The alignment of the nouveau riche to generational wealth

Abstract

Generational wealth is built on a foundation of asset accumulation, a contributor to which is savings. The capacity of a nation's ability to save is strongly related to its ability to achieve elevated sustained and inclusive economic growth and social development. The need for this research stemmed from the slow economic growth, declining savings rate and, in particular, the resulting poverty and middle-income traps, which have become of great concern for South Africa. South Africa's National Development Plan (NDP) pursues to address issues of wealth, inequality and economic growth. At the centre of these issues lie factors such as asset accumulation and wealth mobility. The post-apartheid era has seen an increase of new self-made wealth among its growing middle class. A major concern, however, is the conspicuous consumption behaviour that has come with this newly acquired wealth and could be the antithesis of asset accumulation and wealth mobility. This research investigated the alignment of the nouveau riche to transition from new wealth to generational wealth through materialism, future orientation, money attitudes and the resultant behaviour of either conspicuous consumption or asset accumulation. A theoretical model (Figure 2) was created from concepts present in the literature review. This model was used to create the survey that was completed by a sample size of 44 respondents who fitted the nouveau riche criteria. The findings were used to design the new-generational wealth model (Figure 12), a model representing the alignment of new wealth to generational wealth. The results reflected that the nouveau riche are aligned to transition to generational wealth based on their relative asset accumulation and conspicuous consumption behaviour. It also suggested that their asset development behaviour, the foundation of generational wealth, is mediated by their money attitudes, influenced by the nouveau riche's materialistic and future orientation values. The results have theoretical implications, and also provide useful information to consumer-interest groups, banks, retailers, and policy-makers. The insights regarding the money attitudes of the growing nouveau riche segment are of importance in designing product offerings focused on the transition to generational wealth, and to policy-makers who can play a huge role in creating innovative policies that develop, encourage and reward those behaviours necessary to build the overall wealth of the citizens of South Africa