Hidden Wealth How Do Consumers Perceive Wealth and Its Management

According to mainstream financial theory, rational consumers optimize the risk-reward ratio of their wealth by allocating wealth to various assets. Many social-psychological theories explain consumer behavior as substantially cognitive processes. Within the context of consumer wealth management, our article answers two research questions. First, how do consumers perceive wealth in general and different asset classes, in particular? We also investigate how various sources of values and experience influence consumers’ wealth management related decisions. As we explore empirically various wealth perceptions and motives, we address the second research question; how well do empirically discovered motives relate to those proposed by financial and social psychological theories? We collected empirical data in Finland with eleven financial expert interviews, six consumer focus group discussions and a survey questionnaire responded cumulatively by 702 consumers and 43 financial experts. Motivated by the empirical findings, we introduce the concept of hidden wealth to describe consumers’ wealth management behavior. According to our findings, consumers have predominantly other motives than those proposed by financial theory, and their behavior is significantly influenced by several factors. Security appears as the dominant goal and motive of wealth management. Even in the case of financial assets related decision making, the importance of social values, past experience, feelings and intuition appears to override the importance of risk – return thinking as the source of behavioral motives. We also found differences in how various wealth categories are perceived. A distinctive feature of our study is that we collected empirical data from two independent sources. The underlying tone of the wealth perceptions is shared by consumers and financial experts. Finally, we discuss the significance of our findings by relating our findings to relevant theories as well as the implications of our research both for research and practice.