What wealth can't buy

Jul 27, 2023

If I throw you the word “Hilton”, I’m guessing Paris Hilton and hotels instantly comes to mind.

But who remembers Conrad Nicholson Hilton, founder of the Hilton Hotels?

Here’s how the New York Times obituary described him.

A cautious bargainer who was careful not to overfinance. A flawless sense of timing, he had an instinct for recognizing the potential of an investment. His rise was due less to his skill as an operational hotelier, than to his financial ability. He was not concerned with the minutiae of day‐to‐day hotel operations: he bought the Plaza without inspecting its rooms; he had the briefest acquaintance with the Waldorf Astoria before he acquired control of it. He surrounded himself with top-rated executives to whom he gave a free hand.

JAMES GRUBER, assistant editor at Morningstar Australia, recently commented on the family drama and has some learnings from it.

The Hilton's story, well depicted in J. Randy Taraborelli’s book, The Hiltons: The True Story of an American Dynasty, is akin to that of the Succession television series, albeit a true and arguably better one.

It can be read as an all-American tale of rags to riches or a cautionary one of how that journey may not bring happiness.

More broadly, it has some great lessons about what wealth can give us and what it can’t.

What wealth can buy:

  • Goods 

From necessities to luxuries. Money can be used to buy everything from basics such as food and clothing, to houses and cars, and more elaborate purchases such as boats and holiday homes. In Conrad Hilton’s case, it allowed him to buy a preposterously expensive and elaborate house in Bel Air, Los Angeles. Recently, the house listed with an asking price of $250 million.

  • Health

Money provides better access to doctors and healthcare, and leads to increased quality of life and longevity, according to many scientific studies. There are poor who cannot even afford to buy medication.

  • Social Network

Having money can get you connect with other people with money. This can lead to job and other opportunities that you may not have had otherwise.

  • Time

Money can provide for an early retirement and give you the time to do what you like.

What wealth can’t buy: 

  • Social Connections

Recent psychology studies point to three pillars of life satisfaction in retirement: health, money, and relationships. On the last pillar, the single biggest predictor of happiness is your relationship with your spouse or partner. Close behind is having a social network – that is, plenty of friends who you catch up with on a regular basis. Money can’t buy these social connections.

  • Wisdom

 Human beings have two types of intelligence. One is called fluid intelligence which is our ability to think abstractly and deal with complex information. It peaks early in life, at around the age of 20. The other is called crystallised intelligence, which is where we age and gain more experience of the world, and that helps us to make better decisions.

Money can’t buy either of the two intelligences.

  • Happiness

When Conrad Hilton died in 1979, he willed just $500,000 to each of his sons, and $10,000 to his daughter, the rest of his estate going to the foundation.

Francesca, Conrad’s daughter, fought her father’s will and lost, though received $100,000. Francesca ended impoverished and living in her car, before dying in 2015.

Barron, son, contested the will and won the right to substantial shares in the company stock. Then, in 2007, emulating his father, Barron decided to bequeath most of his wealth to the foundation.

Conrad Junior, son, became an alcoholic and drug addict, and died aged 42.

Problems have followed the Hilton clan through the generations. So much so that Paris Hilton, famous for an explicit video tape and not much else, is regarded as one of the more ‘normal’ Hiltons left. As the Hiltons demonstrate, wealth has a way of bringing as much misery as it does happiness. Put another way, it can bring out the best and worst in people.

  • Freedom

A common refrain is that money can give you freedom. It can certainly provide financial freedom. It can alleviate concerns about getting food, shelter, and other things.

As for freedom more broadly, I’m not so sure. In my view, real freedom comes from not being dependent on money or anything else. By this definition, none of the Hiltons were free as all of them were dependent on wealth, as well as the source of that wealth, Conrad Hilton. I’d argue that generations of Hiltons have been trapped rather than freed by wealth.

Buddhists may have it right. They say that attachment (or dependency) is the root of all suffering. That letting go of all attachments is the key to contentment.

As investors, we’re in the game of building wealth to secure our financial futures. The tale of the Hilton family is a nice reminder that wealth can serve us, or we can serve it. And that we get to choose.

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