New research on the habits of Americans who espouse typical middle-class values but have assets of more than $1 million show these people have a distinctly different set of beliefs, attitudes, and behaviors involving work and wealth-building than other Americans. As described in the book The Middle-Class Millionaire, written by Russ Alan Prince and Lewis Schiff, this wealthier group of survey respondents worked longer hours and made greater efforts at networking than did the other members of the middle-class. These "Middle-Class Millionaires" were also much more likely to ascribe their success to such factors as "gaining a financial stake in my work," "knowing many people," "learning from setbacks and failures," and "choosing a career on the basis of its financial rewards." These attitudes and competencies, which we group together under the rubric of "Millionaire Intelligence," can be summed up as four essential qualities: hard work, networking, enlightened self-interest, and self-efficacy.
Like all good studies, the survey that defined Millionaire Intelligence raised almost as many questions as it answered. We came to wonder what we might discover by surveying the values, attitudes, and work habits of investment advisors. What might such a survey reveal about the markers of success within this one particular field? Since all investment advisors, regardless of income, work in financial services, would the qualities of Millionaire Intelligence register more commonly among them? Or would Middle-Class Millionaire advisors--those possessing a net worth between $1 million and $10 million--demonstrate higher levels of hard work, networking, self-interest, and self-efficacy than those with less than $1 million in assets? Either way, the results would help reveal whether Millionaire Intelligence is generally a function of occupational choice, or more likely serve as a reliable predictor of success across all occupations.
More specifically, by testing the Millionaire Intelligence of investment advisors, we saw an excellent opportunity to learn more about just what it takes to succeed as an investment advisor. By cataloguing the extent to which millionaire investment advisors think and act differently from aspiring investment advisors, we could identify a strong set of evidence-based recommendations that would help guide all investment advisors to improve their performance.
Prince & Associates, Inc. surveyed 536 investment advisors, chosen at random and contacted by phone, from major metropolitan areas all over the U.S. The results were statistically weighted and controlled for age, length of time in the business, geography, education, and gender so that the sample would accurately reflect the makeup of the nation's approximately 500,000 licensed financial advisors. We restricted participation to experienced advisors and excluded those with less than five years in the business, as well as any advisors who reported drawing less than 75% of their revenue from investment products. Finally, since we are interested in the attitudes and behaviors that contribute to financial success, we excluded any investment advisors who reported significant inherited wealth.
The advisors were offered a set of 24 questions, which fell broadly into two categories. The first category included questions that tested attitudes and beliefs about work and money, and asked them for an assessment of relative importance of various factors that contribute to success. The second category dealt with measurable behaviors or events. The advisors were asked to estimate, for instance, how many hours they work each week, their annual number of vacation days, and how many times they have experienced serious career or business setbacks.
Of the 536 advisors, a total of 84% reported net worth below $1 million. This group we have called "aspiring" advisors. The remaining advisors reported net worth ranging from $1 million to $10 million. These we have defined as Middle-Class Millionaire advisors, or MCM advisors.
How MCM Advisors Are Different
Despite some important areas of agreement, the survey showed that Middle-Class Millionaire advisors often exhibit very different attitudes and work priorities than most aspiring investment advisors do.
Attitudes toward wealth: One area of profound agreement is that the vast majority of both groups do not consider themselves "financially wealthy today." In fact, members of the richer group were less likely to say they are wealthy! Just 4% of MCM advisors said they are wealthy, while 14% of aspiring advisors, those with assets under $1 million, said they are wealthy. We found, as you might expect, that members of the two groups have very different ideas of what constitutes "wealth." Among MCM advisors, the mean was a net worth of $28.2 million and the median was a net worth of $17.4 million "in order to feel wealthy." Among aspiring advisors, the goal was much lower. The mean was $6.3 million and the median was $4.4 million in net worth.
Attitudes toward work: We found significant differences among the advisors in describing those things that are "very or extremely important in achieving financial success." Middle-Class Millionaire advisors place a higher value on having access to many people. By a margin of 87% to 59%, MCM advisors were more likely than aspiring advisors to cite "knowing people who know many people" as important to success. Middle-Class Millionaire advisors were dubious, however, about the value of "making an effort to work with 'good people.'" Just 35% of them saw the value in that, compared to 67% of aspiring advisors.
Middle-Class Millionaire advisors are far more likely to think in terms of their direct self-interest. About 93% of them pointed to "when negotiating, coming out a 'winner'" as being important to success. More than 82% of MCM advisors described their most common negotiating approach as "do whatever you need to do to win," compared with 63% of aspiring advisors. Just 17% of Middle-Class Millionaire advisors agreed that "negotiations should always be win-win," while 32% of aspiring advisors favored that approach. The Middle-Class Millionaire advisors were also much more likely to agree with the importance of "obtaining an ownership stake in your work," by a margin of 91% to 69%. About 64% of Middle-Class Millionaire advisors said that "taking advantage of weakness in others" is important, a statement only 32% of aspiring advisors agreed with. More than 53% of Middle-Class Millionaire advisors agreed that "at times, you have to bend the rules," versus 35% of aspiring advisors. Among MCM advisors, 45% agreed that "believing you have to be Machiavellian to succeed" is important, while just 26% of aspiring advisors made the same assessment.
Middle-Class Millionaire advisors are more likely to see the value of taking risks and learning from setbacks. Almost 87% of Middle-Class Millionaire advisors said that "learning from bad business or career decisions" is important to their success. Only 53% of aspiring advisors felt the same. More than 64% of Middle-Class Millionaire advisors claimed that "choosing projects with greater risk and greater prospective reward" is important, a statement that just 42% of aspiring advisors agreed with. Almost 48% of MCM advisors said that "leaving a career that was personally or financially rewarding in order to pursue greater financial success" has been important to them, compared to just 30% of aspiring advisors. And yet 43% of aspiring advisors said that "putting your own capital at risk" is important, an idea that just 26% of Middle-Class Millionaire advisors agreed with.
Attitudes toward money and success: With some very notable exceptions, there were broad areas of agreement among all advisors regarding their values and ideas about getting ahead. Nearly all investment advisors have remarkably similar attitudes about the importance of hard work, persistence, and related values. Nearly all advisors (95%) agreed that "anyone can become a millionaire if he or she works hard enough." Between 81% and 91% of all advisors agreed that "choosing a career for its prospective financial rewards," that "seeing things through," and "the ability to build rapport with other people" are important to achieving financial success. Only 1% of Middle-Class Millionaire advisors said that "Doing what you love and allowing the money to follow" is important, while 27% of aspiring advisors agreed with that statement.
Middle-Class Millionaire advisors put more faith in hard work, luck, and focus. Almost 95% of them pointed to "working very hard" as important to their financial success. Among aspiring advisors, 81% felt the same way. "Concentrating all your efforts on one money-making endeavor" is important to 75% of MCM advisors and 59% of aspiring advisors, but 26% of aspiring advisors claimed that "diversifying the ways you make money" is important. Just 6% of Middle-Class Millionaire advisors agreed.
Reported social behaviors. More than 88% of MCM advisors said they have an active social life and 81% said they are well-connected in their communities. About 70% of aspiring advisors made the same claims. Middle-Class Millionaire advisors appear to be far more influential in the eyes of others. About 76% of MCM advisors said that "People regularly ask you for advice on what to buy," a statement only 25% of aspiring advisors agreed with.
Middle-Class Millionaire advisors network more often and in a more focused way. More than 60% of MCM advisors reported belonging to "a formal or informal networking group," while just 39% of aspiring advisors said the same. We found, however, that among the minority of aspiring advisors who belong to networking groups, 24% cited "[it] provides you a way to meet people who can help you personally (outside your career)" as an important reason for belonging. Just 7% of Middle-Class Millionaire advisors said they network with that purpose in mind. By contrast, 81% MCM advisors said they joined networks because they provide "a way to meet people who can help you get ahead in your work," versus 63% of aspiring advisors. Most important, however, is that 85% of Middle-Class Millionaire advisors claimed that being part of a network is "a way to connect with people you can turn to for information." Just 29% of aspiring advisors agreed with that statement.
Middle-Class Millionaires work longer hours and are more available after hours. Half of all Middle-Class Millionaire advisors reported working at least 63 hours per week. Half of all aspiring advisors said they work 38 hours a week or less. About 90% of MCM advisors said they are almost always available by e-mail or phone for business, while 57% of aspiring advisors said the same. Three-quarters of Middle-Class Millionaire advisors regularly work weekends, a practice followed by only half of all aspiring advisors. About 67% of MCM advisors regularly work nights. Just 39% of aspiring advisors said they regularly work nights. Finally, most Middle-Class Millionaire advisors vacation just eight days a year or less.
Middle-Class Millionaire advisors fail more often but are also measurably more persistent. On average, our sample of Middle-Class Millionaire advisors reported that they had experienced a "major career or business decision that had a very bad outcome" an average of 5.1 times. More than half experienced at least three such occasions. Among aspiring advisors, the average number of such setbacks was just 2.1. The median number was 1.4, which suggests that most aspiring advisors have had only one or two failures and that many of them have had one or none. An overwhelming 93% of Middle-Class Millionaire advisors described their course of action following these failures as "tried again in the same field." Only 67% of aspiring advisors said they responded this way to setbacks. Just over 23% of them "tried again in a different field," and 10% "gave up and focused on other projects." Among Middle-Class Millionaire advisors, 5% tried in a different field and 2% gave up.
Middle-Class Millionaire advisors are more likely to seek coaching. Despite what appears to be their natural aptitude for success, Middle-Class Millionaire advisors are far more likely than aspiring advisors to hire a business or life coach. More than half of Middle-Class Millionaire advisors have had a coach in the past three years, compared with just 20% of aspiring advisors.
What to Do?
We find that nearly all investment advisors believe that money is important to their personal happiness and that hard work and persistence are the most important ways to achieve financial success. However, those advisors who have achieved the greatest financial success seem to be those who are already the most consistent and disciplined in putting these beliefs to work for them. Based on our findings, we think the following five steps are most likely to yield beneficial results for investment advisors interested in being more successful.
1. Review your networking habits and see where you can make improvements. Consider that the most successful networkers are on the lookout for information that can help them. What are the five things you want to know more about, and what sort of network has access to that information?
2. Examine your business activities to see if you are putting your best efforts into areas where the opportunities are greatest. Focusing on what you do best, rather than diversifying your activities, seems to be the way most successful investment advisors get to the top. Are there low-value activities you could shed, which would free up your time to find more opportunities in the area in which you excel? Focusing on what you do best, it seems to us, also tends to put you in a better bargaining position more often, which should lead to better compensation for what you do.
3. Consider that top earners work much longer hours. There may be good reasons why you don't work as many nights and weekends as top-performing investment advisors do, but consider where you could extend your hours and availability. Are you investing in the right kind of communication technology to make it easier to be available after hours? Use your network to find a technology fix that could help you extend your hours.
4. Evaluate your most recent setback. Did you change course instead of going right back to the same type of project? Most Middle-Class Millionaire advisors said that after a failure, they tried again in the same field, learning from their mistakes. What did you learn in the course of a recent setback that might be useful when you try again?
5. Explore the possibility of hiring a coach. We don't think it's a coincidence that the most successful investment advisors are more than twice as likely as other advisors to have hired a business or life coach in the past three years. Coaching isn't for people who can't do the job; it's for people who want to do it better. It's very likely that self-directed businesspeople need one person in their lives they can count on to help keep them focused on their goals.
Nearly all advisors expressed upbeat attitudes toward work, success, and the importance of money in their lives. However, our survey found a distinct tendency among wealthier advisors to put those beliefs into action, especially in the areas of persistence in the face of failure, networking with focus, advancing their self-interest, and working long hours. The survey results are fairly conclusive that these are the markers of success in the investment advisory field, and suggest that all advisors, regardless of income, would do well to consider how their own attitudes and habits could be adjusted in pursuit of the wealth and success that they claim to value.