Who Really Gets Rich? Testing the Three Factors Behind Wealth

At business school, my professor shared a statement that challenged the meritocratic ideal many of us wanted to believe in:

“The three most important factors in building wealth are: who your parents are, luck, and hard work, in that order.”

It wasn’t exactly the motivational message many of us wanted to hear, but it raised an uncomfortable question: is that really how wealth is built? Over the years, as research and data have mounted, it turns out he was more right than wrong. Let's explore why, with up‑to‑date statistics and insights from contemporary studies.

Who Your Parents Are

The evidence is clear: inheritance and family background are the strongest predictors of wealth. Thomas Piketty’s Capital in the 21st Century showed that intergenerational transfers are once again the dominant driver of inequality in developed economies. Empirical work since has reinforced the point. Arash Nekoei and David Seim, using Swedish records, found that heirs retained 50 to 60 per cent of what they inherited even years later, a permanent uplift in their financial position.

In Britain, the Resolution Foundation estimates that £5.5 trillion will be passed down by 2050, an unprecedented transfer of wealth. Already, more than half of households in the top wealth quartile have received an inheritance or significant gift, compared with fewer than one in five in the bottom quartile. The average inheritance for under-35s is around £8,000—seemingly modest, but equal to about five per cent of their total net wealth, far more impactful than in older age groups. The conclusion is unavoidable: who your parents are still matters enormously.

Luck

Luck is less tangible but no less important. Timing in markets, housing, and even career entry points shapes outcomes in ways individuals cannot control. Greg Kaplan, Benjamin Moll and Giovanni Violante have shown how rising asset prices disproportionately reward those who already own capital, widening inequality. In the UK property market, those who managed to buy in the early 2010s saw a decade of historic price appreciation, while peers locked out of the market remain renters at ever-higher costs.

Career timing also matters. Philip Oreopoulos and colleagues demonstrated that graduating into a recession depresses earnings for a decade or more. Those who finished university during the 2008 financial crisis or the pandemic of 2020 faced income scarring that no amount of individual effort could fully counteract. These are structural disadvantages imposed by luck, not ability.

Hard Work

Hard work still matters, particularly for those who are not beneficiaries of significant inheritances. Income from wages, bonuses, and entrepreneurial ventures remains the backbone of wealth for the majority. Fatih Guvenen and co-authors have shown that lifetime earnings trajectories explain much of household wealth differences across the distribution. Entrepreneurship offers a potential leap, though it is risky: Erik Hurst and Benjamin Pugsley’s work shows that most small businesses remain modest, while only a minority scale to create outsized fortunes.

For mass affluent millennials, the most practical levers are steady career progression, salary negotiation, and the cultivation of additional income streams. Hard work alone may not deliver extraordinary wealth, but it remains the essential engine for most.

The Multipliers: Risk and Habits

Beyond inheritance, luck, and income, there are two factors that explain why people with similar starting points diverge over time: risk tolerance and financial habits.

Large-scale surveys in Germany and Italy have found that individuals more comfortable with risk are more likely to hold equities and therefore accumulate greater wealth. The difference between leaving money in cash and consistently investing—even in simple index funds—compounds dramatically across decades.

Habits play an equally powerful role. Research by Annamaria Lusardi and Olivia Mitchell has shown that financial literacy is closely linked to retirement readiness and long-term wealth accumulation. Using tax-efficient vehicles like ISAs or pensions, automating savings, and avoiding high-interest debt are not glamorous choices, but they are the building blocks of enduring financial health.

Was My Professor Right?

Looking at the data, yes.

• Inheritance is the most powerful determinant, particularly at the top of the distribution.

• Luck in markets and timing can accelerate or hold back progress in ways beyond individual control.

• Hard work provides the essential foundation for most people, especially those without large inheritances.

• Risk tolerance and good financial habits are the multipliers that turn income or inheritance into lasting wealth.

How Moola Money Can Help

At Moola Money, we can’t change who your parents are or the economic cycle you were born into. But we can help with the multipliers. Our platform is designed to support millennials in building confidence around risk, investing, and financial literacy.

In short, we help you make the most of what you can control. While inheritance and luck may set the stage, it is your habits and decisions that determine how well your wealth compounds over time, and that is exactly where Moola Money is there to help.