People who have enough money to take it easy, generally don’t; that’s the paradox of banking. There are several reasons commonly advanced for this. Partly, of course, it’s an optical illusion – if you were the kind of person who was going to give up when you made $10m, you’d be less likely to be offered the $10m job. And partly, it’s the simple economics of living an upper-middle class lifestyle in a financial centre; if you’ve got three kids at private school, there are very few jobs outside finance and Big Law that are going to pay the fees.
According to author Christopher Ryan, though, it’s a bit more psychologically complex than that. Looking at successful people in industries from finance to Silicon Valley, he found that a common refrain was that “a few million doesn’t go as far as it used to”. Not necessarily in terms of the things that it buys, but in terms of your own perception of your relative status compared to the people around you. If you’ve got a BMW, you tend to find you’re parking it next to Porsches; when you get to the stage of owning a Porsche, the car parks seem to be full of Aston Martins.
And so you get the phenomenon of the “working class millionaire”. That’s someone who, objectively speaking, has enough accumulated wealth to just invest it in savings bonds and live a comfortable life off the passive income, but who still works as hard as they ever did. Ryan, for example, cites a guy with a house worth $1m, a net worth of $3.5m and passive income of $175k who still put in 12 hour days and an extra 10 hours each weekend. Why? Well, in the words of Match.com founder Gary Kremen, “Everyone looks at the people above them … you’re nobody here at $10million.”
But if you’re nobody with $10million, then what’s your attitude toward the people with $5million? Or $1million? Or even that very substantial proportion of the population, even in investment banking, who do not have even a single million dollars in the bank? Ryan’s book, “Civilized to Death: The Price of Progress” suggests that the way in which wealth changes your perceptions is even more insidious when applied to people poorer than yourself. According to him, it’s a sort of “psychological defense mechanism”; working class millionaires protect themselves against the intolerable cognitive dissonance caused by the gap between their self-image and reality by distancing themselves from other people, eroding their natural sense of empathy and gradually becoming more selfish and less happy. According to Ryan, it’s actually an empirical fact that expensive cars are more likely to cut in front of other drivers and less likely to stop for pedestrians.
This isn’t an inevitable consequence, though. Ryan calls it “Rich A*****e Syndrome”, but it’s a curable disease. Even short periods of reflection – in one experiment, a 46 second video about child poverty – seem to push the reset button and help people regain their sense of perspective. And of course, the greatest status symbol of all is having so much wealth that you can take the Warren Buffett / Bill Gates pledge to give it all away. The trouble is that the business of getting the money often takes so much time and leaves you so mentally exhausted that you don’t remember to stop and smell the flowers.
On an entirely different subject – or is it? – in Big Four firms, the status division between auditors and consultants is really rather marked, with auditors very much at the low end of the scale. Spare a thought for the technologists and consultants of KPMG in London then, who have been informed that if you spend more than 10% of your time advising auditors, then you are going to be moved from the advisory department to sit with the audit department, as preparation for “a more separate future”. Apparently 800 staff and 20 partners will be making the move, but there has probably been some nervous checking of timesheets today by consultants who were just around the threshold.
KPMG’s idea is to anticipate any chances in regulation which might require it to split the audit practice from all the ancillary services. But if the purpose of that regulation is to prevent auditors from upselling technology and consulting services, what are the 820 transferred advisors going to do with the other 90% of their time? Many of them will presumably be hoping that the answer isn’t “while you’re here, you might as well do some auditing”.
A kind of touching feelgood story – one member of this year’s JPMorgan graduate intake is from a very deprived post-industrial town, which is so proud of him that he’s got a profile in the local newspaper. (Lancashire Telegraph)
After the departure of Adam Neumann, the investors appear to have begun a clear-out of his executive team. This apparently includes Mr Neumann’s brother-in-law and some of his childhood friends. WeWork seems to have had a management structure more familiar in small Swiss private banks. (Bloomberg)
How bad are things in small-cap equities? Shore Capital, a specialist broker on the London AIM, has decided to delist its own shares as there was not enough trading in them to make it worthwhile. (FT)
It’s confirmed that Dreamland Adventure Park is going to be one of the more illiquid assets in the winding up of Arrowgrass Capital. Now investors are asking questions about the number of properties in the neighbouring town that had been privately bought by Arrowgrass’s CIO. (Bloomberg, bonus music link)
Deutsche Bank is handing out models of the “James Bond” Aston Martin DB5 as freebies at a fintech conference this week. Although this is objectively the best Matchbox ever made (possibly excepting the Dodge Charger MkIII), the IPO that Deutsche led for Aston has not exactly raced away, and they were conspicuously absent from a recent bond issue (WSJ)
“VCs are very sloppy – they just want their money”. An investigation into Cachette Capital, which appears to have made a lot of commitments to venture capital funds and then not followed through with them, and which is being sued by an employee who used to be based in an office next to a 90s themed gift shop (Bloomberg)
How to handle salary negotiations, by a headhunter and emotional intelligence expert (Business Insider)
Have a confidential story, tip, or comment you’d like to share? Contact: firstname.lastname@example.org in the first instance. Whatsapp/Signal/Telegram also available.
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)
Photo by 青 晨 on Unsplash