The Value of an Education to Wealthy Investors


It is a common parental desire to want their children to someday be self-sufficient. For many parents, one path to self-sufficiency is a good education for their children.

Affluent investors certainly feel that way.

Our newest wealth segmentation series study Financial Behaviors and the Investor’s Mindset surveyed investors about the value of education and the importance of a child’s education with a variety of questions. What resulted was an indication that no matter how wealthy an investor is, education played a role in getting them there, and those same investors want their progeny to have the same basis for success.

“Education can come in many forms, but investors agree that an education is key to financial success,’’ said Spectrem president George H. Walper Jr. “While there is agreement on the value of education, there were differences based on wealth regarding the financing of education and the amount of concern that financing causes.”

Let’s start at the very beginning. Affluent investors almost unanimously select “education’’ as a wealth creation factor. Ninety-three percent of Ultra High Net Worth investors with a net worth between $5 million and $25 million do so, and 86 percent of Millionaires with a net worth between $1 million and $5 million do so.

Asked to place the value of a college equation on a 0-to-100 scale, UHNW investors placed it at 88.24, the highest rating for any of the five core beliefs statements given to UHNW investors in the study. Millionaires also placed the value of a college education at the highest level, at 85.65.

Fretting over the cost of a college education is almost a solely American exercise, and most Americans participate. It is even true of UHNW investors; 12 percent admit to having a level of concern for the financing of their children, and 27 percent are concerned about the educational financing for their grandchildren.

It is worth noting that the level of concern over financing education has dropped considerably as the economy has improved. In 2011, when the recovery from the recession of 2008 was nowhere near complete, 35 percent of UHNW investors expressed concern over financing the education of their children.

It is also interesting that Business Owners have the greatest concern over financing the education of their children, with 22 percent expressing that concern. Meanwhile, 34 percent of Professionals (doctors, lawyers, accountants) express concern over the financing of the education of their grandchildren.

For the first time, our study asked investors of all wealth levels to place a 0-to-100 value on this statement: a college students should finance most of his/her education or be responsible for paying back his/her student loans. The response to this statement ran along wealth lines: the UHNW investors rated it lowly (51.92) while Millionaires rated it higher (62.92) and Mass Affluent investors with a net worth between $100,000 and $1 million rated it at 66.44.

These results are consistent with the idea that wealthy investors plan to pay for the college education of their children and grandchildren and therefore do not intend for the next generation to have to deal with college tuition costs.