But they fret about their kids and worry that their living standards could dip. It would seem that money does buy happiness, though not a whole lot and certainly not for an overwhelming majority of the wealthy. In fact, a new survey of Canadians worth at least C$10 million - $8.6 million in U.S. money - finds that slightly less than half of them are either ambivalent about or in clear disagreement with the statement "As I have [grown] wealthier, I have [grown] happier."

Sensus, a Vancouver, British Columbia-based market-research firm, conducted the TrueWealth study late in 2005 for T. Stenner Group, an autonomous Vancouver-based multi-family office within CIBC Wood Gundy, the brokerage subsidiary of CIBC World Markets.

Fear for the kids

Although the 165 wealthy Canadians surveyed expressed satisfaction with aspects of affluence such as the ability to "provide advantages" for family members (ranked as the most important aspect by 30% of respondents), the freedom to live where and how one chooses (number two for 6%), and the benefit of "long-term security and peace of mind" (number three for 36%), more than two thirds of them said they were uneasy about their ability to maintain their living standards.

Richard Peterson, a psychiatrist and managing partner of Market Psychology Consulting (MPC), a San Francisco-based behavioral-finance firm that works with asset managers and private-client advisors, sees strong correlations between the TrueWealth report and data from his own surveys. Although the self-made rich generally feel more deserving of their wealth than those who have had it passed down to them, Peterson says his research suggests that fear of a come-down in life-style is more prevalent among those who have had to claw their way up.

The TrueWealth study also shows a prevalent fear of "affluenza" among respondents, with about a quarter of them worried that their children may prove shiftless because of family wealth. For self-made millionaires, the apprehension that their children may lack motivation or direction as a result of their family's success could be connected with the senior generation's desire to stay in control of the wealth they've worked hard to build - such people are simply apt to view everyone, especially their near and dear, as less capable than themselves. Meanwhile similar fears among those who have inherited or otherwise fallen into wealth may be based on personal experience.

"Heirs are often [afraid] that they will be perceived as undeserving and often they do feel undeserving - and paradoxically somewhat dismissive both [of] their wealth and [of] others who are not wealthy," says Peterson. "There is a greater rate of mental illnesses such as substance abuse, depression and anxiety disorders among the children of the wealthy" than in the general population, he adds.

Overall though, Peterson says the TrueWealth study supports his view that wealthy people are, on balance, a bit happier than humanity as a whole. "It's a very small effect, but increasing wealth does increase happiness," he says.

Picking your Joneses

But it seems that wealth or financial status relative to one's neighbors is as important to happiness as wealth in absolute terms. "We all have an internal "comparator" that we use to judge how well off we are relative to others," says Peterson, pointing to a 1998 study of 155 students and 79 staff at Harvard�s School of Public Health that asked, among other things, if respondents would rather make $50,000 a year in a society where the average annual income was $25,000 or pull in $100,000 where the average income was yearly income was $200,000 - with purchasing power being equal in both societies. "Many" - 52% of the students and 35% of the staff members - "chose higher relative income over a higher income level in spite of the fact that that higher relative income came at a very big price in terms of real absolute income levels," says Peterson. "The conclusion would seem to be that relative income and income levels are of approximately equal importance in determining decisions," says Peterson.

A more recent study suggests that relative wealth may in fact trump absolute wealth as a determinant of happiness - at least for the general population. Last year, Glenn Firebaugh, a professor of sociology at Pennsylvania State University and graduate student Lara Tach measured the age, total family income, and general happiness of Americans from 20 to 64 years old using analysis from the 1972-2002 General Social Survey. They controlled for health, education, the effects of aging, race and marital status. Happiness was measured using a self-report response of "very happy," "pretty happy,"or "not too happy."

In sum, they found evidence of both relative and absolute income effects, but that relative income was more important than absolute income in determining happiness, especially weighed against peers of the same age.

"Without controls for age, physical health, education, and other correlates of happiness, the higher the income of others in one's age group, the lower one's happiness," Firebaugh says in an August 2005 press release from the American Sociological Association.

It isn't everything

With those controls in place, however, Firebaugh and Tach found that physical health was the best single predictor of happiness, with income or wealth level coming in second, followed by education level and marital status.

MPC's Peterson might have added family - not just marital status - as well as religion and community development and involvement to the happiness mix. "Charity and family are high priorities of the wealthy, as among most people taking my survey," he says. "I find that 'family' is named by more than 50% of my respondents as their number-one priority in life with 'religious community' and 'finances' taking second and third place."

In fact, the TrueWealth report suggests that philanthropy plays a significant role in the lives of wealthy Canadians, with 69% of respondents having donated more than $100,000 to philanthropic causes or organizations in the past year. Children's and arts-related charities were the most chief recipients of that largesse.

"These activities serve to normalize their wealth among other community members and, in a sense, makes them perceived as less detached or different," says Peterson. "There's nothing like charity to show empathy and connection to others."

As for leisure-time activities of the wealthy, 53% of those responded to the TrueWealth survey rated travel as their favorite pastime. Golf, a favorite indulgence of 39%, came second. Meanwhile 85% described themselves as collectors, with 90% of them collecting art, 72% collecting antiques of one sort or another and 69% collecting wine.

Keeping track of what makes its clients tick is an important part of T. Stenner Group's efforts to improve advisor-client communication, says Thane Stenner, the advisory group's first v.p. Much of the information provided by Sensus' survey confirms what the group already knew about their clients, but for the "economy as well as the business and investment communities," he says, it sheds "light on what drives the ultra-affluent in their decisions on investing and lifestyle." More important, he adds, the report "provides a benchmark for [ultra-high-net-worth] individuals to compare themselves to their peers."

Stenner describes T. Stenner Group as "a hybrid between a brokerage[-based practice and U.S. registered investment advisory], with the bulk of [our] revenue coming form asset-based fees and retainers." He says the group provides investment and wealth-planning advice to about 30 families with an average net worth "approaching C$50million or more," and he expects that number to reach 55 to 60 such families "over the next three to five years." Stenner says the group makes a point of offering only non-proprietary managers from CIBC Wood Gundy's investment platform "to avoid potential or perceived conflicts of interest."

CIBC Woody Gundy and CIBC World Markets are part of Toronto, Ontario-based Canadian Imperial Bank of Commerce. -FWR

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