molten lava and there’s only a thin layer and earth you can live on ….and that thin layer is the difference between rich and you need incentives in society so that the rich achieve things, but the whole history of mankind is that the lava overflows it kicks their ass.”
Inability to Trust People/Feelings of Isolation
One of the reasons for this finding might be that as you move up in social ranking (socioeconomic status) you lose some of your dependency on others. Richer people don’t have to call friends for help. They can pay for it. A recent study shows, however, that there are big benefits from the increased social interaction that comes with being “lower class” in America.
Social psychologist Michael W. Kraus at the University of California, San Francisco, and his colleagues have found that people who have less education (a proxy for riches and occupational prestige) or who come from self-described “lower class” families are better at reading the emotions of others than higher status people are. The people in the lower social status group scored higher on a test that involved identifying emotions in photographs of human faces. They more accurately judged the emotions of a partner during a hypothetical job interview. They were also better at inferring feelings from images of just the eyes. In an earlier study, Kraus also showed that lower-class individuals exhibit more social engagement through gestures such as nodding the head and laughing.
By extension, richer and more educated people are not very good at recognizing other people’s emotions. They lack empathy. (This may explain the fact that rich people are not very generous and so, typically, do not make large charitable donations; see Can Money Buy Happiness?) The social disconnect that seems to accompany riches seems sort of sad, and it made me appreciate the ways in which my family’s lack of them might be making me happy.
The respondents also confide that they feel their outside relationships have been altered by, and have in some cases become contingent on, their wealth. “Very few people know the level of my wealth, and if they did, in most cases I believe it would change our relationship,” writes one respondent. Another notes, “I start to wonder how many people we know would cut us off if they didn’t think they could get something from us.”
One complaint that Kenny commonly hears in his practice and has found echoed in the survey results is the sense of isolation that extreme wealth can engender. “Wealth can be a barrier to connecting with other people,” writes the spouse of a tech wizard who cashed in to the tune of $80 million. “Not feeling you should share some of the stressors in your life (‘Yeah, wouldn’t I like to have your problems’), awkwardness re: who should pay at a restaurant.” The poor-little-rich-kid retort is so obvious — and seemingly so sensible — that the rich themselves often internalize it, and as a result become uncomfortable in their interactions with the non-wealthy. Once people cross a certain financial threshold, they have a tendency to hang out with one another, to enjoy the company of other people who know that money relieves some burdens but not others.
The psychology of wealth is knotty. On the surface, being wealthy can make people believe they have more control over their lives, but it can also control them emotionally, said Olivia Mellan, a psychotherapist in Washington who specializes in money issues and is the author of “Money Harmony: A Road Map for Individuals and Couples.”
“If someone doesn’t have that money growing up, it’s like being shot through with too much energy,” she said. “There’s this undercurrent that money equals love, power, security, control, self-worth, self-love, freedom, self-esteem — all those loaded things that money supposedly can do, but doesn’t.”
“In times of personal tragedy you feel more lonely and disliked than ever. Instead of sympathy, people start throwing the ‘you have no idea what it’s like not to have money’ card at you…
“Months later my nephew was the victim of an attempted kidnapping. The trauma our family now faces cannot be described. But again there is very little sympathy from most people. We get many threats and extortion attempts. Like most families we keep these private because we don’t want to attract more potential problems.”
Fear of Lazy Spoiled Kids
Many wealthy people worry their kids will be spoiled. That doesn’t mean they make them work, however. As their children get older, parents turn away from the possibility of giving them sustained exposure to paid work in order to give them other kinds of opportunities. Even those who have been most uncomfortable with affluent lifestyles grow accustomed to their advantages.
The ‘price of privilege’ is a concern for a growing number of wealthy families all over the world. Parents worry primarily about the impact of money on their children.
65% “Too much emphasis on material things”
55% “Naïve about the value of money”
52% “Spend beyond their means”
50% “Initiative could be ruined by affluence”
49% “Won’t do as well financially”
42% “Hard time taking financial responsibility”
− U.S. Trust Survey of Affluent Americans
“There was a time when people really flaunted their wealth — now they don’t,” David Forbes, the head of private office at the estate agent Savills, told the reporter Kate Allen of the Financial Times. “People’s priorities over the years have shifted. Now right at the top of the list, it’s security.”
He added that while the wealthy still spent money on boats and planes, they didn’t want to attract the kind of attention open displays of wealth bring; they’re increasingly opting for what Allen called “under the radar” living, which takes shape on both small and big scales.
This involves blocking GPS from locating property with a jamming signal, removing homes from the grid, and hiring architects to conceal buildings — whether by designing an underground home or by using a “stealth concealment design” for aboveground properties, Allen reported.
These privacy tactics don’t come cheap — one underground mansion was listed for $185 million last year. And those without underground homes are paying up to $500,000 to install luxe panic rooms, which are becoming more popular than ever among the rich as gun violence increases, Business Insider’s Katie Warren previously reported.
They’re also living in affluent neighborhoods that bar Google’s photography vehicles from entering — meaning their residences don’t show up on Google Street View.
Paul McCartney’s mansion isn’t visible on Street View, and neither are the homes of the residents in the celebrity-studded Hidden Hills, California, which include Kardashian West and Kanye West, Lisa Marie Presley, Drake, and Miley Cyrus, according to Vanity Fair.
Forbes told Allen that shell companies and ownership structures enabled anonymity to property buyers, as do gated communities. Homeowners are also spending more on home security systems, he said.
This trend is referred to as “stealth wealth” and is largely based around ensuring privacy:What is Stealth Wealth?A guide to concealing your income, assets, and net worth to maintain privacy and preserve wealthmedium.com
But such security isn’t limited to the home — the ultrarich are also taking steps to travel more discreetly.
“If you’re driving a convertible Bentley right now in the South of France, you’re asking for trouble — you’ll be followed back to your villa by a couple of scooters,” Forbes told Allen.
Perhaps that’s partly why so many billionaires avoid driving luxury cars. Zuckerberg has been seen in an Acura TSX, a Volkswagen hatchback, and a Honda Fit, each valued at or under $30,000. The Walmart heiress Alice Walton, the world’s richest woman, drives a 2006 Ford F-150 King Ranch, which retails for about $40,000, according to CNBC.
But that’s just on the road — traveling across the country or internationally brings other challenges.
For this, Gavin de Becker & Associates relies heavily on logistical planning and execution — clients want hotel rooms prechecked under an alias and privately accessible.
“Our clients will never be found standing at the lobby desk to check in, and even walking through the public spaces is optional,” Howlin said. The firm also owns and operates the Private Suite at LAX, where rich people pay upward of $4,500 for solitude when traveling — that includes drop-offs on the tarmac, bodyguard protection, and “private” security lines.
“It’s a safe haven offering the best privacy, security, and amenities money can buy,” wrote Business Insider’s Tanza Loudenback, who toured the luxury terminal.
But that’s when they’re flying commercially.
The Private Suite at LAX offers security for elite travelers. Courtesy of The Private Suite
Any jet — even a private one — that’s registered has a tail number and can be found, according to XOJET, an on-demand private-jet operator. Billionaire moguls, CEOs, and celebrities are shifting to on-demand charter jets for more privacy.
“If you’re a celebrity and you don’t want the public knowing your every move, flying charter … allows anonymity as the jets are randomly assigned based on the leg,” James Henderson, the president of commercial operations at XOJET, told Business Insider. “Meaning you may never get the same jet twice — allowing for complete privacy.”
Jamie Foxx, Fergie, and Kardashian West have all flown on-demand private jets via JetSmarter, according to Travel + Leisure.
Chartering a private jet doesn’t come cheap — a trip from New York to Los Angeles via XOJET is $25,000 one way. But for many wealthy people, privacy is priceless.
A survey conducted by Prince & Associates, mentioned in the above referenced US News and World Report article, notes that over 80% of people worth $20 million or more worry about being the target of a lawsuit and putting their wealth at risk.
This fear of wealthy of their assets constantly being under siege, has created a multi-billion dollar industry in asset protection and is another key component of stealth wealth:What is Stealth Wealth?A guide to concealing your income, assets, and net worth to maintain privacy and preserve wealthmedium.com
To avoid potential lawsuits, the wealthy tend to use business entities such as LLCs and trusts to obscure ownership. Using an LLC to protect assets such as businesses or real estate is advantageous for many reasons. If your business is a sole proprietorship or a partnership, you and your business are legally the same “person.” Your business debts are also your personal debts. And if your business partner or employee is accused of negligence, your personal assets might be at risk.
An LLC limits this personal liability because an LLC is legally separate from its owners. LLCs are responsible for their own debts and obligations, and although you can lose the money you have invested in the company, personal assets such as your home and bank account can’t be used to collect on business debts. Your personal assets are also protected if an employee, business partner or the business itself is sued for negligence.
Delaware is one of the easiest places in the world to set up an anonymous company, making it a great place to establish an LLC to do business that you don’t want anyone to know about or you don’t want to be easily connected to.
Setting up a company in Delaware is extremely quick, easy and inexpensive. Openness advocates like the Financial Transparency Coalition point out that a person needs to provide more personal information to register for a library card than to register an LLC in Delaware. Delaware LLCs are so effective that massive FBI money laundering investigations have been halted due to the true anonymity a Delaware LLC creates.
While not as easy and far more expensive than Delaware LLCs, Cook Island Trusts are extraordinarily effective. Cook Island Trusts offer anonymity as well as legal protections. The value of the assets in these trusts is not disclosed and it is against the law in the Cooks to identify who owns the trusts or to provide any information about them. No litigant on earth has been able to break a Cook Islands trust, including the U.S. government, which has repeatedly been unable to collect on multi-million-dollar judgments against fraudsters convicted in federal court.Many people would dismiss all these fears of the wealthy as “a good problem to have.” However, whether they are actual problems doesn’t really matter — they are the reality in which the wealthy are consumed. This would be fine, except for the vast influence this extraordinarily small group of people exerts over virtually all facets of society.