Want to know who the smart money is and where it's going right now?


This glittering sliver of the world's population has created an explosion in luxury goods and services, a market many believe-rightly or wrongly, notes Cass-to be recession-proof. It's also prompted all sorts of studies aimed at examining the spending, investments and psyches of the ultra-rich, including one Worth recently conducted with Connecticut's Harrison Group. Based on two-hour face-to-face interviews with 500 Americans who each had at least $5 million in net worth, the Worth-Harrison Taylor Study on the Status of Wealth in America paints a revealing picture of this privileged group.




But if giving remains important to the wealthy, the way they give is changing, says Cass. Those who made their fortunes during the tech boom in the '90s often approach philanthropy the same way they did their businesses, demanding hands-on involvement, accountability, measurable outcomes and even an exit strategy. Many, Cass says, come to realize that you can't measure outcomes for many charitable endeavors-think of a soup kitchen or hospice services-nor can you turn not-for-profits into profitable operations and then walk away. "They're losing propositions from a business standpoint," he says. "That's why we need philanthropy."

Still, they and many other philanthropists today are what Cass calls "venture philanthropists," who aren't satisfied to write a check and send it off. Instead, they want involvement and control in the causes they support.


And even with all that help, adds Cass, the wealthy are struggling to find good investments right now. With the re-emergence of inflation, the flattening of the yield curve, the stagnation of the equity markets and the lackluster fixed-income world, only private equities and the best hedge funds hold out much hope, he says. "There's a mad rush to get into the top performers, but they can't manage that much money," he says. And while many believe investment opportunities abound in the BRIC countries, finding advisors with expertise there is enormously difficult. As a result, the top question for many wealthy clients is how to find and get access to the best manager.

The country's wealthiest investors are worried, agrees George Walper, president of Chicago's Spectrem Group, which surveys investor attitudes for financial institutions. While the wealthiest tend to be the most optimistic, this fall "their level of optimism dropped significantly," he says. "They're very concerned about the U.S. economy, the war and other political issues." Because this group wields so much influence-including over candidates and campaigns-that could signal a coming change in the country's direction.

Those who study the wealthy know that great wealth also isolates. The ultra-wealthy often socialize only with each other, and it's easy to see why. Your former friends may be envious or uncomfortable around you; people ask you for money and expect you to pick up every tab; and your worries about security, managing your vacation homes and how to invest your assets won't get much sympathy from those who are struggling just to get by.


And are they happier than other people?

Walper, who has built his career around studying the wealthy, considers the question. "They're not any more happy or less happy than anyone else," he decides. "They just have different issues they worry about."