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In the first of a series of articles on wealth, Bruce Sheppard probes what wealth actually is and details how he measures wealth through a formula

In the first of a series of articles on wealth, Bruce Sheppard probes what wealth actually is and details how he measures wealth through a formula

By Bruce Sheppard*

Many claim to write with authority on the topic of wealth, and for those who are wealthy, or aspire to be, this thought piece will either resonate or it won’t.

Wealth means different things to different people. For some it is a state of mind. For others it is experiences and knowledge, or the joy and richness of relationships. The most identifiable by all is the tangible measurement of wealth, money and assets.

The only truly wealthy are those that have elements of all of this, however the most critical one is state of mind. If you do not think you are wealthy, no amount of knowledge, experience, cash, assets or relationships will make you so. I guess we have all met the fortunate discontents in society.

So how about I try to define wealth as a formula:

Wealth = (attitude* (knowledge + experience) *networks) + resources.

I view money as an addition not a multiplier to wealth. The exponential impact on wealth for me is experience and networks levered with attitude. It may also be better to think of resource accumulation as the result of attitude knowledge experience and networks.

As the saying goes, money is not everything, but the corollary that it beats the alternative is also probably true. Money however certainly does not bring you happiness, nor does conspicuous consumption. How many first class cruises can you endure?

If the passage of others is a guide, I with this as my guide, examine the components of my ‘formula’.


If your parents instilled in you self-confidence, a desire to try the unknown, a sense of independence and the courage to make decisions and not sweat the little things or overly worry about things when they go wrong, they have probably done you a great favour.

If in addition they have given you a work ethic, determination, along with a good dollop of thrift, then they have doubled your attitudinal gift.

And if also by passage of birth and upbringing your mouth was free of a silver spoon and if this instilled in you a desire to improve your own and your family’s lot, then likely they have delivered you the last component, ambition.

So key characteristics:

  • Self confidence
  • A love of risk
  • Focus and patience
  • Determination
  • Thrift
  • Ambition and aspiration

And finally an overarching belief that you will always be free to do as you wish, for whom you wish, when you wish.

If you don’t have the right attitude you can learn it, but it is much harder because these attitudes have to be behavioural and instinctive.


Education has its place, but the perpetual student accumulating PHD’s would likely have a single dimensional view of knowledge, deep and narrow. Rich in its own way, but those who become wealthy across all facets of wealth acquire a wide range of knowledge across many disciplines, an awareness of what they don’t know, and the knowledge of where to find out.

Knowledge comes from many sources, formal courses, wide reading, trying things, and conversations. One of our graduates, who years after leaving us, sent me an email saying he learned more in his year with us by osmosis, and being exposed to how we problem solve and think than he had learnt before and that in his new job he was ahead of his peers by a wide margin. He had the openness to absorb ideas, toss them around in his head, challenge them, filter them and apply them. Knowledge only flows when you are around people who are prepared to share and if you have an open challenging mind.

Knowledge isn’t instant. It accumulates.
Its accumulation never stops.

Experiences test and refine your knowledge. Over time, right, wrong and grey appear clearer.

Sometimes knowledge comes from unexpected circumstances and occurs in spades when you least expect it. For ten years I ran the New Zealand Shareholders' Association, and in that time I meet many CEO’s, Chairmen and Directors of large organisations. I had no idea of their thinking and the environment in which they operated. I judged them as idiots based on the poor outcomes achieved by them compared to the outcomes that were being achieved by small, well-run businesses in the SME sector. They took the time to educate me, and I them, and we all ended up better as a result of it.

A number of them I now do business with. The conversations around commonly held issues that you will have with others not only widens your knowledge, it leads into the next element, networks.


To build deep networks requires you to talk with people and exchange ideas. Then finding something tangible to do with each other to demonstrate to each other common views, values and purpose, and when you do this, those networks become, what I ridiculed in public companies so roundly, your very own ‘old boys and old girls clubs’.

Without deep wide and trusting networks it is almost impossible to scale knowledge. Without engaged relationships it is impossible to achieve much at all. Many hands make light work!

In terms of the importance of networks a conversation with a public company director went like this. “If you think you are so underpaid for the risk you are taking, let someone else do it, plenty are willing.”

After much banter, it came down to this. “I do this because if I didn’t, I would not be connected and I would lose my sense of purpose and relevance”.

Everyone has many networks, clubs, sports teams, families, professional associations, work mates, shared businesses… it goes on. Each relationship is in context with the only common denominator being you. If you can plug these multiple networks into each other with multiple points of contact they become stronger.

Have you read the book ‘Outliers’, by Malcolm Gladwell? One interesting story in this book was the story of a small American town. It had a population that lived longer than anyone else in the world. Was it environment? Was it genealogy? What the hell was it? It came down to the fact that the population cared about each other. They all addressed each other in the street. They all knew each other, they were all connected. In short, the town was one big supportive network. The people had somewhere they belonged.

Belonging and networks are fundamental to your physiological and economic wellbeing.

Successful people create these though consistency and by being authentic. Networks require trust.  


Resources are more than a score card. They are the underpinning in a tangible sense of your security, and an enabler of the choices you wish to make. To some, control over resources is power, for others it’s security. Some simply see it as a game to get more. As I have said before, that which you chase runs, so for me the pursuit of more for its own sake is pointless. Wealth without purpose is to shun the privilege society has given you. In itself to me this is a breach of trust. More on purposeful wealth another time.

If resources enable choice and freedom, then the first level is to have enough to live. Until you have this, you will never have freedom or choice, unless your wish is to live on the street (its own freedom). Enough in this context that you can live as you wish until you live no more. This number is not that hard to work out. The hard bit is defining how you want to live. Some need a really big number, others very little. But getting to the freedom of having the security to cover yourself without having to do anything at all is immensely liberating. The more you wish to consume the longer it takes to get to the first level of actual freedom which then enables you to really make choices.

Once you have proactive choice, in effect you have the power of freedom.

Then your choices fall into; do something useful, purposeful, or one of two basic approaches to power.

In terms of power, one approach is characterised by the description ‘f**k off’ money. This is enough to tell anyone at all to go away you don’t want to deal with them and if necessary defend that decision. This is about personal empowerment. It allows you to be authentic, in that you don’t have to grovel to others, it allows you to prune your network to those who matter. If you have a bit more than this level of economic power you transcend to what is called ‘f**k you’ money. This is the level of wealth that allows you to exert power over others.

Eventually if you achieve enough you achieve indifference, or, resources to you cease to be relevant.

You have enough, you can do what you wish, and you have no desire to exert power over others, because your self-confidence and freedom is enabled to the point where the thought of exerting power over others is pointless.

You have reached the point and mean it when you say, “It’s not the money, it’s the principle”. If you think many say this and mean it, you are wrong. It is for the vast majority the money, not the principle. You get to judge character in adversity and disputes. I have seen a fair bit of that too.

*Bruce Sheppard is founder and managing partner of accounting firm Gilligan Sheppard. He's also the former chairman of the New Zealand Shareholders' Association. This article first appeared here and is used with permission. 

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Nice Bruce. Some good stuff in here. I'm lucky enough to be most of the way there. That in itself, considering my start point, is success enough for me.

Beautiful Bruce.

I wondered where you disappeared too. Loved your past questioning of business ethics of company operations and particular share floats etc. The SFO could have done or do with you, but we know how it works. After achieving self sufficiency at 41, I thought the best way to contribute was public service. I was so wrong. Democracy is quite broken, with little accountability and largely administrated by a ship of fools.

Look forward to your ongoing commentary; especially about purposeful wealth.

I only have one key characteristic - thrift. I guess I must be impoverished.

or you have financial discipline

Stimulating. Whats your reaction to Trustpower losing all their generating capacity in one of their small hydro schemes earlier this year due to a bearing failure on a turbine? Low or poor maintenance? Bad luck? And why was their not a contingency in place such as a gate of the headstock to stop the dam draining completely while the turbine was repaired...they lost millions!

You see it doesn’t matter. And why? Because they are not accountable, and in that sadly, they are not unique. In the good old days the staff reported to the executive, the executive to the board, the board to the shareholders. Nowadays the executive report to nothing but their own self interest, self reward coupled with scarce self awareness. Who asked any questions about ACC’s cornerstone in Feltex. Was it $27mill straight down the gurgler. So a $million down here or there, what does it matter if my big executive package remains unaffected. Ditto Fonterra, ditto Fletchers, ditto ANZ, ditto on and on. There it is.

Once you have proactive choice, in effect you have the power of freedom.

A very useful thought, that.

I must admit being very sceptical when I first read the title "Articles on wealth". My scepticism was ill-placed, this is a great article with many very pertinent points, thanks Bruce, I avidly look forward to your next piece.

This opinion piece mentions the word networks 15 times yet hardly talks about work at all. It is as if networking is the most important thing in the world. It is work not networking that will make you happy and wealthy and set you free.

I generally avoid all unnecessary networking. The last thing I want are people wanting to network with me, phoning me up or visiting me. I suspect most of the commentators here are the same to varying degrees if they are honest.

The article suggests that the networking aspect is a multiplier on your experience + knowledge. To me it makes some sense. You in your team at work where there happens to be people with similar knowlege + experience - if you can picture that a coworker has a strong networking factor you should certainly believe that will sooner or later it would open them to opportunities that build finances and valuable experience.
You probably will miss out, relatively.
Networking could be painful for you and detract from your day to day happiness, so its totally valid to avoid it, as part of your happiness/wealth balance

About twenty years ago I used to be a supervisor in an IT company. The company went through some ownership changes and one day I went to work to find many of my staff had been made managers. Obviously some serious conspiracies, brown-nosing networking had gone on behind my back unawares. Suddenly I had to do twice the amount of work as before while they went to "workshops". Sadly a couple of years later many of them were made redundant. Middle management first to get chop chop.

It's an 'awakener' because it inspires the state of mind required to wake up to what real wealth is.
Rather than just the dream of having more $ and assets which is certainly not wealth, it's only resources.
I think this bit was lost on you Zachery


Zach, work alone cannot bring you true wealth, if you work 40 hours per week and you want to earn more you can only get a higher hourly rate or work more hours or a combination of both. Soon you will run out of hours or top out your hourly rate. For true wealth you need to network and make a small (margin) of what others bring to your business. (value added by others - what you pay them = your margin). You can never run out of people adding to your business, hence increasing your income.
Secondly it is foolish to think you can know everything there is to know in your business, we need others and when you get other to work for you who know better than you, you become better off.

Networking is the main reason parents are killing themselves to get their kids into the top schools. Your looking at the top business owners and the high end earning parents there and the networking will get your kids up the ladder and into those companies when they leave school. Its simply an "Old Boys Club" but obviously at a much lower level than say the top universities in England.

Exceptional analysis and equation Bruce.
It's an 'awakener' because it inspires the state of mind required to wake up to what real wealth is.
Rather than just the dream of having more $ and assets which is certainly not wealth, it's only resources.

How about:


"awakener" give me a break. Anyway are Frazz and ThePropertyCycle one and the same?

W = health + family/friends + community/environment.

You can be wealthy in many ways Zach, wealthy in money, wealthy in family, friends, wealthy in health, wealthy in spare time etc…

For me W = $ does not work because what good is it if I have $100 million but no time to enjoy it because it takes me 100 hours a week to sustain that $, my wife left me because I neglect her I and die at 50? (Jobs is not my idol) I much rather have $10 million, work 20 hours a week and have my health and family and friends to travel the world with.

Family, friends, health and spare time is not wealth. In the business world, wealth is a measure of financial resources and this is a business news site that deals with these sorts of things. These other things are rather irrelevant and unquantifiable. They are possibly an indication of wellness but even then I am not so sure.

I rather suspect that there is some sort of hidden agenda going on here. Some sort of social conditioning in the making. We could transform and pacify society if we convinced the poor people that they are in fact wealthy, just not in financial assets, maybe in spare time or whanau?

Who is more wealthy than Z, someone worth 10 million but on life support, or another in rude health with $100 in their pocket and a small sail boat.? But as you probably don't enjoy community activities or even the great outdoors we could argue all day long.

health is not wealth? can't enjoy your money if youre dead

I just don't think we can go down the route of valuing non financial assets as units of wealth. They are more like blessings. How can we compare this type of "wealth"? Is an old person worth less than a young one or a blind person more than a paraplegic an intelligent girl more than a pretty one? It just gets silly and is of little value.

I think you're doing semantics, my point was that I'd feel wealthier working 20 hours/week being healthy and enjoying life rather than working 100 hours/week and having no free time to enjoy my money and spending my heath doing so

So if we can't put a dollar value on health, it's worthless? What about the cost incurred of being unhealthy or the opportunity cost forgone due to bad health?

Or is it W=(A*N*(K+E)+R

If you've got your health, you've got just about everything.

A good article, however you have forgotten the importance of good health , if your health is not good, everything suffers and in the end collapses .

The moral of the story, look after your health first