Gilligan Sheppard over its journey has attracted or grown a reasonable number of ‘wealthy’ clients and have observed the behaviours of successful people and families, good and bad.
Many claim to write with authority on the topic of wealth, and for those who are wealthy, or aspire to be, this thought piece will either resonate or it won’t.
What is wealth anyway?
It means different things to different people. For some it is a state of mind. For others it is experiences and knowledge, or the joy and richness of relationships. The most identifiable by all is the tangible measurement of wealth, money and assets.
The only truly wealthy are those that have elements of all of this, however the most critical one is state of mind. If you do not think you are wealthy, no amount of knowledge, experience, cash, assets or relationships will make you so. I guess we have all met the fortunate discontents in society.
So how about I try to define wealth as a formula:
Wealth = (attitude* (knowledge + experience) *networks) + resources.
I view money as an addition not a multiplier to wealth. The exponential impact on wealth for me is experience and networks levered with attitude. It may also be better to think of resource accumulation as the result of attitude knowledge experience and networks.
As the saying goes, money is not everything, but the corollary that it beats the alternative is also probably true. Money however certainly does not bring you happiness, nor does conspicuous consumption. How many first class cruises can you endure?
If the passage of others is a guide, I with this as my guide, examine the components of my ‘formula’.
If your parents instilled in you self-confidence, a desire to try the unknown, a sense of independence and the courage to make decisions and not sweat the little things or overly worry about things when they go wrong, they have probably done you a great favour.
If in addition they have given you a work ethic, determination, along with a good dollop of thrift, then they have doubled your attitudinal gift.
And if also by passage of birth and upbringing your mouth was free of a silver spoon and if this instilled in you a desire to improve your own and your family’s lot, then likely they have delivered you the last component, ambition.
So key characteristics:
- Self confidence
- A love of risk
- Focus and patience
- Ambition and aspiration
And finally an overarching belief that you will always be free to do as you wish, for whom you wish, when you wish.
If you don’t have the right attitude you can learn it, but it is much harder because these attitudes have to be behavioural and instinctive.
Education has its place, but the perpetual student accumulating PHD’s would likely have a single dimensional view of knowledge, deep and narrow. Rich in its own way, but those who become wealthy across all facets of wealth acquire a wide range of knowledge across many disciplines, an awareness of what they don’t know, and the knowledge of where to find out.
Knowledge comes from many sources, formal courses, wide reading, trying things, and conversations. One of our graduates, who years after leaving us, sent me an email saying he learned more in his year with us by osmosis, and being exposed to how we problem solve and think than he had learnt before and that in his new job he was ahead of his peers by a wide margin. He had the openness to absorb ideas, toss them around in his head, challenge them, filter them and apply them. Knowledge only flows when you are around people who are prepared to share and if you have an open challenging mind.
Knowledge isn’t instant. It accumulates.
Its accumulation never stops.
Experiences test and refine your knowledge. Over time, right, wrong and grey appear clearer.
Sometimes knowledge comes from unexpected circumstances and occurs in spades when you least expect it. For ten years I ran the New Zealand Shareholders Association, and in that time I meet many CEO’s, Chairmen and Directors of large organisations. I had no idea of their thinking and the environment in which they operated. I judged them as idiots based on the poor outcomes achieved by them compared to the outcomes that were being achieved by small, well-run businesses in the SME sector. They took the time to educate me, and I them, and we all ended up better as a result of it.
A number of them I now do business with. The conversations around commonly held issues that you will have with others not only widens your knowledge, it leads into the next element, networks.
To build deep networks requires you to talk with people and exchange ideas. Then finding something tangible to do with each other to demonstrate to each other common views, values and purpose, and when you do this, those networks become, what I ridiculed in public companies so roundly, your very own ‘old boys and old girls clubs’.
Without deep wide and trusting networks it is almost impossible to scale knowledge. Without engaged relationships it is impossible to achieve much at all. Many hands make light work!
In terms of the importance of networks a conversation with a public company director went like this. “If you think you are so underpaid for the risk you are taking, let someone else do it, plenty are willing.”
After much banter, it came down to this. “I do this because if I didn’t, I would not be connected and I would lose my sense of purpose and relevance”.
Everyone has many networks, clubs, sports teams, families, professional associations, work mates, shared businesses… it goes on. Each relationship is in context with the only common denominator being you. If you can plug these multiple networks into each other with multiple points of contact they become stronger.
Have you read the book ‘Outliers’, by Malcolm Gladwell? One interesting story in this book was the story of a small American town. It had a population that lived longer than anyone else in the world. Was it environment? Was it genealogy? What the hell was it? It came down to the fact that the population cared about each other. They all addressed each other in the street. They all knew each other, they were all connected. In short, the town was one big supportive network. The people had somewhere they belonged.
Belonging and networks are fundamental to your
physiological and economic wellbeing.
Successful people create these though consistency and by being authentic. Networks require trust.
Resources are more than a score card. They are the underpinning in a tangible sense of your security, and an enabler of the choices you wish to make. To some, control over resources is power, for others it’s security. Some simply see it as a game to get more. As I have said before, that which you chase runs, so for me the pursuit of more for its own sake is pointless. Wealth without purpose is to shun the privilege society has given you. In itself to me this is a breach of trust. More on purposeful wealth another time.
If resources enable choice and freedom, then the first level is to have enough to live. Until you have this, you will never have freedom or choice, unless your wish is to live on the street (its own freedom). Enough in this context that you can live as you wish until you live no more. This number is not that hard to work out. The hard bit is defining how you want to live. Some need a really big number, others very little. But getting to the freedom of having the security to cover yourself without having to do anything at all is immensely liberating. The more you wish to consume the longer it takes to get to the first level of actual freedom which then enables you to really make choices.
Once you have proactive choice,
in effect you have the power of freedom.
Then your choices fall into; do something useful, purposeful, or one of two basic approaches to power.
In terms of power, one approach is characterised by the description ‘f**k off’ money. This is enough to tell anyone at all to go away you don’t want to deal with them and if necessary defend that decision. This is about personal empowerment. It allows you to be authentic, in that you don’t have to grovel to others, it allows you to prune your network to those who matter. If you have a bit more than this level of economic power you transcend to what is called ‘f**k you’ money. This is the level of wealth that allows you to exert power over others.
Eventually if you achieve enough you achieve indifference, or, resources to you cease to be relevant.
You have enough, you can do what you wish, and you have no desire to exert power over others, because your self-confidence and freedom is enabled to the point where the thought of exerting power over others is pointless.
You have reached the point and mean it when you say, “It’s not the money, it’s the principle”. If you think many say this and mean it, you are wrong. It is for the vast majority the money, not the principle. You get to judge character in adversity and disputes. We at Gilligan Sheppard have seen a fair bit of that too.