The Wealth Elite By Rainer Zitelmann

The Wealth Elite is the polar opposite of The Psychology Of Wealth. There are no life lessons, there are no inspiring stories, there are no self-help suggestions on how to improve our mindsets, skillsets, or behaviors. Instead, this is literally Zitelmann’s PHD dissertation turned into a book format. The Wealth Elite seeks to discover whether there are attributes shared by ultra-high-net-worth individuals that differentiate them from the general population - ranging from upbringing, personality type, beliefs, career path, and professional skills. And the results are fascinating. 

To be clear, the term ‘wealth elite’ is not chosen out of privileged narcissism; the author does not suppose that wealthy people are inherently superior or elite human beings. Rather, it’s simply the most academically accurate way to describe the group of people he is researching. He distinguishes the wealth elite from the ‘economic elite,’ who are the ruling class in society as identified by their education, social circles, careers, fashion choices, vocabulary, and favored leisure activities. These members are often more influential to the overall economy, but their total net worths may not be as notable. He also distinguishes the wealth elite from the ‘millionaire next door’ - those who have saved a decent nest egg to retire on by the time they’re 65, but who chiefly are still dependent on their job income and frugality to make ends meet. To qualify as a member of the wealth elite, the individual needed a net worth of at least 11 million USD at the time of the study. In other words, they needed to be decidedly financially independent - not needing to work for money another day in their lives, able to live lavishly on the interest of their investments without ever touching the principal. These are the truly wealth elite. 

As the first scholarly work targeting only the ultra-rich, The Wealth Elite tests historical research findings regarding the generally successful to see if they hold true, or even truer, amongst the very wealthiest. For the first half of the book, Zitelmann summarizes the relevant existing academic research regarding the wealthy. For the second half, Zitelmann shares his findings from a qualitative analysis he performed on a group of 45 members of the present-day wealth elite. The results don’t offer a road map to financial freedom, but quite the opposite. Rainer characterizes both a nature and a nurture that are borderline necessary pre-existing conditions in order for one to have any hope of joining their ranks. Here's my attempt at condensing his 400 pages of research into a few key themes:

Individualism

It probably goes without saying, but following the mainstream format (e.g., looking to get ahead via home ownership, 401(k) contributions, and a lengthy, high-paying career) only lends itself to achieving a common level of success. Unsurprisingly then, the extraordinarily wealthy are characterized by an independent nature. They swim against the stream; they do things differently. They generally do not conform with unspoken societal expectations - not as an intentional rebellion, but because the idea of doing so never crossed their minds. They are not driven by popular opinion or political correctness; rather, they are unafraid to speak their minds and they address conflicts quickly and directly. They’re also unafraid to change their minds. The wealth elite are categorically open to new experiences and perspectives, as they don’t view status quos, traditions, or whether something has been done or thought before as hard boundary lines. 

Not only do they think for themselves - they work for themselves, too. The wealth elite are exclusively made up entrepreneurs and investors. Notably, they are not employees - not even top corporate executives, lawyers, doctors, or engineers. In other words, the top 1% are those who have not only learned to make money with their time, but more importantly, with their money. They are motivated by money not because of what it can buy, but chiefly because it affords them freedom to pursue whatever work projects and personal passions that they want to. 

Another manifestation of this deep individualism is how they respond to crises and setbacks. While more dependent individuals may be quicker to point to unfortunate external circumstances as causes for their shortcomings, the wealth elite blame themselves. To them, their destiny is in their hands, and therefore, if they don’t get there, it’s their own fault. Upon failures, the super rich do not grow defeated, but evaluate what they’ve learned and how they can adjust moving forward. 

In both good times and bad, the wealth elite are characterized by their self-reliance. Most importantly, this independence is in the wealth elite’s nature. It is not a conscious choice or an effort of will power. Thus, without genuinely possessing this internal leaning towards individualism, achieving disproportionate financial success is nothing but a pipe dream. 

Self-Efficacy

Now, not all individualists are especially wealthy. In fact, for most individualists, their independent nature is their kryptonite. On one level, because they may fail to seek or heed advice from others with competencies or experience in certain fields. But on a deeper level, because socially and psychologically, it’s challenging to be different. The more obvious the differences, the more unspoken opposition the individualist may feel, and each year these differences remain serves as a multiplier effect. Eventually, most grow wearing of feeling 'other-than,' isolated, and lonely. They find themselves wishing away their unique internal wiring if they could only just 'fit in' or be like the rest. For the wealth elite, however, this is not the case - they match every ounce of their individualism with an equally weighty self-confidence. Instead of feeling shame or fear from the ways they deviate from the crowd, the wealth elite are supremely assured in their abilities and value. And of all the wealth elite’s shared traits, high self-efficacy is perhaps the most attainable to nurture even as an adult. 

Like individualism, this high self-efficacy reveals itself in many ways. For example, optimism. Ultra-high-net-worth individuals (UHNWIs) almost universally hold a generally positive outlook on their future opportunities. However, upon further investigation, it became clear that this ‘optimism’ is not a faith or hope that circumstances on the whole will be favorable, but a strong belief in their ability to successfully navigate any myriad of circumstances. Their mindset is that rain or shine, easy or hard, they’re going to succeed regardless. Even extroversion, for these individuals, is more related to their opportunism than a pure enjoyment or preference for people interaction. They’re extroverted because of the possibility that the next conversation with a stranger or connection they make could lead to their next big break. 

Most of us, if we had 100 million dollars or a few, would gladly quit our jobs and become full-time philanthopists and hobbiests. But interestingly, contrary to most F.I.R.E. enthusiasts, the vast majority of the wealth elite work judiciously and in official capacities despite their status as financially independent. They continue to lead their companies and investments in a hands-on manner well into old age. This isn’t because they just love working; this is because they regard their contributions so highly. Their confident view of themselves drives them to keep working chiefly because they are so convinced of the value they bring by doing so. 

High self-efficacy also lends itself to high risk tolerance, which is another common trait of the wealth elite. As human beings, the rich are not immune to the concerns and stresses that risky behavior brings. But because of their self-confidence, the wealth elite do not perceive risk to the same degree as others, emboldening them to take higher risks and reap higher rewards than most would be able to stomach. They can make seemingly extreme financial and business decisions without feeling gripped by worst-case scenarios or strict probabilities, because in their minds, the worst-case scenario isn’t even an option. For them, the real risk is to not risk, and due to over-caution, miss an incredible opportunity. While a high view of oneself can be a downfall as much as a saving grace, it is nevertheless a necessity in order to join the super rich. 

Implicit Learning

The difference between UHNWIs and a foolish, overconfident contrarian is that the wealth elite are more or less accurate in their positive self-assessments. They do not lie to themselves or develop a puffed up, inflated perspective; they are actually as capable as they believe themselves to be, thanks to their genius-like implicit learning skills. While many of the rich did receive formal, higher education, where the wealth-elite stand out is in their ability to learn in informal settings. To put it differently, the wealth-elite are constantly learning, everywhere they go, in everything they do. They are what we could call ‘street smart’ - but the streets they are learning inside and out are the streets others are happy simply to walk on. The game they are mastering is the game most are happy simply to be playing. 

The result of implicit learning is subconscious; life lessons and takeaways are derived and stored in a right brain sort of manner, quicker than the conscious, linear, left brain can compute. The application of these learnings is what we know as our ‘gut feeling.’ The intuition gets sharper and more specific over time as one experiences and filters more and more of life. This is what the wealth elite do so extraordinarily well: first, they look to learn - not presuming they know all there is to know - and second, they filter the information they get from their life experiences accurately. The conclusions they draw are true, enabling them to make decisions faster and at a higher success rate than left brain methods or weaker implicit learners could. 

As one of the interviewees put it, “The risk that I will be run over on my way back home from here, that’s about 5%, isn’t it? [But] if it actually happens, the percentages don’t really matter, do they? That’s where gut feeling can be better, because things don’t always work out in terms of percentages. Your gut is less rational, it works differently, somehow. It’s less rational and is like a type of computer, but one whose calculations you can’t necessarily understand. But it’s still right a lot of the time” (p. 299). A significant majority of the wealth elite confirmed that they make decisions more with their gut feeling than any formulaic process or quantitative analysis. Why? Because they’re usually right when they do so. How? Because they are implicit-learning geniuses.  

Implicit learning ability also shines in the realm of people interactions. On the outside, it looks like first-class leadership skills, sales skills, HR skills, networking skills, customer service skills, banking / financing skills, political skills, social skills, listening skills, communication skills - really, it looks like all of the above. But internally, this is nothing but the fruit of other-worldly implicit learning, refined by a data set of countless human interactions. In the minds of many of these individuals, ‘everything is sales,’ which only confirms their preference and aptitude for operating within their implicit learning. 

Upbringing

So, how do you know if you carry these traits? Looking to your childhood, several of the following would in all likelihood be true of you, as they were for the wealth elite:

• You had difficulty with authority figures, often acting out or rebelling against teachers, parents, or both. You did not place significant value / weight on authorities simply based on their position, as your decisions were more so governed by what you concluded was best from your own perspective.
• You asked ‘why’ a lot, questioning things that others generally accepted. 
• You did not grow up as a member of the ‘economic elite’ / the high class of society
• You did not just participate, but truly competed in extracurricular activities, especially sports. You weren’t necessarily great at it, but you gave much effort and you wanted to win. 
• You had a close loved one or family member, especially a parent, who was an entrepreneur, generally only of ‘mom-and-pop’ success. 
• You went to college, or in general, received a higher quality education than the average population.
• You never seriously considered working a ‘normal’ job as a career; likely you didn’t consider it ever, even as a student or right out of college. You preferred the freedom and challenge of creating your own income, finding or imagining it to be impossible to fit within the overbearing structures of typical 9-5 jobs. 
• Even in elementary school, but most definitely by college-age, you had engaged in some entrepreneurial activity (e.g., lemonade stand, selling things at school or door-to-door, lawn care, day trading, etc.)
• You set big goals for yourself, and you held yourself accountable / disciplined yourself to take actions in pursuit of anticipated outcomes. You visualized a future that was prosperous and beyond your present reality, not only financially but certainly including financially. 

Of course, even if all of these are true of you, it does not guarantee you’ll experience the same level of financial success as the 45 individuals interviewed in this book. It simply suggests that such a reality is at the very least within the realm of possibility for you. For the rest of us, as limiting as it may sound, we are better off setting our sights a bit lower. Barring any incredibly difficult setbacks such as a medical crisis or being born into cyclical poverty, most first-world citizens can become an ‘everyday millionaire’ through hard work, frugality, and following commonly taught financial prudence. And in doing so, we would join the top 10, 5, or even 1% net-worth individuals, which is no small feat. That said, the gap between the top 1% and the .1% is much wider than from 10% to 1%, and to reach the threshold of the super rich, “It is not a single personality characteristic but a specific combination of several such characteristics that is responsible for success” (p. 47). 

Which of the characteristics of the wealth elite did you resonate with or differ from? Did any of these themes surprise you?

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