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What are the top 10 problems or concerns that wealthy families have?
Hello! Thank you for your request to determine the top 10 problems or concerns that wealthy families have. The most useful sources were reports by Knight Frank and an article on Time, which cites several surveys on opulent families. The short version is that the top concerns and problems of wealthy families, pertaining to their wealth, include: succession issues, government scrutiny, cyber-crime, distrust of asset managers and personal assistants, and the global political climate. The top concerns and problems of wealthy families, pertaining to family/social dynamics, include: their children growing up spoiled, the threat of kidnappings, family and friends asking for money, health and environmental issues, and dubious friendships. Below you will find a deep dive of my findings.
METHODOLOGY
I have scoured the Internet for studies and surveys that list the top concerns/problems of wealthy families. During the course of this research it has become apparent that the concerns and problems experienced by wealthy families can be categorized as the protection of wealth and problems or concerns stemming from family/social dynamics. Since the request does not specify on which basis the response should be focused, I have endeavored to provide information on both these categories.
From the research conducted, the top concerns/problems related to protecting their wealth are:
Succession issues
Government scrutiny
Cyber-crime
Distrust of asset managers and personal assistants
Global political climate
From the research conducted, the top concerns/problems related to family/social dynamics are:
Children growing up spoiled
The threat of kidnappings
Family and friends asking for money
Health and environmental issues
Dubious friendships
In order to determine the top concerns and problems, where statistics were not provided, I looked at the frequency in which these were stated in reports and surveys. Since most of these reports did not provide a hierarchal metric, the frequency by which it is mentioned served as a basis for inclusion.
Below is a breakdown of the findings of this research.
CONCERNS/PROBLEMS RELATED TO WEALTH
1 - Succession
In a survey conducted by Knight Frank, the top concern among wealthy families was the issue of succession, stated by 85% of respondents to be their top concern.
The issues regarding family succession are highlighted by an article on Wealthinasia. Not only is the question of who should inherit the business/assets a concern, but the legal implications can be astronomical if this process is not handled in the correct manner. This is a real concern for all persons, but with vastly wealthy families, it becomes a matter of cross-border policies and ensuring that the succession process adheres to the laws of the different countries and jurisdictions.
2 - Government scrutiny
According to a survey performed by Knight Frank, government scrutiny of the wealthy was noted as a major concern by 80% of respondents. This walks hand-in-hand with the potential increase in tax on the wealthy, which 81% of respondents stated as a major concern.
The increase in government scrutiny on the wealthy is highlighted by an article on Financial Times, which stresses that governments across the globe are turning to increasing taxes and policies for the wealthy.
3 - Cyber-crime
A survey performed by Knight Frank states that 76% of wealthy respondents said that cyber-crime was a major concern. This not only speaks to the theft of personal information but also the ruining of reputation.
An article on Worth states that wealthy families often have assets similar to those of large corporations but lack the security systems that protect these corporations. The article refers to a scenario where a family member frequently requests money transfers via e-mail, unaware that these correspondences are being monitored by a cyber-criminal, who then defrauds the family. Also stated in this article is the ever-present threat of extortion and defaming from cyber-criminals.
Going beyond cyber-crime and extortion, an article on Time claims that a major financial concern/problem for the wealthy is that they are more susceptible to lawsuits, stating that 80% of those with a net worth of more than $20 million cite being sued as a major concern. This is based on a survey by Prince & Associates.
4 - Distrust of asset managers and personal assistants
An article on Time, which highlights the top concerns of wealthy individuals and those who manage these families' funds, claims that the distrust of asset managers and assistants is a major concern and reality for the wealthy.
As an example, this article refers to the story of a wealthy man who hid $1 million in gold coins under his bed. After the man had passed away, his personal assistant remained in the house and the gold coins had disappeared.
5 - Global political climate
According to the report by Knight Frank, political unrest in places like Russia/Ukraine and the Middle East and economical uncertainty in China are major concerns for approximately 50% of respondents.
As stated previously, wealthy families have assets that resemble those of large corporations. Being that these assets are effectively not bound by geography, unrest and crises in other parts of the world offer realistic challenges to these families growing and maintaining their wealth.
CONCERNS/PROBLEMS RELATED TO FAMILY/SOCIAL DYNAMICS
1 - Children growing up spoiled
The article on Time presents a study conducted by Boston College’s Center on Wealth and Philanthropy which reveals that a major concern for wealthy families is that the children of these families will grow up with a air of entitlement, preventing them from developing a sense of empathy and compassion. This source cites the case where a wealthy man's children, who have families of their own, are living off the man's investments, prompting him to get up early every morning and trade on the stock market to support his children's lifestyles.
2 - The threat of kidnappings
According to the article on Time, another major concern among wealthy families is the realistic threat of kidnappings. This source refers to the case where software tycoon Eugene Kaspersky’s son, Ivan, was kidnapped. The 20 year old Ivan was kidnapped and held for a 3 million Euro ransom. Fortunately the young man was rescued from his kidnappers. An article on The Register, on the kidnapping, states that between 200 and 300 children of rich families are kidnapped in Russia annually.
3 - Family and friends asking for money
Another significant problem experienced by wealthy families is that friends and extended family tend to 'treat them as banks', according to the article on Time. A respondent in this survey states: "Dealing with either the guilt or the obligation to help provide for others can be a lifelong strain."
An article on My Bank Tracker states that many wealthy families have turned to creating so-called family banks, where family members would need to go through a standard loan application process.
4 - Health/environmental issues
The report by Knight Frank maintains that 67% of wealthy respondents have concerns about health and environmental issues.
Research conducted by Thomas C Corley shows that 76% of wealthy individuals perform some sort of cardiovascular exercise on a daily basis. This research also demonstrates that the wealthy follow better diets, avoiding fast food, excessive alcohol consumption, and lower sugar intake than the poor.
5 - Dubious friendships
The Time article states that the wealthy are concerned about the friendships in their lives. The question: "Are they just friends with me because of my money?" is a real issue.
As an example, Time cites case of a man who states that after his family suffered a financial setback, his so-called friends were nowhere to be seen. Only after the family had recovered did these 'friends' make a return.
Furthermore, several respondents from a Boston College study on wealthy families stated that one of their major concerns is the uncertainty of their friends' intentions.
CONCLUSION
To wrap it up, the top concerns and problems of wealthy families, pertaining to their wealth, include: succession issues, government scrutiny, cyber-crime, distrust of asset managers and personal assistants and the global political climate. The top concerns and problems of wealthy families, pertaining to family/social dynamics, include: their children growing up spoiled, the threat of kidnappings, family and friends asking for money, health and environmental issues and dubious friendships.
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