What is old money?
Old money refers to inherited wealth, which has been around for several generations. The term has slightly different meanings in the ‘New’ and ‘Old’ worlds.
The opposite of old money is nouveau riche, new money or parvenus.
In the United Kingdom, when people talk about old money they are referring to members of the aristocracy – Dukes, Earls, Marquesses, Viscounts and Barons – whose families have been part of the landed gentry for hundreds of years.
In the United States, old money refers to rich families that have been around for several generations, but are not aristocrats.
In the past, being rich because you inherited it was more prestigious than being self-made. This is not the case today.
In both countries, the term describes rich people whose families have been able to maintain their wealth over several generations.
According to the Macmillan Dictionary, old money refers to:
“Rich families who have been rich for several generations, especially families who also have a high social status.”
Old money might also refer to locations rather than individual families. In the United States, the Upper East Side of Manhattan is associated with old money, as are Boston’s Back Bay and Beacon Hill, and the Grosse Pointe area of suburban Detroit.
Today’s old money was yesterday’s nouveau riche in America
Ironically, old money families in the United States today are descendants of people who were described as ‘nouveau riche’ – 19th century bankers, builders and industrialists. These people started creating their wealth in a new way, and not as traditional (Gilded Age) landowners.
Pulitzer Prize-winning American novelist, short story writer and designer, Edith Wharton (1862-1937) referred to industrialists as ‘brazen new money’. Today, their wealthy descendants are part of America’s old money.
American pioneering socio-anthropologist William Lloyd Warner (1898-1970) said in the 1930s that the upper classes in the United States were divided into two types:
1. The upper-upper class – they had been rich for several generations and were viewed as quasi-aristocratic.
2. The lower-upper class – they did not come from traditionally wealthy families. They built up their money from businesses and investments rather than inheritance.
During the first half of the 20th century, the upper-upper class had more prestige than the lower-upper class. This has since changed.
The following surnames are associated with old money in the United States: Roosevelt, Cabots, Lowell, Du Pont, Astor, Rockefeller, Griswold and Forbes.
Old money in the United Kingdom
In Great Britain, old money tends to refer just to the landed gentry – aristocrats and members of the nobility who traditionally have lived off the land and inherited their wealth.
The Rothschild family set up finance houses across Europe in the eighteenth century. The family was ennobled by Queen Victoria and the Habsburg Emperor. Throughout the 19th century the Rothschilds controlled an immense fortune, worth trillions of dollars in today’s money.
Over the past two centuries the family, to some extent, has maintained its wealth. The British, however, do not consider the Rothschild family as old money.
Private banks’ relationships with old and new money
Elaine Moore wrote in the Financial Times in 2012 about self-made multi-millionaire Charlie Mullins who founded Pimlico Plumbers. When asked his opinion of financial advisers, Mr. Mullins said:
“I haven’t turned to banks or financial advisers. I want no involvement with them. For me, they are crooks in suits.”
Although his views may seem extreme, several private banking service providers, according to Ms. Moore, admit they find it hard establishing a relationship with ‘new money’.
Wealth managers insist their services are just as useful to people who have made their money as those who have inherited it.
Ms. Moore quoted Philip Smith, head of Wealth Advisory at Barclays, who said:
“Entrepreneurial individuals have enormous talent and capacity which is best focused on growing their business interests . . . In a nutshell, wealth planning for first generation entrepreneurs is around governance and succession planning – to prevent the rags to riches and back to rags in three generations story.”
The problem wealth managers have with new money people is persuading them to extend their time horizon. Their old money clients are used to planning several decades ahead. Self-made entrepreneurs do not generally look further than ten years into the future.
Might it not be that new money people are better at wealth management than the so-called professional wealth managers of private institutions? Maybe self-made millionaires are aware that wealth managers are not judged by their employers according to how well their clients’ investments perform, but rather by how many new customers and additional assets they bring into the company.
Video – The ‘Old Money Way’
In this video, business adviser, consultant and trainer Keith White explains what ‘The Old Money Way’ is – a philosophy developed by rich people who seek to move ‘beyond money’ for its own sake and use their wealth to contribute to society.