Most advisors want to cultivate the high-net-worth market. They want wealthy people as clients. Different firms have their own definition of what counts as wealthy. We may do research to identify these people. We have contact information. We know where they volunteer, relax and unwind. Many advisors are hesitant to approach them because of misconceptions we have about “The Rich.”
1. The rich are really scary. We think of characters we see on TV or in movies. It’s as if they say: “I’m rich. You’re not. Be deferential. Show me respect.” We get the idea the rich are arrogant.
Why it’s a myth: This might be true of certain celebrities, organized crime bosses and drug lords. In your local market, your wealthy prospect is likely a senior-level corporate executive who climbed the ladder, a small-business owner who made it through hard work or a busy professional who doesn’t have time to look after their investments. They are often ordinary people who did well.
2. The rich are screwed up. When did you start watching daytime television? There’s an image that the wealthy got that way by lying and cheating their way to the top. Their competitors are lifetime enemies. Their relationships with their children are combative. If you become their advisor, they will look for a way to take advantage of you.
Why it’s a myth: When TV dramas and movies are written, the bad guys need to have serious flaws. Viewers rationalize: “I may not have much money, but my life isn’t in turmoil.” In real life, the rich are filing taxes with the government looking over their shoulder. They have regulators scrutinizing their business. As business people and professionals, they are used to identifying and managing risk, not seeing how much they can get away with without getting caught.
3. The rich have the morals of alley cats. OK, so you are a fan of reality TV. Maybe you watch one of the “Real Housewives” series on Bravo. It appears they don’t take their marital vows seriously. They have affairs.
Why it’s a myth: Often, the success achieved by a professional, executive or business owner is due in large part to a supportive spouse. This might involve business entertaining, child care or managing the family finances. In “The Millionaire Next Door,” Tom Stanley points out that many successful business owners stay married to the same person. As an advisor, you want to know both parties.
4. The rich don’t make new friends. We think they have a cabal. They belong to their private clubs or secret societies. They do deals among themselves. They collude. It’s a closed shop. They aren’t letting anyone in.
Why it’s a myth: They get new neighbors. New business owners join the chamber. They volunteer on committees. They join charitable boards. They are making new friends all the time.
5. The rich stick to their own age group. Everyone they know is as old and as rich as them. They care little about modern music or stuff the younger generation does. They have no interest in me as an advisor, because I’m a kid.
Why it’s a myth. Business owners and executives know the markets are dynamic. Tastes and fashions change. They can’t keep selling the same products, expecting sales to go up forever. They need to understand how the next generation thinks. They need to be on the lookout for the next big thing. Astute older business owners have a cadre of younger friends who help them stay connected.
6. Rich people don’t associate with people who have less money. You’ve been reading or watching too many Victorian dramas where people are told not to marry into a class beneath their own. You think they only hang out with people who are as rich, or richer than themselves.
Why it’s a myth: It’s partially true because they hit each other up for charitable donations for favorite causes. It’s sort of “pay to play.” Rich people certainly associate with people who used to have money! These are established families with connections but not great wealth. In more practical terms, it’s a myth because wealthy people are into sports, hobbies and working out just like everyone else. They get together with people sharing the same interests.
7. Rich people are just into themselves. We think they go to high-end malls on weekends, shopping in Louis Vuitton, Hermes and Tiffany’s. They walk out with multiple shopping bags. In this image, there’s often a tiny dog on a leash too. We think the wealthy are into conspicuous consumption.
Why it’s a myth: Your local “wealthy” probably don’t identify with the word. They probably think of themselves are ordinary people who work hard and have done well. Although they might buy a big-ticket Christmas or anniversary present occasionally, they keep an eye on their spending. They can be surprisingly frugal.
The more you learn about the wealthy segment of your local market, the more you realize they are similar to you and me.
— Related on ThinkAdvisor:
- How Do the Wealthy Spend Their Money?
- 12 Surprising Traits of the Wealthy
- 8 Things Wealthy People Worry About
Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor,” can be found on Amazon.