The idea of the American Dream has captured the imaginations of people from all walks of life. Mark Robert Rank, with co-authors Thomas A. Hirschl and Kirk A. Foster, found that great wealth doesn't rank highly as a component of this dream in Chasing the American Dream (Oxford University Press, 2014), which provides a new and innovative look into the dynamic between the promise of economic security and the hardships that often arise in the quest for such rewards. The following excerpt from chapter 3, “Economic Security,” sheds light on the fact that wealth does not necessarily contribute to overall happiness and well-being.
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If economic security and well-being through a good job, decent income, some savings in the bank, and a comfortable home represent important elements of the American Dream, then perhaps acquiring economic riches is even more of a good thing. After all, the goal of significant wealth has long been a part of the rags to riches story. We continue to celebrate the modern-day lottery winners who by good fortune find themselves in the millionaire circle. Likewise, a vast array of books and conference meetings abound each year with advice on how best to make your millions. Surely this must be the dream for many Americans.
Surprisingly, great wealth in and of itself is not viewed by most Americans as a key component of the American Dream. For example, in the earlier mentioned 2009 Pew national survey, of the 12 items that individuals were asked to rate in terms of their relevancy to the American Dream, “becoming rich” was ranked second to last. Only a third of Americans felt that it was an essential component of the American Dream. Likewise, a national survey conducted by Xavier University (Center for the Study of the American Dream, 2011) found that a mere 6 percent of Americans ranked “wealth” as part of their first or second definition of the American Dream. Similarly, within our in-depth interviews, only a handful of individuals mentioned great wealth as a key component of their American Dream.
One reason for this surprising finding can be found in a fascinating interview that we conducted with Robert Greenfield, a renowned family wealth advisor and lawyer. It was the week before Thanksgiving when we first met. Robert greeted us warmly in the lobby of his condominium building with a handshake and two bottles of water. Dressed in a charcoal grey business suit, he had a distinguished yet gregarious demeanor. We talked for nearly two hours in the late afternoon, but had to end early because Robert and his wife were attending a charitable event that night. Fortunately we were able to reconnect several weeks later, after he had returned from an overseas consulting trip with several high wealth families in Australia and Singapore. We took up where we left off in our earlier conversation, this time around a conference table on the seventh floor of his office suite overlooking the downtown cityscape. The insights that Robert shared into the world of great wealth were not what I had expected.
He began by noting that his family had had a long history in dealing with wealthy individuals. His grandfather had been one of the nation’s first income tax lawyers at the beginning of the twentieth century and had started the family business. Robert began his career, like his father and grandfather, in tax law, but later developed his own area of expertise in advising families with significant wealth. He founded Greenfield Worldwide Advisors, a family office that consults with a small number of US and international families of immense wealth. The assets of his clients ranged from $100 million to $3 billion. They often represented second- and third-generation wealth families, referred to in the business as dynastic wealth.
As we began our conversation, I expected Robert to discuss how these select families epitomized the American Dream, and to convey some of the lavish details surrounding the privileged lives that they lived. Instead, what Robert talked about was the concept of independence from riches. At first glance, the phrase struck me as odd. I was acquainted with the notion of independence from tyranny, and independence from poverty, but not its wealth counterpart.
Yet it turns out that for many of the families with whom Robert consults, their lives were marked by unhappiness and a lack of fulfillment. Their family wealth had become an enormous burden, and in fact, had prevented many of them from realizing or even imagining the kind of lives that they truly wanted to live. The primary concern for many of these families had become how to preserve and/or increase their wealth, rather than asking what the wealth was for. It had served to imprison rather than liberate. Robert related one story after another that touched upon this theme. For example,
There is a culture among wealth holders, which uses words like stewardship, fiduciary, government structures. These are all words of imprisonment.
I’m reminded of this fellow, he was about 80 years old, who had been a client of my grandfather. And he started with nothing. And when we were meeting and talking he had 600 or 800 million dollars. He was talking about his family office structure, and his grandchild, who was going to be the family wealth steward. And we talked, we used all the vocabulary. And all of a sudden I looked at him and I said, “Gus, listen to the words we’re using—government structure, responsibility, stewardship, fiduciary. When you didn’t have two nickels to rub together, and you were talking to my grandfather, and my grandfather said, ‘Gus, in 60 years you’re going to have 800 million dollars, and here are the words you’re going to use.’ "
And he started laughing. I said, “What’s so funny?” He said, “Those wouldn’t have been the words I used. The words I would have used would have been freedom, independence, doing what you want to do, getting educated.”
Wealth does that. It ends up imprisoning all of these people. So when we talk about how poor people can’t self-actualize, often rich people can’t.
His strategy with clients is to work with them to decide what they want to do with their lives, and then using their wealth to accomplish that. For Robert, it is always about asking the question, “What is the wealth for?” This may be one of the reasons that so many people in the earlier mentioned surveys did not see great wealth in and of itself as essential to the American Dream. Wealth was properly seen as a tool, rather than as an endpoint. When it is transformed into an endpoint, it turns out that there is little satisfaction in that game. Another story by Robert aptly illustrates this,
So you start with what is the wealth for? I can tell you one of my favorite stories. This was at the Institute for Private Investors in 2008 when everything was collapsing. I went to a cocktail party, and I went up to a woman I knew, who had a billion dollars. And I said, “How are you?” She said, “Terrible! How can you ask how I am? I’m terrible.” And then she just ranted and railed about how terrible she was. And I looked at her and I said, “Well what’s wrong?” She said, “What’s wrong? Don’t you see the markets? My portfolio is down 30 percent!” I looked at her, and I said, “Let me ask you a question. What is it you cannot do with 700 million dollars that you could do with a billion?” And she just got furious and fumed off.
The next woman I went up to, I said, “How are you?” She looked sad, and said, “I’m really not doing very well.” She also had a billion. I said, “Well, what’s wrong?” Well, it turned out her 22-year-old had been diagnosed with terminal cancer. That puts it all into perspective.
But that woman who was miserable because she was down 30 percent, no amount would ever be enough because she never said to herself, “Okay, what’s it for?”
Families of great wealth who have been able to answer the question “What’s it for?” are often able to use their wealth in a fulfilling and productive manner. Robert talked about the obvious examples of Bill Gates and Warren Buffett, but also of many individuals whom he knew and consulted with personally. The key transformation for these families was to see their wealth as a tool that can be used to accomplish a worthy goal, rather than as a goal in and of itself.
Psychological and demographic research on this subject has tended to confirm what Robert has found through his personal interactions with high-wealth clients. That is, beyond a certain basic income level, money alone does not buy happiness or fulfillment. Daniel Kahneman and Angus Deaton (2010) analyzed more than 450,000 responses to the Gallup-Healthways Well-Being Index taken in 2008 and 2009. They found that above an annual income of $75,000, levels of happiness did not increase, nor did individuals experience a reduction of stress and worry with increasing levels of income. However, below $75,000, increases in income had a strong effect on increasing happiness and reducing stress. For those struggling in poverty or near poverty, having more income made a significant difference in overall life quality. This is consistent with the general notion of economic security and well-being that we have been discussing in this chapter, and it is one of the reasons that it is such an important goal with respect to the American Dream. Having sufficient economic resources and security is fundamental to overall well-being. But beyond a certain point, income and wealth become irrelevant to personal happiness and fulfillment.
Excerpted from Chasing the American Dream: Understanding What Shapes Our Fortunes by Mark Rank, Thomas H. Hirschl and Kirk A. Foster © Oxford University Press 2014. Reprinted with permission from Oxford University Press.