Wealth management is often seen as the preserve of the money-oriented, but a new psychology of wealth is emerging that suggests a rise in more human motivations for building businesses and portfolios. In our long history of advising on financial matters, many of our client conversations come down to this question – “what does real wealth mean to you?’. To some, real wealth means more time spent with their family and friends. To others, it’s the satisfaction of seeing their business interests thrive and leaving a legacy they can be proud of.
One of our main fascinations at Addidi is this link between happiness and wealth – we think that where these two areas intersect is where ‘real wealth’ lies. Wealth creation can bring incredible meaning to your life when it’s done to create real joy in your life and for people around you, as we see with our clients all the time.
The recent 2018 Gallup World Poll paints an interesting picture of the relationship between wealth and happiness around the world. Over 1.7 million participants in 164 countries were surveyed and asked to rate their emotional wellbeing and life satisfaction. Researchers reported a ‘satiation point’ in the link between increased wealth and happiness – at which an increased household income stops positively impacting life satisfaction. An increase in wealth stops increasing self-reported emotional wellbeing at an average annual income level of £46’000.
Perhaps it makes some sense that income can only generate so much joy – once you have a certain level of financial security and enjoy a reasonable amount of luxury in your life, a simple increase in your bank account is not a one way ticket to eternal bliss. However, in the lives of the well-rounded entrepreneurs and stakeholders we work with, we do see a great deal of happiness linked to the success and attainment in their lives.
As a wealth management company that helps our clients plan their way towards peak happiness, we are fascinated with what might lie beyond that satiation point of income vs. happiness, and how we can use our observations to help our clients reach for their best lives. If you are lucky enough to enjoy an aspirational level of material wealth, it makes sense to us that we should be able to guide you towards an aspirational level of happiness and emotional wellbeing as well.
Looking candidly at the wealth management picture – a strong portfolio needs an emotional reality around it for it to mean something. The generation of wealth and managing your assets involves a lot of hard work and planning – it’s good to remember from time to time what you’re doing it all for. It’s true when they say “you can’t take it with you”, and although we always help our clients to plan robustly for retirement, we also like to make sure we are advising our clients to fully enjoy the here and now.
We advise our clients to nurture the important relationships in their lives and invest in them just as much as any financial asset. The Gallup Poll researches suggest that high-earning individuals had their emotional wellbeing depleted by the pitfalls that come with success: higher demands on their time, heavier workloads, greater responsibility, higher stress levels.
The research suggests that finding that space of ‘real wealth’ is all about balance – finding harmony between generating wealth and taking the time to enjoy it. We have a practice of advising our clients to find a way to enjoy their here and now, whatever that means to them. As human beings we tend to delay our happiness to an ever-moving date in the future – when a certain job or income level or bank account figure has been achieved.
The evidence is there – so why wait. Make time for their family, reignite old friendships, take that holiday, value your employees, invest in enterprises that mean something to you. These are all actions we would advise to make sure you’re building real wealth into your portfolio.