‘The rich are different from you and me,’ F. Scott Fitzgerald once remarked to Ernest Hemingway. ‘Yes,’ Hemingway shot back (or so the story goes). ‘They have more money.’

But is that all there is to it?

Analysis by Chubb with The Wharton School of the University of Pennsylvania reveals that there can be significant differences in the way people with different levels of wealth think – and that these differences can persist even between the rich and the very rich.

Some 81 per cent of UHNWs (those worth more than $30 million) consider tangible assets – such as artwork, boats, planes and collectibles – as part of their portfolio of assets and, therefore, something that should be managed as such. That compares to just 58 per cent of high-net-worths (those worth $10-30 million) who think the same.

This isn’t just interesting because of what it tells us about these two groups of people – or what it might reveal about the psychology of the super-rich. It will also have a bearing on whether they get the right advice or not. While eight out of 10 UHNWs want their tangible assets ‘to be part of wealth to be managed in a connected manner with traditional investment assets’, only two-thirds of advisers to UHNWs coordinate the specific risks associated with these tangible assets. And when insurance advisers are removed from the sample, that proportion drops to less than 50 per cent.

‘A lot of advisers just focus on: they’ve got £10 million – how do I invest it into a portfolio?’ says Bandish Gudka, a partner at LGT Vestra and a Spear’s Top Ten UHNW wealth manager. ‘People forget to talk about where they are at their life stage. What are they looking for? How does it fit in with the rest of their wealth? Where are they heading in terms of the next five or 10 years?’

UHNWs’ assets are characterised by their complexity, with wealth often tied directly to an operating business, and multifaceted assets and liabilities. Their real estate portfolio will probably be a blend of personal and investment real estate, and they will likely have a wide array of tangible assets such as artwork, collectibles, cars, yachts and planes, with overall personal property much larger than the average investor.

So, naturally, UHNWs need advisers equipped to handle that complexity, across continents, generations and all manner of asset classes. The analysis by Chubb and Wharton found that some advisers can tend towards an oversimplified view.

‘The adviser, a lot of times, is very much focused on the investment portfolio,’ explains Scott Teller, who supervises Chubb’s specialty underwriting area, focusing on valuable articles, jewellery, fine art and other collectibles. ‘The gap that we saw is that the UHNW clients expect all their assets to be coordinated and everyone needs to be at the table in order to be able to optimise the protection of those assets, and their investment strategy.’

UHNWs also tend to differ from HNWs in terms of their tolerance for risk. Using the Lytton-Grable Risk Tolerance Questionnaire, the Chubb-Wharton analysis found that two-thirds of HNWs were risk-averse, while just 6.3 per cent had a high tolerance for risk. Among UHNWs, just 45 per cent were categorised as risk-averse, and they were twice as likely to have a high tolerance for risk.

‘The predominant thinking for the average investor is that you probably become more risk-averse the older that you get, because you’re starting to prepare for retirement and you want to preserve your assets,’ Teller says. ‘But the ultra-high-net-worth don’t have to worry about that. The likelihood that they’re going to outspend it is pretty remote and so they have a more aggressive investment strategy over time.’

Clay Cockrell, a New York-based psychotherapist who specialises in HNW and UHNW individuals at his practice, Walk & Talk therapy, says this aligns with what he sees in his clients. With those who are wealthy, but not ultra-wealthy, the fear of loss can influence both financial and personal decisions.

‘They realise that they are in this world of wealth, but they’re always looking up saying, I want to be part of that, I want more – there’s a sense of never enough among these people,’ Cockrell says. ‘With ultra-high-net-worths, they are more concerned with legacy, in that they are planning for generations.’ Cockrell says he is particularly attuned to this gap, as a therapist both to the ultra-wealthy, who have hundreds of millions or even billions to their name, and to their advisers. These Wall Street workers have HNWs themselves, but know they are unlikely to ever reach the wealth of their clients. As Cockrell says, they are ‘in this world of ultra-wealth, but not of this world’.

There can also be differences in attitudes between members of the same family, Gudka notes. If opinions diverge, conflicts can arise – especially when the founder member of the family disagrees with the goals or values of the younger generations. Advisers to UHNWs often need to adopt a holistic approach that acknowledges the family’s entire asset and property portfolio, their goals, values and relationships.

‘Within institutions they often commoditise clients and see them as entities – just “assets under management”, rather than looking at the wider relationship,’ says Gudka. ‘But if you don’t understand that granular level within the relationship and between generations, then how are you ever going to be able to manage the investment?’

This article originally appeared on Spear’s.

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