BOOK REVIEW: The Wealth Elite
What sort of traits do highly successful entrepreneurs have? A book exploring these issues and that contains insights wealth managers will find useful has been recently issued. This news service recently checked it out.
Wealth creators are typically extroverts, non-conformists, fiercely hardworking and have a high sense of being able to overcome challenges, according to a new book that drills into the motivations of what make business builders tick.
And this new book, The Wealth Elite, by Rainer Zitelmann, is an academic-level study into what drives men and women to become entrepreneurs, exploring the emotions and thoughts that they have. It brings a sociological, rigorous approach to a chunk of the world’s population that stands in contrast to the majority of academic studies that have tended to focus more – perhaps understandably – on less well-off cohorts of the population. (Dr Zitelmann is an investor and publicist with a background in media and academia: for a time he worked as a historian at the Freie Universität Berlin. At 421 pages, this isn’t a light read, but it will prove a valuable resource for business students in future.)
The book is also unusual, its author says, in being conducted among 45 ultra-high net worth German individuals. Germany has a significant number of ultra-wealthy persons but, perhaps given the culture of the country, they tend to be less well-chronicled in the media and less willing or able to talk about themselves than is the case in countries such as the US. (One impressive statistic in the book, on page 45, more than 400 professors of entrepreneurship in the US.) The book also looks at a number of other studies (it has a vast bibliography) conducted around the world with wealthy persons to build up a picture of wealth creators.
Divided into two broad parts, the book examines existing research, questions and methodology, while the second goes into the specific interviews. The first part considers, for example, past studies (some of them going back around a 100 years or so) into why some businessmen and women rise. Economics scholars might recognize economics luminaries from the 20th Century such as Werner Sombart, Joseph Schumpeter and Israel Kirzner. All three men in different ways wrote about what drives entrepreneurs to act (Schumpeter, for instance, is famed for the notion that capitalists bring about a form of “creative destruction”, while Kirzner, a figure of the “Austrian” school of free market economics, has developed ideas around “entrepreneurial alertness”.)
The first half of the book also examines how, for example, business leaders approach how their own fortunes came about and how large a role was down to their own character and how much down to chance. It is noticeable, Dr Zitelmann writes, that some entrepreneurs are anxious to stress getting lucky breaks not just because they don’t want to appear arrogant but also to deflect envy and resentment. At a time when there is a lot of political noise around widening wealth inequalities, such a conclusion was a comment that stuck in this reviewer’s mind. The book seems to suggest that while all of us come up against good and ill fortune, the mark of many entrepreneurs and proof of their value is how they deal with it. (There is a political edge to this debate, of course: if we believe that no-one really “deserves” wealth, or even their own moral character because of parental influence or genetics, then it is only a logical step to support draconian wealth redistribution.)
The conclusions the book arrives at aren’t particularly startling, although there is quite a nuanced discussion about how people approach risk that somewhat goes against clichés of how entrepreneurs are dramatically more open to risk than anyone else.
What’s the value from this book for wealth managers? Well, any firm looking to build books of new clients and understand what customers want needs to have a good handle on what shapes their clients, and how their clients think. The ultra-wealthy aren’t creatures from outer space, for sure, but they do have a number of traits that managers must be aware of: a focus on detail, high work ethic, extroversion, determination to succeed and high confidence in their own abilities. The more that RMs and other wealth professionals understand what makes their clients tick, the better for the bottom line.
This book is not bedside reading but as a contribution to the academic research around wealth and entrepreneurship, it is certainly valuable. It is issued by LID Publishing.