How Wealth Creation Has Changed in Past 5 Years
There are many factors that contribute to wealth creation; hard work, education, frugality, risk taking, smart investing, inheritance, luck, and decisions made by a financial professional are just a few. Wealth creation is something that is pursued by the majority of investors, however the factors that contribute to wealth creation have changed in the past 5 years.
Working hard has and continues to be the biggest factor in wealth creation. Ninety-five percent of investors indicate that working hard is a factor that contributed to their wealth creation when asked in 2015. That percentage has slowly decreased until 2020, when 90 percent of investors indicate that they had to work hard to create wealth.
The second most cited factor to wealth creation in 2015 was education. Education has been highly regarded for many years as a method to wealth creation. Eighty-three percent of investors in 2015 felt that education was a factor in their wealth creation. That percentage has decreased to 74 percent over the past five years.
While hard work and education have declined as a wealth creation factor, smart investing has stayed the same. The percentage of investors that identify smart investing as a wealth creation factor has only varied by a few percentage points in the past 5 years. Investing intelligently is something that needs to go hand in hand with many other wealth creation factors.
That smart investing can often come from a financial professional. Decisions made by a financial professional was identified by 37 percent of investors as a wealth creation factor in 2015. That percentage has increased to 43 percent in 2020. More individuals have become advisor-dependent as well in the past several years, just showing that working with a financial professional is something that investors may want to consider if they aren’t already working with one.
Whatever the factors are that created an investor’s wealth, it is important for a financial professional to be aware of those factors and ask how their clients developed their net worth. Investors who believe it is all about being lucky or being in the right place at the right time may invest or behave differently than someone who feels wealth creation comes from hard work and education. It is likely that most investors feel there have been several factors that have contributed to their wealth, and those advisors who inquire about that journey are one step closer in developing a closer relationship with their client.