Wealth
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Of Note:


There were 544,000 high-net worth households in Canada as of Dec. 31, 2009 and their ranks continue to grow.

Less than half of this country’s millionaires become happier as they accrue more wealth.

And that’s mostly because having more money often means more problems.

Life generally becomes “a lot more complicated” after Canadians amass their first $1 million.

“Money can’t buy happiness, but it can buy you the kind of misery you prefer.”


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Can money buy happiness?



Published On Thu Sep 30 2010



We’ve all heard that “money can’t buy happiness,” but Canada’s biggest bank is now offering proof the old adage really does ring true for this country’s mega rich.

In a study to be released Thursday, Royal Bank of Canada says less than half of this country’s millionaires become happier as they accrue more wealth. And that’s mostly because having more money often means more problems, bank executives said.

In fact, life generally becomes “a lot more complicated” after Canadians amass their first $1 million, said Anthony Maiorino, vice-president and head, RBC Wealth Management Services.

While the study found that people with investable assets exceeding $5 million are “much more likely” to feel “happier,” about 31 per cent also believe having money “brings about as many problems as it solves.”

“The money that you have at this level can solve a lot of the basic issues that come up in life. But it doesn’t solve everything and it doesn’t necessarily make life simpler,” Maiorino said.

“It leads to its own set of complexities which need to be discussed and looked at. And (it) can create as big a concern for these individuals as, you know, issues that other individuals might be facing.”

For instance, millionaires often worry about handling their wealth, including saving for retirement and succession planning for their businesses.

The vast majority are “self-made” whose prosperity is largely fuelled by their pay and investments. Most cite a “diligent” long-term focus, rather than sheer luck, for their riches. Only 8 per cent were born into money, the study found.

“The interesting thing is they often don’t view themselves as wealthy,” Maiorino said. “They view themselves as successful, but not necessarily being classified as a wealthy individual — even though they have attained what most Canadians would say is a wealthy amount of assets.”

As a result, about 10 per cent of millionaires suffer from a “fear of failure” such as ending up in the poorhouse during their golden years. That can make them preoccupied with the constant growth of wealth, Maiorino said.

Many also fret about leaving inheritances for their children and grandchildren. Some 49 per cent are “concerned” their kids are ill-prepared to handle a windfall, while 35 per cent worry heirs “may take the money for granted” and fritter away the cash.

Despite those fears, however, 39 per cent of those surveyed did not have an estate plan. A stunning one in five had not even considered preparing one, the study found.

“They have to do a lot more planning,” said David Buchanan, vice-president, high net worth initiatives, RBC Wealth Management.

The findings are from a survey conducted in July and August by marketing firm HNW Inc. It is based on a sample of 399 Canadians with at least $1 million in investable assets. The margin of error is plus or minus 4.9 per cent in 95 out of 100 cases.

There were 544,000 high-net worth households in Canada as of Dec. 31, 2009 and their ranks continue to grow. That small group controls 67 per cent of the total wealth in this country. As a result, Canadian banks are increasingly chasing after this lucrative clientele.

A separate study on U.S. millionaires, released Wednesday, found that Hawaii has the largest number of millionaires per capita in that country.

The report by the Phoenix Affluent Marketing Service found that 6.9 per cent of Hawaii’s households could be classified as millionaires.

Other states with high populations of millionaires per capita include Maryland (6.8%), New Jersey (6.7%) and Connecticut (6.7%).

Overall, the total number of U.S. millionaire households grew by 8 per cent in 2010 to 5.6 million, the report said.

“It is remarkable that the same four states have topped our millionaires ranking for three years running,” said David Thompson, managing director of the Phoenix Affluent Market, in a release.

“However, Hawaii, Maryland, New Jersey, and Connecticut all share some important distinctions: they are small states with large concentrations of highly educated professionals and business owners which are key ingredients to growing wealth.”

While the numbers of millionaires are growing on both sides of the border, Maiorino stresses that having big bucks does not make one’s life problem free.

Others, however, take a slightly different view of the dilemma. According to one unknown author: “Money can’t buy happiness, but it can buy you the kind of misery you prefer.”



Quick Facts about Canada’s Millionaires

•Average age is 54 but most amassed their first $1 million in assets by 42

•59% are married with adult children

•21% were born outside of Canada

•40% own a business

•At the end of 2009, there were 544,000 high-net worth households in Canada, representing 3.8% of total households

•High-net worth Canadians hold a collective total of $1.8 trillion in wealth or 67% of the total wealth in Canada

Source: Royal Bank of Canada, Investor Economics

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The Toronto Star


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