The Real Differences Between $10 Million and $100 Million

Speaker 1 – 00:00
Welcome to EWA’s FinLit podcast. EWA is a fee only RIA based out of Pittsburgh, Pennsylvania. We hope all listeners
of this podcast will benefit as we deep dive into complex financial topics that we will make simplified for you. And
we hope that this really serves as a catalyst so that you can make the best financial planning decisions for your
family and also save time foreign. Welcome everybody. Excited to be joined here by Devin and Jameson. We’re
talking today about the difference between a 10 million dollar net worth and 100 million dollar net worth. And the
reason we’re discussing this today is we’ve had, you know, the privilege of serving, you know, people in both of those
categories.
Speaker 1 – 00:46
The $10 million obviously more common today with a lot of, you know, people participating in RSUs or being very
disciplined savers, being in several bull markets as they’re, or maybe they’re a business owner, small business owner
with it with an exit and then that, you know, the 100 million would typically be, you know, the result of generational
wealth, maybe a tech based company being the founder, a VC backed, a real estate, you know, empire that’s been
built, etc. So and the interesting thing is like very few people that you’d think got to 100 million like most people
think, oh, like athletes, very few like athletes or like celebrities actually have $100 million. It’s very small percentage.
Probably 1% of that profession has the high of a net worth. So today we’re going to talk about, you know, what
should the goal be?
Speaker 1 – 01:41
Should the goal be, you know, more the better? Maybe less is more. What’s the, what are the financial planning
considerations and is wealth for those people that have achieved that wealth is, was the stress to get there worth it?
Because did their life really change that much? So we’re going to be, you know, deep diving and a lot of good stuff
today. So. Okay, well, let’s talk about, just generally speaking, what are some of the biggest psychological differences
or lifestyle differences between the two? Devin, what are your thoughts?
Speaker 2 – 02:16
Yeah, I mean again, it’s a kind of a fundamentally different level of wealth when you go from eight figures to nine.
Couple of things off the top of my head. So number one, if you got 10 million bucks, you’re probably flying first class
most of the time. But if you have 100 million, you’re probably flying private, meaning you have your own plane.
Speaker 1 – 02:33
Yep.
Speaker 2 – 02:35
Some other ones, if you’ve got 10 million in net worth, you probably have a vacation home or two, you have 100
million. You probably have a portfolio of properties around the country, if not the world. And then one that’s kind of
tongue in cheek is that if you got 10 million bucks, your grandkids college is probably paid for. If you have 100
million, your grandkids lives are probably paid for. So those are just a few examples.
Speaker 1 – 02:57
Yeah. And so in our experience, like the 100 million, where the. You said the grandchild’s lives are paid for. It’s not
necessarily a good thing. You know, generational wealth lasts, like 97 of it statistically is gone by the third
generation. And there’s that balancing act between helping people and enabling people. And so I think one of the
greatest gifts you can give your kids or grandkids is their ability to have skills, to have values, to pass that on. Not
necessarily. Just here’s an easy street, an easy key of money, because that really resets the brain into a certain way
of thinking as well. So.
Speaker 2 – 03:32
Absolutely.
Speaker 1 – 03:33
Okay. Jameson, anything? Any other thoughts on that?
Speaker 3 – 03:38
Sorry, this coffee was really hot. It threw me off.
Speaker 1 – 03:42
It’s too. It’s so hot. You should. And you’re. We’re both wearing, like, long sleeves. Today is a bad mistake. I need to
start checking the weather out before I wake up. I feel good.
Speaker 3 – 03:48
This is. This is comfortable. It’s light.
Speaker 1 – 03:51
You go off Laurel Valley yesterday, you get that yesterday.
Speaker 3 – 03:54
It’s nice and light.
Speaker 1 – 03:54
Yeah, it’s a nice one. I like that.
Speaker 3 – 03:56
It’s Grayson. I’m a huge Grayson.
Speaker 1 – 03:58
I’m surprised it’s black, though. I’ve never seen you wear black before for.
Speaker 3 – 04:01
Yeah, yeah, Black and white. That’s it. Mainly black.
Speaker 1 – 04:04
You watch any of our podcasts? You know, James is only in black.
Speaker 3 – 04:07
Eliminates the decisions. I had a good con. We don’t need to derail into this. Let’s talk about $100 million. Would you
ask me what are my thoughts?
Speaker 1 – 04:16
Yeah. Any thoughts on that? I was going to go through, like, key differentiators, like. So to get to 10 million, you have
to be extremely high discipline, saver, like a W2 physician, for example. Making half million to a million bucks could
get to 10 million if they live well below their means. Now, should that be the goal? Because to save that much, maybe
they’re only. Maybe they’re only spending. If they’re bringing in. Let’s say it’s a million bucks, they’re bringing in
50,000amonth, they’re saving half of it. So then they get to retirement with $10 million and they’re used to 25amonth
and now they could live off of 35amonth. Are they gonna, are they gonna be happy doing that or they did they just
work? Was the trade off of working too hard necessarily work worth it to get there?
Speaker 1 – 04:56
So these are all considerations and I think everyone, you should have a number. You have to have the why before it.
Because if you think getting the 10 million is going to be solve your life problems, it’s not at all. It may make your life
more difficult because now you’ve kind of isolated yourself from what you can do compared to your friends. Stealth
wealth is the best wealth. And I think in that if you’re on that 10 million dollar net worth, privacy is key because you’re
in that awkward stage. You can’t do the cool stuff that like the 100 million dollar people like fly private because you’ll
go broke like instantaneously if you try to do that 10 million. But you’re probably well far above most of your
colleagues or peers.
Speaker 1 – 05:30
And then it kind of becomes awkward if you turn your wealth into riches, which is like what you see like the cars you
drive, the house you drive, the cool stuff you do, trying to impress other people that you probably don’t even like. So it
becomes almost a paradox of. So I think the intentionality and the reason we’re doing this is like, hey, these aren’t
necessarily good goals. It’s just like what’s the difference in our perspective that we’ve seen between you know, the
10 million, 100 million both have problems, both have hard stuff they have to deal with psychologically. You know,
friendships, privacy, kids, you know, whatever it is, marriages, second marriages, they both all have that. The, the
dynamic of the problems just change. The problems don’t go away. It’s just what pain do they have to deal with
changes as well.
Speaker 3 – 06:15
So yeah, I think the hundred million and then if you want to even kick it up a notch to like 100 million to a billion,
that’s just like a different type of human being. You know, it’s like they’re just wired differently. It’s, it’s, they have their,
they have a different set of problems than somebody that’s at 1 to 10 million.
Speaker 1 – 06:37
Yeah, absolutely. And so, okay, so primary driver to 10 million high income net worth probably or one small to
medium sized exit if they were part of a business or owned a business, potentially part of a startup, that they had
equity and that hit it really big through RSU or through some kind of equity. And usually these people are totally Fine.
Using one financial advisor that’s able to quarterback services of an estate plan or a really good tax person,
insurance person, or you know, not pitching our firm, I am. You have a firm that does it all for you in one house.
Because your time is really the only non renewable resource you have. 100 million.
Speaker 1 – 07:17
Your primary driver is probably equity value had, whether that’s real estate, a business, or if you’re part of like a
private equity fund and you know you’re making millions of dollars a year. And at this point we’ve seen a lot of people
above 100 million, you know, they’ll set up their own family office and the family office is essentially going to do all of
those services kind of in house for them. They have someone on full time salary, several people managing their
public stocks, their prior and this, at this point we see a lot of shift into. They have access to private deals, so private
equity deals and they’re managing, you know, the deal flow and the cash flow and the tax ramifications, et cetera. So.
Okay, well, let’s talk about from a financial planning standpoint. You know, what is a $10 million household?
Speaker 1 – 08:15
What have we seen our priorities and what have we seen are their planning needs. What would you guys say?
Speaker 2 – 08:22
I think typically the number one, I don’t know if this is dependent on net worth, but the number one priority for most
folks is cash flow. You got to have money to spend liquidity. Right. So I wanted to mention earlier, like with a $10
million net worth versus 100 million, typically, correct me if I’m wrong, but $100 million net worth is generally far less
liquid on a percentage basis than a $10 million private investments, real estate, et cetera, businesses. So that’s kind
of maybe not a number one, but up there in the list of priorities in terms of we got to have money that we can spend
to live our lives, no question.
Speaker 1 – 08:54
James, what would you add to that?
Speaker 3 – 08:58
Yeah, I think 10 million probably has more money than they can spend most of the time or than they will spend, I
guess 100 million. You definitely have more money that, than you will spend in your lifetime. And so it’s just a
different set of problems. It’s a different set of stressors. It’s not okay, how can I spend on these things? It’s like,
what can I actually spend on that will bring me fulfillment and satisfaction? And how do I, you know, pass values on
to kids and make sure that my kids aren’t ruined from all the money. I think, I think is the biggest shift.
Speaker 1 – 09:38
No question. I think from a $10 million net worth, if someone is still actively working, we see just breaking it down.
You know, we typically see like a third of their money is liquid and like public market. So stocks, you know, probably
10 to 20% in like cash or fixed income instruments and then a lot of them still have private business interest that
make up a substantial, I think diversification or concentration risk is a huge thing for the 10 million dollar person that
hasn’t exited yet. Because you know, we’ve seen a lot of people worth 20 or 30 million dollars in paper that they have
less than a million dollars of liquidity because everything’s in their business. And so setting chips aside in their
whole life it’s like, well, I can get my best return.
Speaker 1 – 10:14
The business, well, you have one bad year where everything goes under and your whole life’s work has been basically
gone. So that’s a huge consideration. And typically these people have a, you know, 15 to 25 of their money tied up in
real estate, whether that’s a primary home and a vacation home. So I’d say the difference between the 100 million is
that public equities exposure goes down the 20 or 30%. And then private equity and venture capital goes up. That’s
now a 25 to 35 chunk. And someone with $10 million, unless they have an advisor that’s able to bring that to the
table, they just don’t have good access to the good stuff. They would get the junk of kind of on the private markets.
And then private credit would be 10 to 15%, you know, private credit.
Speaker 1 – 10:52
We’re actually developing a portfolio right now that’s going to involve private equity and private credit, but not the,
through institutional offerings. And that’s going to be an exciting thing that we’re going to offer to our higher net
worth, you know, clients because it is much more complex. But the other thing, you know, the 100 million is like
donor advised funds or private foundations. Typically these will make up like 5 to 10% of the net worth. You
accumulate it now it’s how do we govern it for the next generation? Like you said, you’re taking care of the grandkids.
How do we give it, how do we give it away while preserving it?
Speaker 1 – 11:26
And how do we not, you know, essentially we not ruin our life today because if we just show it off and like it’s going
to create problems if you’re not, if you’re, you know, flashy over private. So there’s obviously a sweet spot to reach
there. And then how do we not ruin the next generation by not giving them the gift of handling adversity if they know
their money is kind of set from the get go? So that’s the right values in place, the right skill sets. You teach your
children the money won’t affect them, but a lot of times we see it affects them more than it doesn’t. They lose some
motivation or kind of the it factor behind it.
Speaker 1 – 12:02
So yes, I would say the biggest shift is between going from like a personal advisor to more of that multifamily office
or family office structure and then obviously from public markets to private markets would be the two most common
between 10 million, 100 million. The other thing I would say too is there’s not. Let’s talk about 20 million versus 20
million. It’s not the subject of the podcast. The reason we did 10 to 100 is there is a pretty, you know, let’s talk about
Pittsburgh. At 10 million, you can pretty much do everything you want to do. I mean, if you’re retired with 10 million,
you’re spending 30 to 40,000amonth, like after taxes, you know, between some, probably Social Security coming in
and the interest, you’re able to Safe withdrawal rate 4%. Well, let’s talk about 20 million. You have 60 to
80,000amonth.
Speaker 1 – 12:53
You could do that, but typically you’re not spending that. You’re probably retired but still investing in private deals and
kind of, you know, messing around that world. But lifestyle wise, you’re already flying first class. You’re already doing
all the vacations you want to do. Not a huge. There are some subtle differences between 10 to 20. There’s less
worry, there’s more estate planning ramifications, but there’s not like noticeable differences when you go from 10 to
20. So for there to be. That’s the reason we said 10 to 100. That’s where there’s no difference. Noticeable
differences. And hey, right now anything above 14 million per spouse is going to get taxed at 40% federal level, four
and a half percent. If you live in Pennsylvania state level. Well, okay, if you’re married, that’s 28 million tax free. That’s
72 million.
Speaker 1 – 13:39
If you’re worth 100 million, that’s going to get clipped at 44.5%. That’s over $30 million that’s gone in taxes. Obviously
we want to prevent that, now we got to set up complex trust and gifting strategies for kids, for grandkids, and make
sure, you know, we do that in a way that doesn’t ruin their motivation, that we are tax efficient. That becomes a huge
priority. And then also just making sure that you are maximizing the enjoyment of life. You know, you don’t want to
have any regrets in life as well. So that does require some big. And so we found with the super high net worth
clients, like, it’s natural to make your life more complex, like have all these vacation houses. But when you, and you
think, oh, this is going to be, this is great.
Speaker 1 – 14:25
Well, making your life more complex typically adds a different level of stress because now you have to worry about
even if you have full. So, okay, you have another house. There’s, there’s always that word in your house. Something
goes wrong, right? You have staff to say, oh no, I’ve got that covered. Well, now you have to manage a staff, which
could maybe even worse than managing the problem itself because, you know, now you’re dealing with other people.
Speaker 1 – 14:46
So the more the 100 million, it does open up the door where you can do really cool stuff, but you can really quickly go
in the wrong direction where it kind of works against you, where your life’s so complex now, where you have all this
cool stuff, but now your time is being, you know, your attention and your time is being sucked up in all these kind of
random directions. So we have seen some very happy clients as net worth. They have very structured, you know,
governance meetings, annual meetings. Their kids, they talk about charities, they talk about, you know, who they
want to give. They have their kids involved with that. And they do that from a young age. And we find that’s obviously
one of the most, the best setups for not again enabling kids in the future.
Speaker 1 – 15:29
Any other thoughts on that?
Speaker 2 – 15:31
Yeah, just thinking it’s, you know, it. There’s so many factors involved in these situations, but a big piece of it with,
with at any net worth is the individual or the family’s goals, right? So it just totally depends on what you want to do
with the money. Are you, are you going to retire? How much do you want to spend? What are your philanthropic
goals? What do you want to give to your kids? What do you want to buy? What don’t you want to buy? What brings
you value, what brings you joy, et cetera. So that’s a very key component of the analysis.
Speaker 1 – 15:58
And I would Say the other thing is intentionality behind. And there’s a reason why, like someone that’s worth 100
million from like gambling proceeds, it’s simply going to be studies that show it’s going to be gone. Or you know,
athletes who have earned a lot of money, it’s typically they go bankrupt. I think this all comes back to like how our
brains work with dopamine. If you like, you need more to like feel that rush or whatever. And so people that have
earned it, that have intentionality, I mean, there’s a reason why, you know, some people, they are able to keep it. They
have very structured plans, they’re very intentional conversations. But what we wouldn’t recommend to do is don’t
just pick a number out of blue air. Think about first, like, what do you want out of life?
Speaker 1 – 16:38
What do you want for your kids? How do you want to protect? Do you want time, autonomy? Do you want financial
autonomy? Do you want a vacation house? Do you want the ability to like, give the charity? You want the ability to
start a charity? What motivates you? What is your purpose? And Instead of picking 10, you know, some people are
okay with half a million dollars when they retire. A million dollars because they have very simple lives. And that’s not
any better or worse than someone with a hundred million dollars. I would say just be really intentional about what
you want.
Speaker 1 – 17:07
I mean, someone that’s a school teacher that wants to be a school teacher that has half a million dollars net worth,
we’ve seen, could be 10 times happier than a billionaire that has it all on paper but doesn’t, you know, just keeps
chasing and is not happy. So. So I would say no matter what your net worth goal is, you should have a number.
Because as humans, if we don’t have a number, it’s kind of going to be created for us. If you don’t kind of call
shotgun on that. But more importantly than your number is why. And to figure out why. You got to figure out what
your values are.
Speaker 1 – 17:38
You got to figure out what you want in life, and you got to figure out what’s most important to you and really dial that
in and then reverse engineer because that’s going to then help you make the decisions on of how hard do you work?
How much do you spend now versus save later? What kind of lifestyle do you have? Well, your kids are under your
roof because once they’re 18, studies show like 80% of your time with them is spent now. They’re starting their own
lives. So those Decisions are all key factors. You don’t get to make those decisions twice, so you gotta be really
intentional about those decisions.
Speaker 1 – 18:05
So someone trying to create a $10 million net worth, if you’re making half million dollars, that could be catastrophic
because that could mean you have, you’re working 80 hours a week, you miss every child’s game. All you’re doing is
saving and you’re destroying your family because you’re not literally, you know, scraping coupons for food. And
someone that accumulates $10 million of net worth, that’s making, you know, $5 million a year, that’s just saving a
little bit, when they get there, they’re going to go bankrupt because they’re used to this lifestyle. So it’s very
personalized and you really have to think through thoughtfully of what is your number and why, and make sure your
money is supporting your life by design. You’re not chasing, you know, a certain number because of impressing other
people or, you know, chasing some phantom goal that you’ve created.
Speaker 2 – 18:50
So, yeah, absolutely.
Speaker 1 – 18:51
What are the thoughts you guys have now?
Speaker 2 – 18:53
Just kind of reinforcing this idea that going from 10 to 100, that doesn’t necessarily mean that it’s better for you or
better for your family. Right. So it’s just kind of asking that question of why I, I have. We see some folks that have 10
and they’re gunning for that hundred. And so we asked, why are you sure that’s what you want? Because it brings a
whole host of options in your life and your lifestyle, but it also brings, it can bring a whole host of problems. So let’s
talk about what exactly it is that you want. And maybe again, depending on your goals and your values and things
like that, maybe 10 million is where you need to be.
Speaker 2 – 19:23
You don’t need to gun for that 100 sacrifice all the time with your family, just time in general and when you didn’t
really need to. Right.
Speaker 1 – 19:32
James, anything, any closing thoughts?
Speaker 3 – 19:34
No, it all sounds good to me. We covered it all.
Speaker 1 – 19:38
It’s a very, It’s a very complex. It’s a very. It’s a tough conversation talking about these high net worth because there’s
a lot of stigma behind it, but it’s an important one to have behind closed doors, know what to keep private, know
what to share kids, know how to navigate it all. It requires a lot of skill set and a lot of intentionality, a lot of tough
conversations, courageous conversations. So welcome those and appreciate you joining us and we’ll catch everyone
next week. Thanks for tuning in to our podcast. Hopefully you found this helpful. Really hope this is as beneficial and
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