A recent study conducted by Bank of America Private Bank has shed light on the origins of wealth among multimillionaires, revealing that only a small fraction of them are self-made.
The study, which surveyed a diverse group of individuals with a net worth of over several million dollars, found that a mere 27% of respondents achieved their wealth through their own efforts and hard work.
Inherited Wealth and Affluent Upbringing
Interestingly, the study indicates that wealth is often intergenerational, with a significant portion of multimillionaires having enjoyed an affluent upbringing or inherited a substantial portion of their wealth.
Approximately 28% of participants acknowledged having an affluent upbringing with inheritance, while an additional 46% reported either an affluent upbringing or some form of inheritance.
The Generational Breakdown
The study also provides insights into the generational breakdown of multimillionaires. Unsurprisingly, the majority of respondents belonged to the baby boomer generation, comprising a staggering 62% of the participants.
The silent generation, consisting of individuals over 75 years old, represented 9% of multimillionaires. Meanwhile, Generation X accounted for 20% of the respondents, millennials made up 9%, and remarkably, the youngest generation, Generation Z (ages 21-25), constituted less than 1%.
Slow and Steady Accumulation of Wealth
One key takeaway from the study is that building wealth is a gradual and meticulous process that demands discipline and long-term financial habits.
The study emphasizes the importance of consistently practicing good financial habits over several decades to achieve multimillionaire status. This finding underscores the fact that wealth accumulation is rarely an overnight phenomenon but rather a result of sustained effort and strategic planning.
Strategies to Build Wealth
The study also offers insights into the strategies employed by those who successfully amassed significant wealth.
The most commonly cited methods include maximizing income, investing in the stock market, and maintaining consistent saving and investing habits. These strategies, when combined with prudent financial decision-making, can contribute to long-term wealth accumulation.
Exception Rather Than the Norm
It is crucial to acknowledge that becoming a self-made multimillionaire without any form of assistance is an exception rather than the norm, especially among younger adults.
The study’s findings indicate that a vast majority of multimillionaires have benefited from their families’ prior wealth or inheritance, underscoring the significant role played by intergenerational wealth transfer.
Implications and Reflection
The study’s revelations raise questions about economic mobility and the ability for individuals from less privileged backgrounds to attain significant wealth. They also challenge the popular narrative of the “rags-to-riches” story, highlighting the importance of structural factors and family wealth in wealth accumulation.
As policymakers and economists grapple with issues of income inequality and wealth distribution, this study serves as a valuable resource, providing a deeper understanding of the complex dynamics involved in wealth creation. It underscores the need for policies that promote financial literacy, access to opportunities, and a level playing field for individuals to build wealth independently.
So, the Bank of America Private Bank study presents a comprehensive analysis of multimillionaires and their backgrounds. By highlighting the prevalence of intergenerational wealth transfer, the study offers a nuanced perspective on wealth creation, challenging the notion that self-made multimillionaires are the norm.
