Elite Rich Americans Often Overlook a Factor That is Key to Their Success
Interesting article on wealth. Sometimes being lucky outperforms talent or intelligence. A recent article including some graphs I included. Sources for the graphs are provided allowing the reader to learn more about how wealth is obtained. Article by Vawn Himmelsbach was portrayed in Moneywise.
‘Moneyball’ and ‘Big Short’ Author Michael Lewis Says Elite Rich Americans Often Overlook This One Factor That’s Key to Their Success, Moneywise, Vawn Himmelsbach Freelance Contributor
The American dream is based on the idea that if you work hard enough, you can achieve great success — and great wealth. Many people believe we live in a meritocracy, and they tend to put the superrich on a pedestal, believing they must be smarter and more hardworking than everyone else. In other words, if people just work hard enough, they too can attain riches.
But the truth is more complicated.
“There’s a natural tendency for people to tell the story of their lives, of their success, forgetting all the accident that was involved, all the help they got, all the gratitude they should feel,” said “Moneyball” and “The Big Short” author Michael Lewis on an episode of the Emmy-nominated interview series, “Brief But Spectacular.”
Research supports Lewis’ assertion: A group of researchers led by Alessandro Pluchino — a theoretical physicist who specializes in modeling complex systems — found that, the wealthiest individuals were not the most talented, but the luckiest.
This makes sense intuitively: Some people are more talented than others, some are less talented, but most are about average — and that doesn’t match the way wealth is distributed. The top 1% of U.S. households account for 30% of total net worth.
And, as MIT Technology Review pointed out in an article about the research: “Some people work more hours than average and some work less, but nobody works a billion times more hours than anybody else.”
It turns out that the majority of wealthy Americans did not start from scratch. Only a quarter (25%) of wealthy Americans are self-made, according to the 2024 Bank of America Private Bank Study of Wealthy Americans (right). Almost a third (32%) had both a wealthy upbringing and an inheritance, while 43% had a head start coming from a wealthy upbringing with no inheritance; or a middle-class upbringing; plus some inheritance.
Even if you’re not from an ultra-wealthy family, you can still benefit by learning from successful people’s journeys.
Get a mentor
If someone is born into an ultra-wealthy family, they could be fast-tracked into an executive position if their family owns the business or knows the top execs. You can recreate some of this advantage by choosing a mentor in your organization who can advocate for you and help you develop skills and strategies to advance. Many executives cite mentors as being important to their progress.
Get smarter
One of the primary ways wealth is transferred between generations is through education. Wealthy people tend to provide their children and grandchildren with the best education possible. But, even if you can’t get into an Ivy League college, getting an education still provides a strong competitive advantage. Researchers estimate that the net lifetime earnings gain from a bachelor’s degree is $1 million. Many on the Forbes World’s Billionaires List made their billions in finance or tech. And, while many notable exceptions exist, these industries typically require advanced degrees to rise in.
Learning and Earning by Degrees CEW-attainment-gains-full_report.pdf
Strike out on your own
Most of the richest people in America started their own business (or businesses) — which is one way to make your own luck. But, to do this, you’ll need to take on some level of risk. About one in five (21.5%) new businesses don’t survive their first year and only about 35% make it to 10 years, according to data from the Bureau of Labor Statistics.
Switch up your career
If you don’t want to start your own business, you might want to consider regularly switching jobs. Research by Bank of America shows that, as of May 2024, the median pay raise for job movers was 10%. Do this every couple of years, and this could markedly alter your lifetime earnings trajectory.
Both Graphs are from the Bank of America Institute Page 3
It’s also worth examining — and discussing with a financial adviser — whether you should take more risk with your investment portfolio. If you have a long investment horizon, you may be able to afford to take more risk and potentially earn higher gains than you are now.
2024 Bank of America Private Bank Study of Wealthy Americans: Our 2024 quantitative survey included 1,007 respondents who had at least $3 million in investable assets and were at least 21 years of age. It was designed to be a statistically representative sample of the population that meets those two criteria. Data collection was fielded between January and February of 2024.
So as a younger partner in a law firm in the 1980’s, I was in awe of Michael Milliken. I could appreciate that he might have been smarter than me and worked harder than I did, but he was making 400 times what I made and I did not think he was that much smarter and worked that much harder. Turned out of course that he was just a whole lot more dishonest than me. Somehow that seems to be the real story of American success–how crooked a person is. The most recent presidential election is a case in point.
Hi Terrance:
Thank you for your reply. I do not know what real success is. You can be the most sufficient in what you do, so much so, that everyone wishes they had your job. Until they have it and then find out it is not a cake walk.
I am supply chain or was supply chain. Not an expert, just literate, used the same computer the employees used and understood the lead times from supplier to us, then from us to plants, and costs of getting it there and the same for being late. When your facility turns 22 times a year without automated picking, you are doing something right and they will leave you alone.
I had the privilege of sitting in a 100,000 square foot warehouse and not upfront talking to the customers. They made the big bucks and I . . . a thank you. In most cases my education surpassed theirs. I could write better and explain it better.
I made sure the people in the warehouse were paid well and received the best increases the company allowed me to give. I also had some of them made employee of the month.
I knew I was doing well when the VP in charge did not want to move the warehouse to Mexico. Someone made the comment about inventory. I knew where it came from and explained to the commenter in front of the crowd why it had to be the way it was. Silence . . . They did not know I was in the crowd.
It was maybe a year later when I came back from a different division and stopped by the larger warehouse looking for tie-straps. I asked one guy and introduced myself. He looked at me and said; So you are the one so and so talks about and the job you did at the other warehouse. It came as an unexpected compliment. I thanked him and the person next to me was impressed a warehouse worker would acknowledge me.
I was still a five digit in salary manager. Six digits came during my last 10 years until I was 70 (the Koreans’ overpaid me). It is nice to make the big bucks when you work at the grill (“Coming to America” movie), however there is such a thing as integrity. Not that I did everything right. I knew when I did and when I did not. That is what is important. It sounds like you knew and you cared . . .
Hey Bill, thank you for your comments. Sounds like you knew what you were doing, were paid fairly for it and were a “success”. I think I was a success too although I never made a huge amount of money, I earned enough to get my daughters a decent education and fingers crossed should not die in poverty or living off the government teat–I do consider social security and Medicare something my wife and I paid for and continue to pay for and figure between state , local and federal taxes we have contributed somewhere around a million dollars to the greater good and I am happy we did. My “success” was due to my parents investing in my education, a society which still valued hard work and saving and of course the fact that I was white and male. I do not begrudge the billionaires their “success” although as noted when you look into some of the richest people in this country it turns out they are also among the most crooked. And I very much fear that what limited constraints have been placed on the oligarchs since the Great Depression are now a thing of the past and that makes me both sad and angry.