Why the Heritage process?

THI CEO and co-founder Rod Zeb talks about the reasons he and Perry Cochell created The Heritage Process, and describes what it does for individuals and families.


Why The Heritage Process? from Brad Haga on Vimeo.

So, comb your hair!

Creditworthiness may be linked to looks
A credit score can tell a lender a lot about a prospective borrower, but so can the borrower's looks, a new study says. People who are perceived to be trustworthy are more likely to have a higher credit score and pay lower interest rates on loans, and are less likely to default, according to the study by Rice University in Houston, Texas. Even when hard facts such as credit scores are available, people rely on an assessment of trustworthiness to decide whether to make a loan.
"It turns out that if you look trustworthy, you're more likely to get a loan," said Jefferson Duarte, a professor of real estate finance at Rice University, one of the study's authors.
Tue Mar 17, 2009
Reuters

Fewer by the day

The numbers are in: Millionaires are getting clobbered by the financial crisis.
The population of millionaires in the U.S. fell 27% last year, according to a study by Spectrem Group, the biggest percentage drop since the wealth-research firm started collecting its data about a decade ago. The Chicago firm’s millionaire population study showed that the number of households in the U.S. with a net worth of at least $1 million (not including primary residences) dropped to 6.7 million in 2008 million from 9.2 million in 2007.

The number of households with investible assets of at least $1 million sank 26% to 4.4 million from 5.98 million. Households with a net worth of $5 million or more also took a hit, with the ranks falling to 840,000 from 1.16 million.
The population of millionaires is now at levels last seen in 2003-2004, meaning that the economic crisis has all but erased the millionaire boom of the past five years. “There’s no question that the crisis has had a huge impact on wealth,” says George Walper, president of Spectrem. (Official data from the U.S. census won’t be available until 2011.)
The study also showed that nearly half of all millionaire households had lost more than 30% of their net worth, with 17% saying they had lost 40% or more.
Spectrem’s study is based on a statistical model which tracks the portfolios of wealthy investors and factors in the changes in value for the broad asset classes they hold. The changes in value are calculated on a weighted basis, reflecting their importance in the portfolio.

A silver lining in a very dark cloud

Monday, March 23, 2009
Washington Times
Happy days are here again!
In his occasional messages to Americans trying to put a happy face on the economy, President Obama has been missing an opportunity. He should consult Chris Ruhm, an economics professor at the University of North Carolina at Greensboro, whose study of economic downtowns for the past 20 years found that a deteriorating economy inspires people to improve their health. In short, as the March issue of CFO magazine reported, Ruhm's research shows hard times can actually be good for you.
How so? Ruhm found that “people actually eat healthier, overall, during a recession, and they are less likely to be obese,” possibly because they eat out less frequently. He also said people exercise more when times are hard because they have more time and, feeling more powerless, want to take control of other areas of their life, “so you take steps to get healthier.” He told CFO magazine that a one percent increase in the unemployment rate reduces mortality rates by half a percent, with heart attacks decreasing by slightly less than a half a percent. Traffic deaths decline by 3 percent because fewer people are commuting and drinking is down. And there are fewer smokers, which in the long term has a big impact on mortality rates.
Things just get better and better. In a recession, the professor found, deaths from flu and pneumonia decline, as do cases of acute medical conditions like back problems that may be stress-related.

Help, We're Running Out of Rich People

That, at least, is the view of Rep. Michele Bachmann (R., Minn.). The congresswoman says the Obama administration is plotting to divert money from Republican to Democratic districts and plans to tax the wealthy (or those labeled “wealthy”) to fund the windfalls.
“I don’t know where they’re going to get all this money because we’re running out of rich people in this country,” she said, adding that the Obama folks have labeled as “big evil” anyone with joint income of $100,000 or more. “And I truly believe that’s going to go to $65,000 or more…and they’re going to be taxed to the hilt.”
Ms. Bachmann is right about one thing: the population of rich people–no matter what the income or wealth cutoff–is most certainly declining. All you have to do it look at the stock market, real-estate prices, business values and the lack of liquidity to know that 'Richistan' is a smaller place today than it was a year ago. How much smaller remains to be seen.
Yet she is right that the wealthy are coming in for higher taxes. The weekend brought confirmation that to reduce the deficit President Barack Obama hopes to raise the top tax rate to 39.6% from 35%, raises taxes on the investment gains of private-equity and hedge-fund chiefs and the rate for capital gains and dividends.
The disappointment will come when there are very few capital gains, dividends or high-end salaries to tax. I would bet that most of the wealthy will be reporting losses for last year and 2009, rather than taxable gains.
In short, the trouble isn’t that we are running out of rich people. There are still millions of millionaires in America. The problem is that the wealthy are running out of taxable income.
http://blogs.wsj.com/wealth/2009/02/23/help-were-running-out-of-rich-people/

Benefits of The Heritage Process

The Benefits of The Heritage Process from Brad Haga on Vimeo.

Just thinking

You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it. 



In Tough Times, Advisors Focus on What Will Bring Results

It is interesting to see how many indicators are pointing to a resurgence of the recognition of the importance of the advisor / client relationship. Advisors looking for work right now are turning away from large, transaction-driven firms in droves. In an interview this week, William D. Cohan, a former senior M&A banker on Wall Street and author of The Last Tycoons: The Secret History of Lazard Freres & Co., said:

"It is no coincidence {given the current economic meltdown} that the smaller, more-focused firms—the ones that are closer to their clients—are being flooded with resumes."

Advisors are going where relationships are valued. As a result, they will thrive, their clients will prosper, and the firms for which they work will grow– even in these tough times.

Well, we all have to sacrifice!

Even though the market for collectible wines is slumping, Sotheby’s recently announced it will sell off 9,000 bottles in two auctions in March and April. The sale is titled “Classic Cellar from a Great American Collector," and some believe it is from the storied McClendon collection. An article in the San Francisco Chronicle quotes experts saying that lot prices for wines at auction have fallen as much as 30% since the summer. Some bottles, like 1986 Leoville-Las-Cases, averaged around $360 a bottle in the past two years but are now trading closer to $200. (For those interested in current wine prices, Steve Bachmann of Vinfolio has an informative blog analyzing auctions, valuations and advice for sellers and buyers. Link below.).
The McClendon collection may fare better than others. It features more than 1,500 bottles of Domaine de la Romanee Conti–a favorite Chateaux of the nouveaux that has held up relatively well in price. The collection also has plenty of Mouton Rothschild, Margaux and Lafite, also blue-chip names.
What is more, Sotheby’s is hedging its bets by splitting the auction in two, with half being offered in New York and half in Hong Kong. While U.S. collectors are pulling back, Hong Kong collectors have proven more resilient, with recent auctions there posting healthy results. (Sotheby’s is shipping 4,000 or more of the bottles in temperature-controlled containers to Hong Kong, something it has never done before).
Mr. McClendon may be the biggest wine seller so far in the financial crisis, but he most certainly won’t be the last. With many collectors running light on cash, we suspect more and more will turn to their wine cellars in search of real liquidity.
http://www.vinfolio.com/thewinecollector

Could you repeat that?

How was it you said that The Heritage Process fits into the planning sequence?

That's easy: there are three elements to effective multi-generational planning:

• Element 1– Financial Planning, which prepares and protects your assets during your lifetime;

•Element 2 –Estate Planning, which prepares your assets for your family; and

•Element 3–Heritage Planning, which prepares your family to receive their inheritance (and which includes far more than just your assets).

Pity today’s trust funders.

Their bright futures of easy money and endless leisure went up in smoke with the stock markets and financial crisis. They have seen their future Hamptons homes and Aspen villas crash in value, their charitable foundations get poorer and their bling budgets drastically curtailed. Some may not even get to replace their Bentleys this year.Then there is the group we might call Bernie’s Kids–the economically orphaned
trust funders whose parents lost money in Mr. Madoff’s fraud. We have read about dozens of foundations that lost millions of dollars in that alleged Ponzi scheme, and while most were created for philanthropy, some are vehicles for passing money from parents to their children.
Trust fund kids everywhere are up in arms. And in Palm Beach, Fla., they took matters into their own hands. According to an article in the Palm Beach Post, several teenage boys claimed responsibility Sunday night for festooning Bernie Madoff’s front yard in Palm Beach with toilet paper. The boys said they were “acting in retaliation after they lost their trust funds to the accused swindler” and that their act of toilet-paper justice was sanctioned by their parents.
By the time Palm Beach police arrived at the home Monday morning, the toilet paper was gone and the housekeeper chose not to make a police report, police spokeswoman Janet Kinsella said.
Among those who oppose inherited wealth, like Warren Buffett, the Madoff fraud might actually have a silver lining. While no one likes to see wealth destroyed, some may see Mr. Madoff’s impact on trust funds as a healthy corrective to inherited wealth and dynasty. Mr. Madoff may have finally achieved what Paris Hilton couldn’t–to limit the damages from unearned family money. It may even force some of today’s wealthy offspring to consider more drastic measures for their future–like working for a living.
Of course, it is a tragedy when anyone gets defrauded–whether the wealth is earned or inherited. But rather than this Halloween prank, which seems so, well, Middle School, couldn’t they have been more constructive, or least creative. Perhaps exercising their constitutional right to petition the government for some of that bailout cash?

From Wall Street Journal

In depth information

Want to learn about The Heritage Process? Co-creators Rod Zeeb and Perry Cochell have written a powerful, informative, entertaining and completely original book, called Beating the Midas Curse.

People have said some pretty nice things about it:

...a wonderful contribution to the field of gift and estate planning. -- A. Charles Schultz, President, Crescendo Interactive

"Couldn't put it down. What a terrific book" -- P. Binnion, National Sales Manager for Financial Services Firm

"You need to give away a box of tissue with every book-it's so powerful." --Sharon Porter

For more information, or to order a copy (tissue is extra):

http://www.amazon.com/Beating-Midas-Curse-Cochell-Rodney/dp/1933694009/ref=sr_1_1?ie=UTF8&s=books&qid=1233636734&sr=1-1

You've Already Done Your Planning? Then, please watch this.

Untitled from Brad Haga on Vimeo.

Is The Heritage Process for you?

Is The Heritage Process for you? Only you can decide. Fortunately, making that determination is easy. Just take a few minutes to answer the following questions:

1. If you could look into the future 50 years, and you could see your family gathered together, what would you like to see? It is usually easy to say what you don't want to see. For example, most folks do not want to see only a few of their family getting together, or that some family members are living unproductive lives. When you look into the future, and see your family, what kinds of things would you like to see, and what kinds of conversations would you like to hear?

2. Now, think about the financial and estate planning you have done. How far will that planning get you towards the picture of your family that you just described? Hopefully, it will pass your money into the future. But, does it accomplish the other parts of what you would like to see in your family 2 or 3 generations from now?

If your existing planning does not get you all the way to what you would like to see for your family in the future, then we invite you to explore The Heritage Process. This proven process will help you pass your values, standards and principles to future generations, and will work with your financial and estate planning keep your family and your fortune together for many generations.

And, if there is anything you would like to know, in order to determine whether this Process is right for you, we invite you to post those questions on this BLOG.

Who will manage rich people's money now?

Wall Street Journal
Robert Frank

Yesterday I talked with a wealth advisor who said her firm had hired a psychotherapist specializing in trauma and life shocks.

“For clients?” I asked.
“No for the advisors,” she said. “We’re getting screamed at and verbally abused every day by our clients. We need therapy.”
I was tempted to say: “Perhaps you need better advisors.” But in today’s markets even the best wealth managers are getting an earful from clients.
Clients are angry over the losses. They are angry at the bad financial advice. They are angry over the high fees, the product-pushing banks, the SEC, IRS and DOJ investigations and complex investments no one understood until they blew up. And they are tired of the revolving door of advisors due to mergers and turnover.
As I wrote in a recent post about the investor revolt, 81% of investors with $1 million or more in investable assets plan to take money away from their current advisor.
The question now is, where will the wealthy put their money next? How will the crisis reshape the business of wealth management?
It’s too early to tell. But here are possible scenarios for what the wealthy will do with their money:
SELF-HELP — Why pay someone else to lose your fortune when you can do it yourself? I’ve written before about the rise of wealth peering groups, where group of similarly wealthy people get together to swap financial information and advice. Now, interest is even greater. According to a recent Dow Jones article, interest has surged in wealth peering groups like Tiger 21, CCC Alliance and IPI.
FLIGHT TO QUALITY — Size isn’t always a virtue, especially in wealth management. But these days, some investors want to move their money to larger institutions for stability and breath of services.
SMALLER IS BETTER — A more likely outcome of the crisis is an acceleration of a trend that has been happening for over a decade — the rise of the little guys. These boutiques and multi-family offices, usually founded by exiles of the big firms, try to offer advice without products, more personalized service and less turnover in staff. The downside is that some of the firms may not be around in 10 or 20 years, and the wealthy want long-term stability with their advisors. But at a time when investors and wealth advisors are both becoming disillusioned with the big-bank-brokerage model of wealth management, the boutiques could become the biggest winners of the crisis.

http://blogs.wsj.com/wealth/2008/11/14/who-will-manage-rich-peoples-money-now/

The Dead, More Generous Than the Living in 2008

“Giving while living” became a mantra of philanthropy in recent years. Now, with the living running out of cash, it is the nonliving who are back in the lead as donors. According to Slate magazine and the Chronicle of Philanthropy, 7 of the top 10 charitable donors in 2008 were from estates. That is a big change from 2007, when all of the top 10 donors were alive when they made their gifts.

“In the 13 years we’ve published the Slate 60 list, this is the first time a majority of the top donors have come from estates,” said David Plotz, editor of Slate. “Regardless, we continue to be inspired by the charitable donations the list recognizes and hope our readers are, too.”
What gives? The rich, according to the Chronicle of Philanthropy, just aren’t giving the way they used to. Donors in the finance sector are a big reason: about a quarter of the top donors in 2008 came from the financial world. Next year will see even fewer donations of $100 million or more, experts say.
Nonfinancial donors also are paring back. Among those who have dropped off the list this year are Pierre and Pam Omidyar, T. Boone Pickens and Oprah.
The biggest donors in 2008 were:
1. Leona M. Helmsley (bequest), $5.2 billion

2. James LeVoy Sorenson (bequest), $4.5 billion

3. Peter G. Peterson and Joan Ganz Cooney, $1.02 billion

4. Harold Alfond (bequest), $360 million

5. Donald B. and Dorothy L. Stabler (bequest), $334.2 million

6. David G. And Suzanne Booth, $300 million

7. Frank C. Doble (bequest), $272 million

8. Robert and Catherine McDevitt (bequest), $250 million

9. Michael R. Bloomberg, $235 million

10. Dorothy Clarke Patterson (bequest), $225 million

Wealthy Investors Stage Revolt Against Advisors

Wall Street Journal
Nov 14, 2008 With investors getting clobbered by financial markets, it’s no surprise they’re blaming their financial advisors. But the wealthy aren’t just getting mad, they’re getting even — by pulling their money and moving it to different firms.

According to a new survey from Prince & Assoc., 81 percent of investors with $1 million or more in investible assets plan to take money away from their current advisor. An even larger number — 86% — plans to tell other investors to avoid their advisor. Only 2% plan to recommend their firm to other investors. That’s of critical importance, since wealthy investors often get investment advice from each other.
The irritation is especially high at the “brand” firms — large brokerages and banks. Fully 90% of clients of brand firms plan to take money away from their advisor and 70% plan to leave the advisor altogether. That compares with a mere 29% for the boutique, local advisory firms.
So what does this mean for investors and wealth-management firms? It could just mean a reshuffling of assets between branded firms, with big clients moving money from Merrill to U.S. Trust, or Lehman to Goldman. Or, more likely, it could accelerate the broader shift away from big-name advisors to smaller shops with fewer conflicts, lower turnover and more personalized service.
Wealth management firms argue that it’s not their fault, that they’re victims of the same extreme and unforeseeable market conditions that have wrecked even the most sophisticated managers. And blaming your wealth manager for a 770-point drop in the Dow is pointless.
Yet it’s not just the performance that has irritated wealthy investors. Of those clients whose investments returns this year were up against pre-determined benchmarks, fully half planned to take money away from their advisor.
In other words, bad service can’t overcome good numbers.

Keep an eye on this lad.

With ambition like this, he's going somewhere big someday!

6-year-old misses bus, takes family car, crashes
Jan 6, 2009
WICOMICO CHURCH, Va.
(AP) - A 6-year-old Virginia boy who missed his bus tried to drive to school in his family's sedan—and crashed.
State police say the boy suffered only minor injuries and authorities drove him to school after he was evaluated at a local hospital. Sgt. Tom Cunningham says the boy arrived shortly after lunch.
It happened around 7:40 a.m. Monday on Route 360, about 61 miles east of Richmond.
Police say the boy, who wasn't identified, missed the bus, took the keys to his family's 2005 Ford Taurus and drove 10 miles toward school while his mother was asleep.
He ran off the road several times before hitting an embankment and utility pole about a mile and a half from school.

Millionaires lose 30% of their fortunes

American millionaires have lost about a third of their wealth during the financial crisis, according to a new survey.

The study, by Spectrem Group, the Chicago-based wealth-research firm, found that households with a net worth of $1 million or more say their assets have declined 30% or more. Nearly one-fifth of millionaires have experienced declines of more than 40%.
Nearly all the millionaires surveyed (90%) fear a prolonged economic downturn. Altogether, they believe it will last for another 22 months, and more than half (55%) are concerned they will not have sufficient assets to maintain their present lifestyles.
“The current financial crisis has had a dramatic impact on America’s millionaires, reducing their net worth substantially and threatening their ability to maintain both lifestyles and retirement plans,” said Catherine S. McBreen, Managing Director of Spectrem Group.
Spectrem’s measure of household assets doesn’t include primary real-estate but does include other real-estate, which has dropped precipitously. But for the households in Middle and Upper Richistan, where houses account for a smaller share of net worth, investment losses have been the main wealth killer. Many of the wealthy are blaming their wealth advisers.
According to the Spectrem study, just 36% of millionaires feel their adviser performed well during the crisis and only 14% say they will increase their use of financial advisers in the future.

http://blogs.wsj.com/wealth/2009/01/06/millionaires-lose-30-of-their-fortunes/

Special Needs Trusts

Parents of children with special needs often face years of expensive care for their children. Now a growing number of financial-services companies, lawyers and financial planners -- often calling themselves "special-needs planners" -- are springing up to help parents provide for kids with disabilities, especially when parents are no longer alive to provide care. These professionals guide families through the intricate maze of federal and state programs for disabled individuals, and help set up trusts, insurance policies, retirement plans and estate-planning documents.

More than 41 million Americans, or almost 15% of the population age 5 and older, have some type of disability, according to 2007 Census survey data. Some 6.2% of children ages 5 to 15, or 2.8 million kids, have disabilities, the Census Bureau found. And individuals with disabilities are living longer than ever before. That means that many disabled children will outlive the parents who support them.

At least two professional groups -- the Academy of Special Needs Planners and the Special Needs Alliance -- provide referrals to lawyers familiar with special-needs planning, and other resources. Financial-services firms such as MetLife Inc. and MassMutual Financial Group also have divisions devoted to special-needs planning.

Wall Street Journal October 2008

When is the right time to teach your children about philanthropy? How about today.

Dying boy inspires goodwill in people near and far
November 21, 2008

BOTHELL, Wash. -- An 11-year-old boy's dying wish to feed the homeless has taken on a life of its own, sparking a movement to help the hungry nationwide. Doctors gave Brenden Foster two weeks to live. His time was up last Wednesday.

"I should be gone in a week or so," he said last Friday. On Monday, groggy and medicated, Brenden was having a rough day. "Tired," he said, visibly weak."(You) need some more medicine," said his mother, Wendy Foster, stroking his head. Leukemia halted the young life of Brenden, who once dreamed of becoming a marine photographer. Brenden has relapsed for the last time. There is no chemo, no more transfusions; just comfort medications. "I'm hoping I'm awake when he decides to pass because I want to make sure I'm holding him," Wendy later said.

Brenden survived his leukemia long enough to witness his dying wish come true. Last Friday Brenden shared his last wish to feed the homeless. "I was coming back from one of my clinic appoints and I saw this big thing of homeless people, and then I thought I should just get them something," he said. Volunteers handed out 200 homemade sandwiches to the homeless to fulfill his wish. "They're probably starving, so give them a chance," he said.

On Monday, Brenden could barely keep his eyes open as he watched a video of volunteers feeding Seattle's homeless on his behalf.Over the weekend, his wish went national on CNN. And KOMO News received phone calls from Fort Lauderdale, Florida to Fort Wayne, Indiana. Clearly in pain, Brenden still managed to smile as he listened to stories about the phone calls and e-mails his story had inspired. His story touched many people from all walks of life, from families fighting cancer to men in the military."I think it's great, all over the country..." Brenden said.

"He made my dream come true. In my lifetime, I wanted to change the world and my son did that," said Wendy. "The world is such a beautiful place and (that became) evident the last 72 hours, and Brenden did that." Brenden has one more wish for the afterlife: become an angel who accomplishes even more in heaven than he did on Earth.

"I don't need to worry about it until the time has come. So I don't bother think about it while I'm still alive; now," he said.

Christmas book recommendation for boys

This book has been a huge hit because so many parents find it difficult to find books that speak to the true nature of boys. (Dirt, danger and dinosaurs!) Equal parts droll and gorgeous nostalgia book and heartfelt plea for a renewed sense of adventure in the lives of boys and men, Conn and Hal Iggulden's The Dangerous Book for Boys became a mammoth bestseller in the United Kingdom in 2006. Adapted, in moderation, for American customs in this edition (cricket is gone, rugby remains; conkers are out, Navajo Code Talkers in), The Dangerous Book is a guide book for dads as well as their sons, as a reminder of lore and technique that have not yet been completely lost to the digital age. Recall the adventures of Scott of the Antarctic and the Battle of the Somme, relearn how to palm a coin, tan a skin, and, most charmingly, wrap a package in brown paper and string. The book's ambitions are both modest and winningly optimistic: you get the sense that by learning how to place a splint or write in invisible ink, a boy might be prepared for anything, even girls (which warrant a small but wise chapter of their own). Read more here:
http://www.amazon.com/Dangerous-Book-Boys-Conn-Iggulden/dp/0061243582/ref=sr_1_1?ie=UTF8&s=books&qid=1227645956&sr=1-1

Why the rich give to charity

Ask a wealthy donor why they give to charity, and they’ll give one of two answers: making the world a better place or giving back to the community.

But there’s another reason the rich give back to charity: It makes them feel better about themselves.


A philanthropy study done by the Center on Philanthropy and Bank of America found 46% of respondents said their charitable donations have a “greater impact on their own personal fulfillment” than on those who receive their gifts. The survey polled those with an income of $200,000 or more or a net worth of $1 million or more.

Less than 20% of the respondents believe their donations make a major impact on the organizations they support, and only 6% believe they’re making significant contributions to the improvement of society.

In other words, they know their donations won’t change the world, but it makes them feel better anyway.

Read the entire article: http://blogs.wsj.com/wealth/

Giving by the Rich to Remain Strong in 2008

Chronicle of Philanthropy

Despite the weak economy, charitable giving by the rich could increase this year compared to 2007.

That is the rather optimistic prediction of Crown Philanthropic Advisors, a New York firm that sells technology platforms for donor-advised funds. The firm’s survey of donors and advisers showed that the wealthy–those with $2 million or more in investable assets–are unlikely to cut back on charitable giving this year.

William Hewitt, the firm’s national marketing chief, said that giving by the mass affluent–those with $100,000 or more invested–is likely to be cut back. He said giving by this group declined in the first quarter, according to the survey.

Yet the affluent, he says, are more affected by weak housing prices, falling stocks and rising prices. Companies also are planning to keep their giving flat this year. A recent survey of 77 businesses by the found that 50 would keep their giving the same as last year, while 21 expected an increase, and six said their donations would drop.

Colleges Compete for Wealth…and Maybe Educations

Associated Press
U.S. News & World Report recently released its college rankings , with Harvard, Princeton, Yale, MIT and Stanford nabbing the top five slots. But the real news is price. A year at Harvard now costs $36,173 (tuition and fees), while Columbia will set you back $39,326. The cost of a college education is escalating at three to four times the inflation rate.

The standard explanation is that colleges are spending to improve the quality of their educations and remain competitive. Yet an article by Penelope Wang in Money magazine explains that while tuition prices have soared 459% since 1982, a large chunk of the money is going to building luxury dorms, hot tubs, fancy gyms, climbing walls and gourmet dining halls.

The schools are, she writes, “engaging in a luxury arms race, fueled by the wealth of such elite institutions as Harvard and Yale.” She says one reason for all this luxury is to attract as many applicants as possible. That way the school can have a higher rejection ratio and boost its position in the U.S. News rankings.

I think another big reason is to appeal to the richest applicants. Schools want big donations. And big donations usually come from wealthy parents or wealthy alum. The best way to attract wealthy children is to provide the lifestyle to which they have become accustomed–five-star hotels, fine dining and plush gyms. Today’s young heirs don’t just want libraries: they want world-class party pads and 15-person hot tubs. “Lux et Veritas” has turned into “Luxury is destiny.”

“The rankings are a measure of wealth, exclusivity and fame, not quality,” Kevin Carey, research manager at the nonprofit Education Sector says in the Money article.

If that is the case, perhaps a truer ranking of higher education might be: “Colleges With the Most Billionaire Dads.” Or “Top 10 College Concierge Services.” Or even “Ivy League Chefs: Top 10 Best Meals on Campus.”