Secrets of the Super-rich

Have you ever wondered what its like to be richer than 99.99 per cent of people? For Michael Gilding, this was more than idle speculation. University lecturer, researcher and author, Gilding set out to discover what being on BRW ’s Rich 200 List is like. Who are they? How did they become so wealthy? How does wealth influence their relationships? What began as an academic research paper evolved into a best-selling paperback: Secrets of the Super Rich.* For Gilding, phoning the powerful and wealthy wasn’t easy. He admits he put off doing the interviews; it scared him. Most researchers study groups less powerful than themselves. Michael’s anxiety came from reversing this custom—talking to the superwealthy about society’s most taboo subject—money. The few who agreed were so guarded, the information gleaned wasn’t worthwhile.

These fortunes have ruined lives and split families.

So how is it in a country of workers and battlers, that some have accumulated staggering levels of wealth? (This year’s minimum cut-off was $A85 million). Gilding struggled to find a common thread, and those he interviewed doubted he would establish any similarities. It became obvious that there are many pathways to wealth. But some trends do emerge, of which three are worth a look:

1 Trauma and insecurity.

Many of the interviewees had lost their fathers at a young age. Other forms of insecurity such as financial deprivation and bankruptcy were a noted pattern.

Gerry Harvey, billionaire retailer, at the age of 13 watched his parents go broke. The family lived in a garage for three years.

Reflecting on this, Harvey says, “I didn’t want to live like that. So that would have had some bearing on my desire to succeed in life, because I’d had a reasonable upbringing . . . then I had the poorest of poor from then on.” Other financially deprived interviewees described their decision very early in life: that whatever it took, they were going to become financially independent.

Many on the list are escapees of the Holocaust. They witnessed the murders of family members and escaped to Australia.

They were independent and mature ahead of their age. Jews who survived the Third Reich became alert to both danger and opportunity. Survival is a strong instinct among the interviewees. By contrast the typical Australian is too comfortable and has given little thought to financial security or the future.

2 Parents in business.

The parents of the rich 200 overwhelmingly owned their own businesses or were self-employed. This didn’t mean they were wealthy. In fact financial deprivation was often a consequence of the entrepreneurial efforts of their parents. But the fear of starting one’s own business is less dominant in children who’ve seen their parents take this initiative. As Gilding observes, “Above all, parents set an example, encouraging their children to think in terms of setting up their own businesses rather than working for wages.”

3 A minimal education.

Teachers and educators will find this paragraph disturbing, and should skip to the next section. The wealthy may be overachievers, but school prodigies they were not. Gilding found in his research that education didn’t count for much. “A good education and academic success routinely lead children into professions— the law, medicine etc. A profession is a means of reaching a better-than-average income and social status, but not a fortune.

Professionals don’t make big money, because the clock has to be working, and they themselves are the only ones who can make the money.” The lack of a traditional education also allowed the super-rich to “think outside of the square.” They hadn’t been taught to do things like everyone else. They hadn’t learned when to take a risk and when not to.

thrifty

Surprisingly, not all the wealthy spend money like water, travel in private jets or have million-dollar yachts tied up in Sydney Harbour. Thomas Stanley and Williams Danko’s The Millionaire Next Door gives a profile of the typical millionaire: they live in houses worth less than 10 per cent of their wealth, haven’t received any inheritance, live well below their means, wear inexpensive suits, drive older cars, have wives who are budgeters, and invest about 20 per cent of their annual income. “Wealth is more often the result of a lifestyle of hard work, perseverance, planning and, most of all, self-discipline.” Hard work, long hours and frugality also characterise Australia’s wealthy. “One of the troubles I have,” said an interviewee, “is that I’m not interested in racing or gambling or drinking or womanising, and so I don’t really have a colourful life to spend my money on.” Another drew attention to the fact that he was a wearing a T-shirt acquired for free. Sobriety, thrift, honesty and reliability are traits emphasised during the interview.

self-made men and women

Gilding’s research explodes the myth that society’s rich have inherited their wealth and had it easy. Some 89 per cent of Australia’s fortunes have been assembled since World War II. Most have obscure social origins.

These are self-made millionaires. Inevitably, children who’ve grown up surrounded by the trappings of wealth are ill prepared to assume control from ageing parents. They are the products of expensive educations, business training and privilege—the very things that almost guarantee their failure at growing the inherited fortunes.

The rich list has brought out into the open the very thing that these people have kept a secret—their wealth. As one man said, “If you’re rich, nearly everybody is chasing you for a dollar.” They include everyone from the tax man to the ex-wife.

In America, wealth attracts respect; in Australia, it’s just the opposite. One man put it, “People won’t respect you because you’ve got money. In fact, they actually look down on you. You’re a tall poppy. They want to shoot you.”

not all roses

Of those who’ve inherited their money, none is more reluctant than Deborah (an alias). “The money has brought so much pain to our family,” she explains. Her childhood was a blur of yacht clubs and parties, politicians and celebrities with plummy English accents and a lack of average people. She talks about the idle rich—the people who haven’t worked at making it, but have it. “It might seem like an enviable position, but I think it’s very difficult for your self-esteem,” she says.

At the age of 21, Deborah started receiving dividends from her family estate.

Money for nothing. And it wasn’t welcome.

From the start she began to give the money away, and has done so ever since. But giving money away, she explains, is a full-time job—scouting out projects and organisations that will use the money effectively.

Deborah hates the money, because it becomes so much harder to establish normal relationships with everyday people.

She wanted authentic relationships, but as soon as she’s open about her inheritance, people are unable to see past her money. It will become harder for Deborah. Her children will want to know why they aren’t living the same lives as their cousins.

Deborah’s story shows that there’s another side to wealth. Knowing who your friends really are is just the beginning.

Secrets of the Super Rich encourages readers to think again about what it means to be that rich. It seems most on the rich-list live complex and highly pressured lives. Lives, no doubt, that their families would happily do without.

* Secrets of the Super Rich, HarperCollins, 2000.

Extract from Signs of the Times, October 2002.

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