The Declining Impact of Hard Work
Are you willing to state that you worked hard your entire life? Do you see an obvious impact upon your current station in life as a result of your hard work?
American children are almost all taught the lesson that hard work leads to success, and for most affluent investors in the country, hard work played a role in their current financial success. Education is also given maximum credit by most investors, and they also often point to their investing decisions, whether they did them on their own or had the help of an advisor.
But a study by Spectrem Group indicates that hard work may not be the necessary ingredient to success it was always thought to be.
As part of its annual report Evolving Investor Attitudes and Behaviors, Spectrem asks research participants to list all of the factors that led to their current wealth creation. Among the factors stated above, frugality, taking risks and luck are also considered, along with about half a dozen other choices.
“Hard work” has always led the field, and in 2009, 95 percent of all investors admitted hard work played a role in where they were financially.
Last year, that percentage dropped to 92 percent, and it was discovered that Millennials were less likely to point to “hard work’’ as one of the defining factors in their wealth creation. Then, in the 2020 study, that percentage fell to 90 percent, still well above the 78 percent who chose “smart investing” as one of their wealth creation factors.
In fact, only 73 percent of Millennials surveyed for the 2020 study listed “hard work” as one of their wealth creation factors. Eighty-seven percent of Gen X investors listed “hard work” as a factor, and the percentages climbed over 90 percent for Baby Boomers and World War II investors.
Do you personally know someone who is financially successful who did not work to get there?
If you are thinking that “inheritance” or “family connections” might take the place of “hard work” as a choice among Millennials, note that 37 percent of Millennials offered “family connections” as a reason for their wealth creation, and only 12 percent of all respondents felt that way. “Inheritance” as a response was around 30 percent for all age segments, although slightly higher (34 percent) among Millennials.
To be fair, the Millennials were less likely to answer in the affirmative on any of the categories of choices given to them. Seventy percent listed “frugality” as a factor, 68 percent chose “smart investing” and only 67 percent listed “education’’ as a wealth creation factor.
Another difference between the 2009 and 2020 study is that education is no longer the No. 2 choice among affluent investors as a wealth creation factor. Frugality (78 percent) has passed “education” (74 percent), as the selection of “education’’ has dropped since 2009 from 84 percent to 74 percent.
Once again, the question is asked: Do you know someone who is financially successful who did not get there through the benefit of a good education?
There are other choices which have seen declines from 2009 to this year, including “taking risk” (from 60 percent to 52 percent of respondents), “luck” (from 45 percent to 36 percent), and “being in the right place at the right time” (from 48 percent to 36 percent).
There is, however, one category of response that has increased in popularity over the past 11 years, and that is in the influence of financial advisors. In 2009, only 33 percent of investors said “decisions made by my financial advisors” had an influence on their wealth creation, and that percentage has steadily climbed to 43 percent in 2020. And that percentage is similar across the board among investor age segments in the study.