A personal finance columnist for the NZ Herald

Inside Money: The poor rich - a basis for therapy

Psychologists are seeing an increase in very wealthy clients suffering from 'wealth guilt.'  Photo / Thinkstock
Psychologists are seeing an increase in very wealthy clients suffering from 'wealth guilt.' Photo / Thinkstock

As highlighted by the post-crisis protests against the '1 per cent', income inequality has become an era-defining issue.

Even the World Economic Forum (WEF), a traditional bastion of the rich and powerful, had its two cents to say on the matter in its 2013 'Global Risks Report'.

"The global risk that respondents rated most likely to manifest over the next 10 years is severe income disparity," the WEF study says.

But in a fascinating report published last November, World Bank economist Branko Milanovic shows by one measure the years "between 1988 and 2008 witnessed the first decline in global income inequality since the Industrial Revolution".

"Broadly speaking, the bottom third, with the exception of the very poorest, became significantly better-off, and many of the people there escaped absolute poverty," the study says.

"The middle third or more became much richer, seeing their real incomes rise by approximately 3 percent per capita annually."

Despite this finding, Milanovic's research also supports the case against the '1 per cent'.

"The most interesting developments, though, happened among the top quartile: the top 1 percent, and somewhat less so the top 5 percent, gained significantly, while the next 20% either gained very little or faced stagnant real incomes," the study says.

"This created polarization among the richest quartile of world population, allowing the top 1% to pull ahead of the other rich and to reaffirm in fact -- and even more so in public perception -- its preponderant role as winners of globalization."

But where some see impending social dislocation, others sense a business opportunity. As this recent Financial Times (FT) article details, a new sub-genre of psychologist has arisen to treat the wealthy for financial guilty feelings.

"Dr Traeger-Muney, originally from Ohio but based in Israel, specialises in treating inheritors from all over the world and believes the vilification of the '1 per cent' in the aftermath of the financial crisis has caused psychological problems for the very rich," the FT reports.

"Rates charged by financial psychologists range from $175 an hour to $500 an hour," the FT story says, or, and this is the most arresting line in the article, "a percentage of a client's assets".

But any rich person willing to give basis points to someone just to listen to them moan about the problems of having too much money needs their head seeing to anyway.

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A personal finance columnist for the NZ Herald

David is a freelance journalist who has covered the financial services business on both sides of the Tasman for over 15 years. He is the editor of industry website Investment News. David has edited magazines and websites for the financial advice, investment and superannuation industries.

Read more by David Chaplin

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