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Middle-Class Millionaire Advisors and ‘Aspiring’ Advisors

"Millionaire Intelligence" among investment advisors.

April 17, 2008
by Lewis Schiff and Russ Alan Prince

It turns out that middle-class values and middle class incomes are not exactly the same.

Among Americans who espouse typical middle-class values, those with assets of more than $1 million have a distinctly different set of beliefs, attitudes and behaviors toward work and wealth accumulation than those with annual incomes in the $50,000 to $80,000 range, according to new survey research by Prince & Associates, Inc.

The research, as described in our book, The Middle-Class Millionaire revealed that the wealthier group of survey respondents worked longer hours and made greater efforts at networking than did the other members of the middle-class. These "Middle-Class Millionaires" were also much more likely to attribute their success to such factors as "gaining a financial stake in my work," or "knowing many people" or "learning from setbacks and failures" and even "choosing a career on the basis of its financial rewards." These attitudes and competencies, which we group together under the rubric of "Millionaire Intelligence," can be distilled into four essential qualities:

  • Hard work
  • Networking
  • Enlightened self-interest and
  • Self-efficacy.

Like all good studies, our research that defined Millionaire Intelligence raised almost as many questions as it answered. For instance, the survey showed that two-thirds of Middle-Class Millionaires were either self-employed or were partners in professional corporations, while two-thirds of the middle-class survey respondents were salaried employees. Did the research largely measure the greater opportunities afforded to those who earn their living outside the strictures of wage work? The survey also did not ask respondents to categorize their occupations. If it had, would it have found that a greater number of the Middle-Class Millionaires were disproportionately in fields such as finance and financial services, where the opportunities for wealth-building are greater?

These and other questions finally led us to wonder what we might discover by surveying the values, attitudes and work habits of investment advisors. What might such a survey reveal about the markers of success within this one particular field? Since all investment advisors, regardless of income, work in financial services, would the qualities of Millionaire Intelligence register more commonly among them? Or would Middle-Class Millionaire advisors — those possessing a net worth between $1 million and $10 million — demonstrate higher levels of hard work, networking, self-interest and self-efficacy than those with less than $1 million in assets? Either way, the results would help reveal whether Millionaire Intelligence is generally a function of occupational choice, or more likely serve as a reliable predictor of success across all occupations.

More specifically, by testing the Millionaire Intelligence of investment advisors, we saw an excellent opportunity to learn more about just what it takes to succeed as an investment advisor. A survey of this kind can help expose beliefs and practices that are most distinctive and prevalent among the top-earning members of this field. By cataloging the extent to which millionaire investment advisors think and act differently from aspiring investment advisors, we could identify a strong set of evidence-based recommendations that would help guide all investment advisors to improve their performance.

Methodology

Prince & Associates, Inc., surveyed 536 investment advisors, chosen at random and contacted by phone, from major metropolitan areas all over the U.S. The results were statistically weighted and controlled for age, length of time in the business, geography, education and gender so that the sample would accurately reflect the makeup of the nation's approximately 500,000 licensed financial advisors.In the course of the survey, we restricted the participants to experienced advisors and excluded those with less than five years in the business. We also excluded any advisors who reported earning less than 75 percent of their revenue from investment products. Finally, since we were interested in the attitudes and behaviors that contribute to financial success, we excluded any investment advisors who reported significant inherited wealth. All 536 participants reported that their wealth was "self-made."The advisors were offered a set of 24 questions, which fell broadly into two categories. The first category included questions that tested attitudes and beliefs about work and money, and asked them for an assessment of relative importance of various factors that contribute to success. The second category dealt with measurable behaviors or events. The advisors were asked to estimate, for instance, how many hours they work each week, their annual number of vacation days, and how many times they have experienced serious career or business setbacks.

Of the 536 advisors, a total of 84 percent reported a net worth below $1 million. We called this group "aspiring" advisors. The other 16 percent advisors reported net worth ranging from $1 million to $10 million. These we have defined as Middle-Class Millionaire advisors.

Results

Despite some important areas of agreement, the survey showed that Middle-Class Millionaire advisors often exhibit very different attitudes and work priorities than most aspiring investment advisors do. For complete survey results, click here.

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Lewis Schiff and Russ Alan Prince are private wealth specialists who work with high-net-worth (HNW) clients globally. Their new book, The Middle-Class Millionaire: The Rise of the New Rich and How They Are Changing America (Currency/Doubleday) was published in February 2008. For a free report on the highly effective habits of successful advisors by the authors of the middle-class-millionaire and complete details, click here.