International Finance
Business Leaders Magazine November - December 2018

How the rich become rich, and stay rich – the real story

How toHOW THE RICH BECOME RICH, AND STAY RICH – THE REAL STORYfoster a healthy workforce as sick leave figures drop
Ever wondered how billionaires become billionaires? What kind of personality traits do they have? Are their lives only about making merry and partying wildly? Do they have insecurities? Most importantly, how do they stay wealthy? Dr Rainer Zitelmann, author of award-winning book The Wealth Elite reveals these secrets and more

Tell me why you decided to write the book the wealth elite?

We know very little about the correlation between personality traits and financial success. There is no shortage of popular “how to get rich (quick)” books, but hardly any academic studies have been published on the subject. I wanted to get the ball rolling with this book and hope that it will inspire further research into this topic. Academics have carried out extensive research into poverty, but we know so little about the rich and their personalities. I had the opportunity to speak openly and at length with 45 ultra-high- net-worth individuals. They also completed a psychological test. This research led to my book, The Wealth Elite ( Incidentally, the book has been particularly successful in China, where people are very interested in the topic of wealth. In fact, I just came back from a promotional tour of five, major Chinese cities.

What is the one compelling trait seen across the wealth elite that you’ve profiled? Please shed some light on the same.

There is no SINGLE personality trait that all members of the wealth elite, without exception, have in common. Even the rich and the super-rich are different, in the same way that not all people at the other end of the social spectrum are the same. There are, however, some patterns among the rich that do repeat themselves and I would like to mention just three of them here: The rich and the super-rich are so wealthy because they have acted completely differently from most other people. They acted differently because they thought differently. They don’t have the slightest problem with swimming against the current of majority opinion, and many of them even enjoy doing so – they are nonconformists.

A second point: They deal with defeats and setbacks differently than most people. Most people tend to claim the credit for their successes and blame others for their failures: competitors, society, the market, etc. This is not the case at all among the wealthy people I spoke to – they accept all of the blame for their defeats, failures and setbacks. And that gives them a feeling of power.

A third point: Most of them are excellent salespeople. I don’t just mean sales in a narrower sense, i.e. selling products. As one of my interviewees put it: Everything is sales. Many of them gained experience in sales or as entrepreneurs while they were still relatively young. It was these implicit learning experiences that formed the basis of their implicit knowledge – in everyday language we often speak of ‘gut feeling’ or intuition. And this is a key characteristic of people who are extremely successful financially.

How do these wealthy people approach wealth building? How is it different from those who work regular jobs and make a fixed income?

Almost all the super-rich have built their fortunes as entrepreneurs or investors. This is not only true for the people I spoke to, you just have to take a look at any list of billionaires and multi-millionaires, e.g. the Forbes 400 list. Almost everyone on the list is an entrepreneur, and if they are not entrepreneurs themselves, they inherited their companies from their fathers, who were. There are very few employees – CEOs of large companies – who earn millions every year. We talk a lot about these CEOs because they are the subject of intense public attention. But that’s a small minority of the rich and super-rich. There are also very, very few people who have become rich through stock market investments.

If you want to become rich, you have to be a successful entrepreneur. And to be a successful entrepreneur, you have to have certain personality traits. That is what my book is all about.

Largely, how do the uhnwi get there and more importantly, stay there?

It is important to distinguish between how someone got rich and how they stay rich. Most of the super-rich people I spoke with were very willing to take risks. This is usually a prerequisite for building wealth. Mostly, however, they significantly reduced their risk profiles as they got older, when they were already rich. In my opinion, this is an important factor in staying rich.

What is it really like to be an uhnwi? Generally speaking, how is their life on an everyday basis?

Work, a lot of work. None of the people I spoke to NEED to work. They all have so much money that they could easily sit back, relax and live quite comfortably. They are all financially independent, which means they never actually have to work again in their lives. But they all work very, very hard, even the UHNWIs who are over 60 or 70 years old. The media often paint a very one-sided picture: You see the rich living ostentatiously, drinking champagne, lounging around on yachts, driving expensive cars, etc. TV and magazines need such pictures. Otherwise, it would be pretty boring to show the rich in their offices at work. But that’s the reality.

What according to you, is the biggest fear uhnwis face? How do they cope?

Some of the UHNWIs I interviewed told me that they are afraid of losing it all and slipping into poverty. It reminded me of an interview with a bodybuilder who had 120 kilograms of muscle mass and was afraid of wasting away. That’s certainly not rational, but it does play a role for some people. Some also worry about political developments, because history shows us that the rich have always been the victims of the politics of envy, which has either been aimed at stripping them of their wealth completely (i.e.confiscated) or to a large extent (through excessive taxes).

It appears that these people get more done in a regular working day than others —what kind of unique advantages do they have and how do they manage time?

They are masters of efficiency. The key to wealth is not to work hard, but to work efficiently. And that means above all: delegation, delegation, delegation. The rich understand that each task consists of two components: The first component requires experience, knowledge, contacts and creativity. The second component is all about routine work. High added value can only be  achieved with the first component. Unlike most other people, rich people are masters at breaking down all processes into these two parts. They do the things that depend on experience, knowledge, contacts and creativity themselves. Everything else they delegate to others.

Is money the sole motivation for rich people? Is there something more they seek?

Money is not an end in and of itself. In order to better understand the motives of my interviewees, I asked them what money actually means to them. They associate money with very different advantages in their lives. The motive of “being able to afford the finer things in life” (i.e. expensive cars, houses or travel) played a role for some, whereas others were not interested in luxuries in the slightest. On this subject, my interviewees were very different. There was only one motive on which everyone agreed: they associate money with freedom and independence. They are almost unanimous in associating wealth with freedom. In fact, no other motive was rated as highly.

How are these people influencing communities and impacting world economies?

As I have already mentioned, mos tof the super-rich built their fortunes as entrepreneurs. Their companies naturally influence the lives of all of us. After all, as consumers, we have all made them rich. You build wealth primarily as an entrepreneur, and as an entrepreneur you become rich when you develop products that other people want and need. One of the UHNWIs I spoke to is worth about five billion euros. He became rich because he made more out of milk than others before him. He developed new dairy products, such as yoghurts, and transformed a small company with four employees into one with over 20,000 employees. Yoghurt buyers made him rich, in the same way as Jeff Bezos’ wealth is the result of people buying everything under the sun from Amazon.

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