• by Stephen Kraus , Op-Ed Contributor, June 19, 2013

How do people get rich? It’s a question that has fascinated people since … well, since the invention of money. The answer, of course, depends in part on one’s definition of “rich.”

For 37 years, our survey has studied “Affluent” Americans. Defined as roughly the top 20% of Americans in annual household income (HHI), today it takes at least $100,000 HHI to join the ranks of the Affluent. How do people get Affluent? 

• Education certainly helps, as we find that ~60% of Affluents have college degrees, doubling the ~30% the Census Bureau reports for the general population. 

• Marriage is more widespread among Affluents (~70%, vs. 50% of the general population); with a definition based on household income, the presence of a second breadwinner in the household obviously helps in reaching the affluence threshold of $100K. 

• Attitudes and other individual differences such as ambition, opportunity and career choices play large, if sometimes less easily quantified, roles. 

Recently, a client asked me “How do people get rich?,” but she defined rich as “millionaires” with $100K+ HHI and at least $1 million in liquid assets – an elite group that is just 12% of the Affluent population. We find that millionaires are…

• particularly well educated; 71% are college graduates, and one-third have graduate degrees – significantly above Affluent rates.

• just as likely to be married as Affluents, which likely boosted their income; moreover, those still on their first marriage (which is most of them) have avoided the often asset-destroying experience of divorce. 

• older, averaging in their mid-50s, a full decade older than Affluents (giving millionaires more time to accumulate assets). 

• particularly high in income, doubling nearly the average HHI of Affluents.

Statistically, we controlled for obvious demographic drivers in search of the more subtle correlates of having substantial liquid assets. From these analyses, one underlying factor stands out – business ownership. A solid income, frugally saved, can lead to significant financial comfort, but generally not millionaire-level assets. Instead, millionaires tend to be owners of a successful business in today’s high risk / very high reward entrepreneurial climate. The “ethic” of ownership runs deep for them, and extends to other areas of their lives. For example, their financial portfolios are diverse and exhibit a relative comfort with risk, but also reflect a premium they place on “ownership” investments, extending beyond equities to include a strong interest in real estate, gold, commodities and private equity funds.

For some characteristics of millionaires, it is difficult to even theorize about causality from the intriguing correlational data. Millionaires are heavy readers, and heavy consumers of financial media more generally; are they more interested because they have more to invest, or do they have more to invest because they study wise financial strategies? Millionaires are also heavy users of financial advisors, but it is difficult to disentangle cause-and-effect, chicken-and-egg, advisor-and-account-balance.

Millionaires are distinct in other ways of interest to advertisers as well. Across categories, they are willing pay a premium for quality and service. They are influential opinion leaders, but skew lower on social media use. They have sophisticated and open-minded tastes in culture and cuisine. Intuitively, at least, many of these factors are likely “consequences of being rich” rather than causes of wealth creation. Many marketers don’t really care about the cause-and-effect dynamics involved; they must connect with millionaires as they are today, regardless of how they got there. 

Ultimately my client asked me a “causal” question – what advice would I offer to aspiring millionaires? In the advice department, it’s hard to go wrong with “go to college,” “seriously consider a graduate degree,” and “create a loving, lasting marriage.” For those intent on reaching a truly elite financial echelon, “start and run a successful business” is a wise strategy. But not everyone has the skills, ambition or risk-tolerance to become an entrepreneur. And success is far from guaranteed; some attempt to “start and run a successful business” only to end up losing their life savings and spending years digging out of debt. 

Instead, more universally applicable advice would be to know your strengths and follow your passions. These, too, are characteristic of today’s financial elite – most set out, not to become rich, per se, but to pursue a passion in a manner consistent with their fundamental approach to life. As author Bruce Kasanoff recently put it: “If Steve Jobs, Bill Gates and Richard Branson were starting out today, do you think they'd be polishing their resumes and waiting for a promotion? No way. Once again, they'd be looking to disrupt entire industries.” They know their strengths, pursue their passions, and don’t try to “re-wire” their personalities to be something they have never been. Good advice for all.