Many of us believe that a million dollar salary will automatically solve all our problems, but the reality is that financial anxiety and worry plagues even the very rich. Most people can’t understand how rich people can have problems, but it turns out that while they don’t worry about where their next meal is coming from, they are just as concerned about money.
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We interviewed three financial advisors to understand the money worries their wealthy clients face.
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No immediate availability of liquid funds
RJ Weiss, certified financial planner and CEO of The Ways to Wealth, found that his high-net-worth clients often worry about not having enough cash on hand.
“Often their assets are tied up in investments or business ventures. This lack of liquidity causes them unnecessary stress as the lack of cash affects their peace of mind and financial flexibility.”
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The future of their children
Weiss said his wealthy clients, like all parents, are worried about their children’s future.
“However, their concerns often go beyond basic needs, including preserving family wealth, ensuring financial independence in their children and instilling strong financial values,” he said. “They also often worry about the impact of wealth on their children’s character and the potential for entitlement.”
Market volatility
Despite their financial success, high net worth clients are often very concerned about market volatility, particularly since large portions of their wealth are invested in the markets. This means they tend to experience more dramatic highs and lows when markets are volatile.
“My wealthy clients also worry when there are periods of stagnation,” Weiss said. “They fear that the S&P 500 or other major indexes might not grow for an extended period of time, which could affect their long-term financial goals, their estate planning or, in some cases, the loans they have taken out against their assets.”
High taxes and IRS audits
Gloria Garcia Cisneros, a CFP-licensed wealth manager based in Los Angeles, said her high-net-worth clients are often concerned about the high tax bills they will have to pay and the possibility of an IRS audit.
“They are particularly concerned that changes in tax laws, such as the expiration of tax breaks, could lead to an increase in their taxes,” she said.
As a result, Cisneros says, her wealthy clients often place importance on proactive tax planning when selecting their advisory teams. For example, they specifically look for experienced accountants, consultants and lawyers to organize their assets in a tax-efficient manner.
“They also use strategies such as taking advantage of estate tax exemptions and charitable giving to reduce their lifetime taxes,” she said.
Estate planning and probate matters
Another major concern wealthy people have when it comes to money is estate planning. This means planning what will happen to their property and assets after they die.
“They are often interested in passing their wealth on to their family efficiently while minimizing inheritance taxes. This requires complex planning and trust structures,” Cisnero said. “In addition, there are many emotions associated with money, so they typically want to pass their wealth on to the next generation responsibly.”
Data protection and trust issues
The inner conflicts that wealthy people often experience include suspicion and paranoia, but also heightened distrust and a strong focus on privacy. Cisnero believes this skepticism often arises from the perception that others may have ulterior motives when dealing with them.
When you are rich, your social status increases. This then attracts people from less powerful positions who may view your wealth as a means to improve their own status. Consequently, the rich often become more suspicious of the intentions behind social interactions.
“I’ve noticed that my wealthy clients tend to be very conscious of their financial situation. Some are suspicious when it comes to discussing their money, even with their professional advisor team,” said Cisnero.
The fear of not having enough
According to the Mind Over Money survey by Capital One and The Decision Lab, 77% of Americans say they are worried about their financial situation, and the wealthy are no exception.
Jeffrey Lewis, CFP and financial advisor at Savant Wealth Management, shared that even his wealthy clients worry about not having enough money.
“It’s human nature to want things you don’t have, and for some people there is no such thing as having enough,” he said.
However, Lewis pointed out that while his wealthy clients generally have enough financial resources to live the lifestyle they desire, their self-doubt and lack of confidence often prevent them from finding true peace of mind when it comes to money matters.
Understanding financial fears across all income brackets
Money problems exist regardless of how much you earn, although the nature of these worries may vary. Wealthy people tend to worry about preserving and managing their wealth, while lower-income people are often more concerned about immediate financial stability.
Despite these differences, fear of financial problems is a widespread problem that transcends all income classes.
“It’s fascinating to me as a financial advisor to see that financial fears and worries exist regardless of the amount of money,” Cisnero said. “This behavioral side of money is often overlooked and is the root cause of many of the problems with scarcity or overspending that we see in both the affluent and lower-income households I speak with.”
In other words, many of the money worries that both the wealthy and the less well-off have are not about dollars or numbers. They are usually emotional and behavioral issues, such as deep-seated fears of scarcity, that need to be addressed.
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This article originally appeared on GOBankingRates.com: 7 Things the Rich Worry About When It Comes to Money
