The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors, + Website

The Rich and the “Faux Rich”

Another issue that tends to cause confusion in this regard is the confounding of two kinds of prominent families: the truly rich, that is, those who control very significant amounts of private capital, and the “faux rich,” those who merely enjoy extremely high incomes. The latter might eventually control significant capital, but the dynamic that drives their lives and their characteristic neuroses is the relatively sudden thrust from a middle-income (or worse) past to a very, very high-income present. Such people are more analogous to lottery winners than to the truly rich, and their typical patterns of behavior are similar to the dysfunctional practices of lottery winners.

There are very few ways in the United States or any other democratic society for anyone to legally earn a huge income, and in virtually every one of those sectors of the economy the jobs come with enormously high risk. Is the CEO of a Fortune 500 corporation really worth being paid hundreds of times as much as a factory worker? Maybe so, but many people will be skeptical, including many CEOs themselves. Worse, the job of any CEO can suddenly disappear, its occupant summarily fired, often for reasons wholly beyond the CEO's control. And along with the job, out the window go the high income and all the perks and the CEO's reputation. Private capital, on the other hand, if it is wisely managed (see Chapters 9 through 22, above), never goes away.

Let's compare two people we'll call Helen ...