February 05, 2007
Why the Rich Are Headed Back to School
It is my contention that financial education is going to become a very hot topic in the next few years. It is needed at every level, from school age children to retirees, for those living on minimum wage to those who have a very high net worth. It seems, like many things, the market is developing at the top of the financial spectrum, where people can afford to pay for it.
According to a January 17, 2007 article in the Wall Street Journal ...
The wealthy are flocking back to school to learn how to be rich.
As investing and estate planning grow ever more complex -- with labyrinthine trusts, derivatives, hedge funds, structured products, complex philanthropic options and ever-changing tax laws -- wealthy individuals increasingly want to get a better handle on what to do with their money.
Often, the students are successful business owners who have recently sold out and are struggling with how to invest their windfall. In other cases, they are women who have been widowed or divorced and may not have handled tough financial decisions before. And a growing number of fortunes are passing into the hands of baby boomers, who are more apt than their parents to reach out for help in understanding how to manage their finances.
To that end, they are signing up for courses offered by universities and business schools, financial-services companies and independent firms that focus solely on wealth education. In addition, peer-education groups are sprouting up, allowing wealthy individuals to meet regularly and learn from each other and from guest speakers.
The classes and seminars don't teach the secrets of how to become rich; instead they focus on how to handle the money that the participants already have. As a result, they are all geared to those who anticipate having taxable estates and who can afford to invest in hedge funds, private equity and other investments generally open to accredited investors. Although none of the courses have hard and fast wealth thresholds, the University of Miami course, for instance, is targeted toward individuals whose family holdings are at least $4 million, while many students at the Wharton program have at least $25 million in family assets.
My company teaches wealth management to the next tier down, people who have accumulated between $500,000 and several million in investable assets, or those who expect to.
Some of Ms. Anderson's clients say they are frustrated with their experiences at larger private banks. "One thing that Wall Street sometimes does is deliberately talk over people's heads to make their financial consultants sound smart," she says. "Much of what is called education is actually disguised product sales."
The core problems are the same, whether you have $10,000 to invest or $10 million: 1) How do I formulate my investment objectives? 2) How do I decide which tactics will have the highest likelihood of meeting those objectives? 3) How do I measure my performance against those objectives? and 4) Who do I trust?
The fact that we all need a working knowledge of money and investing is a given. If you don't have that working knowledge yet, or it is sketchy in places, your choices for obtaining it are simple: 1) You can educate yourself - which is time consuming but doable; 2) You can pay for sensible financial education; or 3) You can do nothing and hope that your naïve choices work out.
The smart thing is probably a combination of the first two. Unfortunately, most people will likely continue to opt for naiveté - at least until we begin to see the consequences come home to roost for the Baby Boomers.
The smart ones won't wait.
1. Rachel Emma Silverman, "Upper Class: Why the Rich Are Heading Back to School" Wall Street Journal 17 January 2007; p D1.
Kim Snider, Kim Snider Financial Communications, Chronim Investments and/or Snider Advisors make no representation that the information and opinions expressed are accurate, complete or current. The opinions expressed should not be construed as financial, legal, tax, or other advice and are provided for informational purposes only. Call 866-952-0100 to request the Snider Investment Method™ Owner's Manual, which includes a description of the Snider Investment Method, investment objectives, risks, suitability and other information. Please read and consider carefully before investing. All investments are subject to risk including possible loss of principal.
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Kim Snider is an author, speaker and host of Financial Success Coaching, Saturdays at noon, on KRLD Newsradio 1080, Dallas - Fort Worth. This blog is primarily devoted to empowering individual investors with information to help them be good stewards of their money. Above all, it is about achieving true financial success. Kim's book, How To Be the Family CFO: Four Simple Steps to Put Your Financial House in Order is in bookstores now. Order yours from Amazon or other fine booksellers today.
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