Family Wealth Report


Exclusive Interview With Paul Sullivan On The Nature, Impact Of Money

Joe Reilly, February 26, 2016

Joe Reilly: Apparently you have some angry readers. In the acknowledgements for your new book The Thin Green Line, you mentioned that “…the angry ones who directed their vitriol and hatred of the rich at me were the (most) valuable in my seeing this book through: they convinced me that ignorance about wealth and money was so widespread and deep that this book could fill a need.”

Paul Sullivan: I started writing Wealth Matters for the Times in the fall of 2008, just as Bernie Madoff was being revealed. A few months later, I wrote a column about psychologists who talk about how it is not productive to hate the rich and that all this hatred of a small slice of America is deeply unhealthy. So I published that. And my email exploded. These emails were crazy. At the time, my official photo was me in a bowtie and readers said “We want to string you up by your bowtie.” They created a whole web page collecting vitriol about me. There were all these people out there who couldn’t explain what happened. They just wanted to vent. Everything had gone wrong for them. They bought a house, and the price went down. They had jobs and they were supposed to keep them but they were gone. Their salary was supposed to go up 3 to 5% a year and it didn’t. They use to get a bonus but that vanished. Life didn’t work out the way they thought it would. Nobody had this sense that the party could end. Nobody thought that house prices could go down, just like people didn’t think stock prices can go down. It was collective angst, and it lasted throughout the year, and I became a target for a certain slice of that frustration. I accepted it.

Joe Reilly: Was this the ultimate impetus for the book?

Paul Sullivan: Well, my own situation now is fine, but I came from the bottom 20%. I always wondered about the rich. I wouldn’t say I’m envious of the very wealthy. I don’t poke fun in my column or my book. I’m just trying to understand their choices. How do they do it? And once I figured out how they made it, then how do they hang onto it? How do they make sure it doesn’t cause them more problems than they would have anticipated? And this is where all kinds of problems with the kids come in, and hangers-on and friends. If you look at any other people’s problem they would say “If only I had money life would be better, and if I had a little bit more money I could get myself out of the problems I have now.” But if you are wealthy you obviously have money – and you still have these problems. I look at the wealthy as a somewhat “purer” group to study because you can see how they act if you don’t have to worry about money for your basic needs. What then happens? Now, you still worry about money for other things, everyone worries about money. But if you don’t have to worry about money for your basic needs, and you can get great advisors, how do you make sure you make the right decisions? In an optimistic way, the book is about those decisions and those behaviors and the choices that one group of people make, and hopefully other people with a lot less can learn from it. Because you have this group that has all of those options, and what are the choices they are making? And you can scale that back to the middle class or upper middle class.

Joe Reilly: You had some interesting experiences talking to TIGER 21. Anything you can tell us about them?

Paul Sullivan: I’m grateful to the TIGER 21 people, especially Michael Sonnenfeldt, the founder, who got me thinking about the difference between being wealthy and rich, which is the key distinction in this book. The wealthy are the ones who have choices and the rich are the ones where life is going to happen to them. These TIGER 21 groups serve a valuable need – they ease isolation for these very wealthy men who want a safe space to talk about what concerns them.

Lesley Quick is quoted in the book, and he is a great example. He grows up a pretty normal guy, but then he’s the fourth or fifth employee of Quick and Reilly, and the company takes off. It’s purchased by Fleet for a billion dollars. Now he has a lot of money. But he still has his friends from the old neighborhood who say, “Les, how can you have any problems – you’re rich.” And Les says, “Yeah, I am rich – but now I have rich guy problems.”

A friend of mine works in financial services, and her family owns a hotel. Years ago she told me one of the most difficult things to do is to be rich. And at the time, I was just out of grad school, and I didn’t have any money and I said “What are you talking about?” And she said “Look – I don’t have anyone to talk to, I have to find people to talk to.”

And even I notice it. At my church recently, one of the community ministers said, “this is a great group of people, we’re really diverse and it’s not just all paid for by the 1%.” Now my wife and I are in the 1% (by income) and so I didn’t take offense to it. But you are allowed to make these comments openly and it’s supposed to be okay, and you wouldn’t turn it around the other way and say, “this is great, even with the bottom 20% here.” You would never say that.

And what TIGER does for those twelve people once a month is provide a place that they can go and just relax – and they won’t be judged. It is no different than when you’re in college and you are in a frat and you get together and you have a similarity. You go to the old neighborhood, and you all have things in common. So I think TIGER 21 lessens the isolation for these people, and lets them talk about the big issues – their families, their kids, all those people who are pitching them their ideas and trying to get some portion of their money to invest in some XYZ scheme that may or may not return 5X.

Joe Reilly: Do you think wealth managers have any responsibility to educate people?

Paul Sullivan: Absolutely. I think the best advisors out there are those who have prepared their clients and are educating them. The other advisors are all calling up and pitching a stock or an investment. That conversation is on the return, and not on the broader value of the really great advisor. The broader value comes from talking about insurance, life insurance, health insurance, talk about managing your debt, talk about how much is your house. Talk about your kids. Where do you want to be in twenty or thirty years? Those are the big conversations where the good advisors are educating their clients about wealth and not returns. It’s great if you are making 9%, but you still might be making bad decisions. I talk about in the book that you should concern yourself with what you can control. There are things like saving, spending and how much you give away. To some extent you can try to control how you think about money, but that is more complicated. But you need to focus on what you can control, and you can’t control if the market is going to go up or down. You’ll just make yourself miserable.

Joe Reilly: What do you feel is the main lesson of the book?

Paul Sullivan: Money is a means of exchange. If there was one lesson I could beat home it would be this one. If you have more money then you have more choices, if you have less money then you have less choices. But money is still just a means of exchange. That’s boiling it down to its most basic, but that is what people don’t do. In the last chapter of the book, I flew out to Manhattan, Kansas to go to a lab and have all these electrodes and tests at this center at Kansas State where they study how people feel about money. Going into it, I think I’m going to do great and that I know all the answers. But I do horribly. I’m just as stressed out as anybody about money. What they are trying to do is get at those deep feelings we have around money, which are hard to change. But really all you can do is focus on the choices you do have.

Joe Reilly: Inequality has become a major issue in the current election cycle. Has your work given you any perspective on it?

Paul Sullivan: Is it good or is it bad? Well, of course inequality is bad. You don’t want to live in an unequal world. But I think it is a reality. I don’t want to be that doom and gloom guy and say the best days are behind us. But when you look at all the work Piketty did, the 70’s look like a golden age. But those who lived in the 70’s didn’t really think so; you had the oil embargo, Vietnam, Iranian hostages. You probably didn’t think you were living in a golden age. But that’s it. Where we are now, historically, is where we have always been. We are wasting a lot of time, and it’s not really the 1%, it is the .01%. And we are focused on taxes, and who pays a lot of taxes. But it’s a waste to focus on the .01%. They will end up paying estate taxes, and giving the money to their kids, and if history is any guide their kids will just blow it, so that money is going back into the economy anyway. But there are bigger issues to deal with in terms of education, even something resembling a level playing field to begin life.

Joe Reilly: How does one best cover the “wealth sector?” How do you approach it?

Paul Sullivan: There is a lot of wealth coverage that is just about who has the biggest boat. And I admit it, I get sucked in and want to see who has the biggest boat. But when I write my column, and when I wrote this book I wanted to know – what goes into owning a boat like that? Do the owners think of it as an investment? Is it an investment? How do they maintain it? How did they actually make that money to buy the boat? I want to tell the story of everything that went into that yacht. I try to understand it. I figure if I can understand people who have all the choices in the world, well then my hope is that people who have less will be better able to make decisions in their own financial lives. Ideally, my lessons are what upper middle class people can use to make better choices in their own lives.