23 September 2020

Inside the Secretive World of Elite Wealth Management

Wealth management is a profession on the defensive. Although many people have never heard of it, it is well known to both state revenue authorities and international agencies seeking to impose the rule of law on high-net-worth individuals. Those individuals—including the 103,000 people classified as “ultra-high-net-worth” based on having $30 million or more in investable assets—pay wealth-management professionals hefty fees to help them avoid taxes, debts, legal judgments, and other obligations the rest of the world considers part of everyday life. The general public doesn’t hear much about these professionals, since there are only a few of them worldwide (just under 20,000 belong to the main professional society) and they strive to keep a low profile, both for themselves and their clients.

But they are very much on the radar of regulatory agencies, due to the central role wealth management plays in tax avoidance. Media coverage of the 2012 presidential campaign of Mitt Romney noted that his $250 million personal fortune was spread out through a network of offshore trusts and bank accounts, lowering his effective income-tax rate to just under 15 percent. Few outlets, however, noted the professional interventions that made that happen: Mitt Romney employs at least one wealth manager to create and maintain those offshore shelters.

By the same token, when Oxfam estimates that just 1 percent of the world’s population will own more than 50 percent of the world’s wealth by 2016, it’s important to realize that such a state of affairs doesn’t just happen by itself, or even through the actions of individual wealthy people. For the most part, the wealthy are busy enjoying their wealth or making more of it; keeping those personal fortunes out of the hands of governments (along with creditors, litigants, divorced spouses, and disgruntled heirs) is the job of wealth managers.

Given the little that is known about the profession and its role in global inequality, it seemed imperative to learn more about how wealth managers pull off this sleight of hand: Without breaking any laws (for the most part), they enable their clients to sidestep many laws and policies—especially those designed to prevent the kind of neo-feudal concentrations of wealth emerging now. But like many elites, professional and otherwise, wealth managers are not well-disposed to answering questions from impertinent social scientists. Particularly those suspected of harboring what the gentleman I interviewed in the British Virgin Islands called a “left-leaning” agenda. So a traditional research strategy—cold-call to request interviews, or send out a survey—seemed doomed to failure.

Instead, taking advantage of a research fellowship I was awarded in Germany, which freed me from teaching and administrative responsibilities for a few years, I decided to jump into the field with both feet. Reader, I trained to become a wealth manager. That initial part of my study took two years, many thousands of dollars, and hundreds of thousands of miles of travel. Although I never practiced as a wealth manager, training to join the profession opened the door to a secretive realm that would otherwise have remained closed to me.

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