Quora Answer: Do People Born into Rich Families Have an Advantage over People Born into Poor Families?

The following is my answer to a Quora question: “Do people born into rich families have an advantage over people born into poor families?”

Being born into wealth, especially legacy wealth, and not the newly rich, affords two main advantages: the proper attitude towards wealth, and an established network.  People not born into wealth do not often have the advantage of understanding the role of money, and assets.  Being born into wealth conditions us to think in terms of asset acquisition for financial growth, instead of showing off.  Money is in the family, and there is no mystery, or wonder at it.  The truly wealthy have no incentive to show off, or keep up with others.  A newly rich person may buy a Ferrari, and imagine that it has aggrandised him.  A scion of old money may buy it, and understand that it is an asset that has a potential to appreciate in value to collectors.  People of old money are also careful about not flaunting what they have.  The acquisition of wealth is a means to access power, and gain influence.  Money is not the goal in and of itself.  Accordingly, there is little benefit in ostentation.  It invites unwanted attention, particularly from the authorities, and tax audits.  Only the foolish, and the young, feel the need to wantonly flaunt wealth.

Another understanding of being born into real wealth, is to have the benefit of being surrounded by people who truly understand how money, and finances, work.  There is an understanding that there are types of financial products the general public is no aware of, that there are advantages in running transactions through vehicles such as companies and trusts, and how to mitigate credit exposure.  There are ready sources of leverage, fund placement, and credit.  The wealthy also understand the benefit of insuring everything they can to mitigate, and outsource risk.  There is no benefit in undertaking any risk that is not mitigated and managed.  Poor people leave things to chance.

When it comes to relationships, and networks, this is where wealth is protected, nurtured, and propagated, within families.  Networks grant access to those in power, and opens doors to opportunities that ordinary people never have access to.  The world runs on networks.  Success is determined by who we know more than what we know.  There is no point being brilliant in something, or having a world changing idea without access to the people who can make it happen.  That is why mediocre people like Kylie Jenner can earn hundreds of millions.  It is the network, exploited successfully, for mutual gain.  The key to success, and wealth, is, and has always been, about knowing the correct people, and impressing them, or having something that appeals to their sense of self-interest.