Registered Rep.: Why write a book on a magazine list? And how much money do you have to have to make it on the Forbes list?

Peter Bernstein: The amount of net worth you have to have to be on the list has increased at a pretty healthy rate over the years. In 1982, you had to have $75 million; and in 2007, you had to have a net worth of $1.3 billion.

Why did we write the book? Because we were interested in wealth in America in general, and we noticed that the Forbes 400 was going to be 25 years old. The entirety of the list had never been looked at [over time] and we just thought it would be a fascinating group, of what turned out to be, now, roughly 1,350 people who have been on the list over 25 years. We figured it would give a comprehensive picture of wealth in America, and how people make their money and how they spend it. So that was sort of the sample size — large as it was — that we set out to study.

Annalyn Swan: The other point was that while Forbes had always given the numbers and focused on that, the data is very much like batting averages in baseball. And so what we decided to do is exactly the opposite of just a purely numbers-driven approach, although we do have lots of numbers. We thought, who are these people? What motivates them? So we went directly to them, and they became, as it were, the real subject, the real heart of the book.

RR: Who is the list dominated by these days? I would guess the members of the list reflect the economy at large?

Bernstein: There's been a dramatic shift from 1982 to 2006 and 2007. In 1982, the largest number of fortunes came from oil; I think it was around 23 percent. And these days the largest industry segment is finance. Finance has doubled in terms of the number of billionaires it produces as a percent of the list. But there's also been, as you would expect, a huge growth in technology-based fortunes, which have actually quadrupled since 1982 from about 3 percent to just under 12 percent.

RR: Why has finance been such a fast-growing industry? Why now?

Swan: Basically, we explore that in-depth in the book. It all began when Ronald Reagan assumed office and started to change the tax codes, what the repercussions of that were. Basically, credit completely changed. It ushered in an age of easy money. And a whole new class of financial instruments cropped up, which we talk about in an entire chapter, titled “Beyond Wall Street.”

Bernstein: Hedge funds have just been a huge generator of wealth in the last five years. And just in the last year, from 2006 and 2007, there are 45 new members on the list. And I think half of them come from hedge funds. The people at the top are making $1 billion to $2 billion dollars a year.

Swan: As we point out in the “Beyond Wall Street” chapter, hedge funds alone control $1 trillion in a $13.2 trillion economy. And then we cite experts who say that's changing everything across the board, in every sector of American finance, because they're so big and they're so powerful.

Bernstein: But I think there's a larger point that might be of significant interest to your readers, that we notice from studying the list over a 25-year period, which is the fluidity of wealth in America. One, how it's made, and two, who's making it. You know, this is not a very static list. The average person is on the list seven-and-a-half years, but around 250 of the 1,300 are only on the list for a year. So the speed and ever-changing nature of wealth in America is really interesting and staggering.

Another sort of uber-trend we found while studying the list is the growth of self-made fortunes over the last quarter of a century. In 1982, half the list was people who had inherited their money; 25 years later, almost three-quarters, 280 people, had self-made fortunes. So that's been another huge change in the trends.

RR: You made the point that people make money and then they lose it too. Do you find that? Is there anybody who had a colossal wipe out?

Swan: Surprisingly fewer than you might think. I guess they are more willing to take risks, but they're also incredibly good at figuring out the downside. So we cite examples of people who have actually gone into bankruptcy, once or maybe even twice, or mortgaged everything up to the hilt, but they've managed to come out and survive. And there are actually very few people on the Forbes 400 list who have ever declared personal bankruptcy. I think the number is 13.

Bernstein: I don't think we really have a number on that. I think 13 is the number of convicted criminals [on the list].

Swan: I think it's also fair to say that, by and large, the Forbes 400 members with whom we spoke don't focus a lot on the downside. They are driven by a sort of vision of making it work. And so they focus on the upside. But they all talk about how you have to take risk. Sheldon Adelson, the Vegas casino mogul, is a prime case. He says to be an entrepreneur one must take risk.

RR: I noticed that most members don't have advanced degrees. And are they mostly men on the list? Or are there more women than ever?

Swan: Quite the opposite. That's one of the striking findings, the diminution of women on the list over the years. In 1982, primarily because there were so many more heiresses and inherited money, there were 75 women on the list. And by 2007 it was down to 39. I mean just a striking decline in inherited wealth, you know, across the board, so that sort of wipes out all the heiresses. But then the question we have is why aren't there more women entrepreneurs on the order of Meg Whitman at Ebay coming onto the list? And there are so few, you can count them on two hands, if that.

Bernstein: And while Forbes doesn't track ethnicity or religion, you know, I still think it's fair to say that the Forbes 400 is pretty much an exclusive, white, male club. So, there are, for instance, [only] 90 first-generation immigrants who have been on the list.

RR: White guys that don't have advanced degrees.

Swan: That's right. That's another time-honored assumption: To get on the list, you go to the prestigious schools and that's your entrée to the top. Quite the opposite is true. In any given year, we found about 10 percent of the list would be college dropouts, or sometimes even high school dropouts. They certainly weren't carriers of major degrees, although, of course, you can find them. But the number of Ivy League degrees is well below 10 percent. And only 16 percent of the list has an MBA. So there is no true or tremendous correlation between higher learning at our top institutions and getting to the top of the list.

RR: What is it, what quality drives these people?

Bernstein: These people are super, or hyper, competitive — sometimes almost to the point of ruthlessness. I mean, they're extremely focused on what they do. Wal-Mart has a well-deserved reputation for squeezing every nickel out of every single deal, and that goes for how they treated many of their employees — well, certainly in the early days. They kept them part time, they didn't pay them basic health care benefits, and they have been accused in the courts of discriminating against older workers who are maybe less efficient.

There are other examples. These people can be relentlessly focused on the bottom line. Ditto for Bill Gates and Larry Ellison at Oracle. You know, they are tough, tough competitors.

Swan: Those are the negatives. Obviously some of them take it too far. But when you flip over the coin, we discovered that they are, by nature, a tremendously hard-working bunch. With some of them, you have to wonder whether they have any time at all to celebrate the accumulation of wealth because, again and again, what we heard is, they are wedded to the job. John Kluge of Metro Media said, “I hate to tell you this, but I've never liked the weekend in my life. I was enthusiastic about Monday morning from the day I left college.” Again and again, you see this.

RR: But the drive wasn't just to make money, right? It was to build their visions.

Swan: Most of them evince these aggressive work habits and, again and again, we heard what their goal was. They never thought about, per se, making billions of dollars. What they thought about was I want to build this company, I'm going to do whatever it takes to build my company.

RR: That's an interesting way to slice it. So they're focused on the success of the company, and the money is secondary.

Bernstein: And another thing I think that also might be of interest to your readers is while these people have been very good at building up huge net worths, in terms of investing, they're not the best investors outside of their businesses. For instance, look at the Founders' Club. These are people who have been on the list for all 25 years. And about 60 percent of them underperformed the S&P 500 in terms of the growth of their wealth over the 25-year period. They're still plenty wealthy. So, you know, they're very good at building their businesses, but they're not necessarily very good at managing their money outside of their businesses.

The exception would be the people who are in finance where, of course, they're investing both their firms' and often their own money in deals. But most of the people who are running nuts-and-bolts businesses, non-finance businesses, I would say this is an impression — not anything that we have hard numbers on — but they're not particularly keen, or necessarily savvy, investors in stocks and other things.