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Inside the Ultra-High-Net-Worth World and Their Toys Thumbnail

Inside the Ultra-High-Net-Worth World and Their Toys

What does "wealth" mean to you?

For some folks, wealth is a salary level that will provide a better life for their families.

Other people define wealth by having the means to do what they want, when they want, or buy what they want, when they want.

And for many older Americans, wealth might be a number that they want to hit as they approach retirement age.

I was thinking about these sorts of definitions while reviewing the new World Ultra Wealth Report 2022, published by Altrata, as well as some recent news items about the ultra-rich. As you'd probably expect, the figures in these stories are eye-watering. But the conclusions that we can draw about wealth, the economy, and our legacies are also quite humbling. No matter how big your nest egg is, there are certain experiences around life and money that are universal. And I think focusing on those shared experiences can lead us towards a more impactful understanding of what true wealth is.

They're Just Like Everyone Else! (But Not Really)

Altrata defines the global ultra-high-net-worth (UHNW) population as people whose net worth is $30 million and above. And, due to the same economic ups and downs that we've all been experiencing in 2022, for the first time since 2018 the number of people in that lofty group has decreased by 6% to 392,410 worldwide. The UHNW population's combined net worth has also dropped by 11% this year to ... get ready for it ... a mere $41.8 trillion. In North America, UHNW collective wealth fell by 13.9% to $14.5 trillion, which is almost a three-year low.

Now I know we're not going to cry too hard for someone whose net worth has dropped from $30 million all the way down to the low twenties. But I think these figures show that creating and managing wealth isn't the "rigged game" that folks who are skeptical or nervous about investing think it is. Market volatility and challenging economies affect all investors, just as positive markets and roaring economies help all investors grow their wealth. While, generally speaking, UHNW individuals are probably able to cope with a 6% loss better than the average investor, in my thirty years in the financial services industry I've also seen plenty of extremely wealthy people who lived beyond their means and never bothered planning for a rainy day.

And, in recent weeks, we've all seen that sometimes even the wealthiest, most successful, and most famous people on the planet make major money mistakes.

My educated guess is that once this market correction ends, some of those rich folks who lost that UHNW designation will get it back, just as many average investors who've stuck with their plans and even taken advantages of some opportunities in this volatile market will continue on the path to long-term growth.

But folks who have overextended themselves or tried to navigate these choppy waters without a plan might have a tougher time, regardless of what their net worth may be.

From High-Tech to High Art

One UHNW name you might have seen in the news lately is Microsoft co-founder Paul Allen, whose net worth at the time of his death in 2018 was approximately $20 billion.

Allen was fascinated by the ocean, and he invested a part of his fortune in a fleet of yachts and submersibles that he used for research expeditions and leisure. One of his "superyachts" recently sold for $90 million; another sold in 2021 for $300 million. These boats featured helipads, swimming pools, basketball courts, movie theaters, and even a private elevator for the owner!

Allen was also an avid art collector. Early this month, pieces from his collection sold for more than $1.6 billion at auction, a record for a sale by a single owner.

It's certainly fun for folks to imagine how they might use that kind of fortune to pursue their hobbies, passions and charitable initiatives.

But from a big-picture standpoint, I also think that I'd rather live to see age 66 and beyond, which is something that Paul Allen didn't get to do. He was only 65 when he died from complications from non-Hodgkin’s lymphoma.

Your Plan to Build True Wealth

There’s an old saying that you might have heard spun a couple different ways: “Real wealth is what money can't buy and death can't take away.” I think on some level, even someone who accomplished as much and earned as much as Paul Allen understood that. Once, when asked about his yachts, Allen quipped, “They’re too big, and there are too many of them." And as to Allen’s art collection, Christie’s notes, “Pursuant to Mr. Allen’s wishes, the estate will dedicate its proceeds from the landmark series of sales, totaling $1,622,249,500, to philanthropy.”

Read between the lines there, and I see a man who knew the limits of what money can and can’t buy.

One of the challenges of a financial plan is discovering your own limits, your own definitions of wealth and happiness, your own long-term goals, and the steps that will lead you to your destination. As you wrap up 2022 and start thinking about the year ahead, call up my team at Keen Wealth and let’s discuss how our planning process can help you realize that vision and keep progressing towards your dream retirement.

About Bill

Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.

KWMG, LLC’s dba Keen Wealth Advisors (“company”) is an SEC Registered Investment Advisor located in Overland Park, KS. The company and its representatives may only conduct business in those states where registered or where excluded/exempt or from licensure. For registration information please contact the SEC or the state securities regulators for the states where the company is notice filed. A copy of the company ADV is available upon request. Advisory services are only offered to clients or prospective clients where the company and its representatives are properly licensed or exempt from licensure. No advice may be rendered by the company unless a client service agreement is in place. This information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy and is for illustrative purposes only. Clients and prospective clients must consider all relevant risk factors involved with each strategy, including costs or fees, and their own personal financial situations before trading.

The views outlined in the book, Keen on Retirement Engineering the Second Half of Your Life, are those of the author and should not be construed as individualized or personalized investment advice. Any economic and/or performance information cited is historical and not indicative of future results. Economic forecasts set forth may not develop as predicted.

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