The Extraordinary Intimacy Between the Ultra-Rich and Their Wealth Managers

Behind the Panama Papers scandal, LuxLeaks, and the other offshore-finance stories of recent years lies an elite profession whose expertise makes the whole system function: wealth managers. Without them, tax avoidance on an almost unimaginably large scale—in which hundreds of billions in state revenues are lost every year—could not exist. The lawyers, bankers, accountants, tax specialists and others who make up the wealth-management profession specialize in working with high- and ultra-high-net-worth clients around the world; in addition to helping them avoid any laws the clients find inconvenient, wealth managers often organize family business succession, structure the inheritance of complex estates, and mediate internal disputes over family fortunes. At this level of privilege and service, the relationships between professionals and clients becomes—by necessity—extraordinarily intimate.

As a result, wealth managers have employment patterns quite unlike those of most of their professional peers in finance and law. While retaining legal counsel or consulting a financial adviser now commonly leads to short-term relationships, wealth managers maintain clients over the long term, sometimes amounting to lifetime employment. One study characterized the profession in terms of “relationships of long and uncertain duration, usually measured in lives.” It is not uncommon to find wealth managers working with the children or grandchildren of their original clients.

Like a family doctor or lawyer, a wealth manager is privy to highly sensitive information, but that information is not confined to just one domain. The doctor who knows everything about a patient’s body rarely knows the contents of her bank account or estate plan. The wealth manager, in order to do his or her job properly, has to know everything. As one manager put it, the client has to “undress” in front of the wealth manager. A London-based practitioner described the level of familiarity required in even more vivid terms: “When people choose a wealth manager, first they sort based on competence, then they have to pick someone they want to know everything about them: about Mother’s lesbian affairs, Brother’s drug addiction, the spurned lovers bursting into the room.”

Wealth managers need to know these intimate details of their clients’ lives because so many of the factors that affect high-net-worth individuals also affect their fortunes. As a fiduciary, the wealth manager is bound to protect clients’ wealth from risk: This includes not just financial risk but the threat of spendthrift heirs dissipating the family assets or of family members with embarrassing secrets who might be targeted for blackmail.

Through involvement in such struggles, wealth managers themselves often end up taking on a quasi-familial role vis-à-vis their clients and clients’ relatives. Perhaps in recognition of the special intimacy and trust conferred on these professionals, the 1989 Guernsey Trusts Law states that a fiduciary must “observe the utmost good faith and act en bon père de famille”—a French phrase that translates literally as “good father of a family.” In practice, wealth managers are “usually recruited in a very personal way” by the actual fathers (rarely mothers) of high-net-worth families, with the relationship cultivated carefully to ensure that the professional represents the wishes and interests of the father after his death. Some scholars have interpreted this in purely rational-bureaucratic terms: “The work of the fiduciary ... occupies, after the death of the family founder, the place of abstract patriarchal authority in a family, but what family beneficiaries literally trust is not an object or person imbued with positive family values such as love, amity and warm feelings, but a cold, rational construct of wealth—the trust and its trustee.” However, this instrumental view is belied by the statements of participants in this study, who repeatedly emphasized that trusting client relationships hinged on mutually experienced bonds of emotion.

For example, one manager in Dubai described her client relationships in terms that emphasized the emotional labor and caring involved: “They’re asking you to take care of their family. You can’t just think of it as another piece of business ... It’s not just a matter of signing documents; it’s the whole concept of doing the right thing for that family. You have to be able to say, ‘Mr. A., don’t worry—your kids are all going to be put through university. It’s all going to be okay.’ You have to be very businesslike. But also family-like.” Comments such as this point to a socio-emotional aspect of the duties of loyalty and care stipulated in fiduciary law. Beyond their rational-bureaucratic sense, in which “care” is intended to mean “prudence in business dealings,” an additional layer of genuine interpersonal attachment may arise between professionals and clients.

Sometimes clients themselves underscore the familial quality of the relationship with their wealth managers. A Los Angeles-based practitioner recalled: “I worked with some clients in San Diego who said, ‘Oh, we wished you were our daughter instead of the daughter we had.’ When the father died, the daughter pestered her mother constantly for money, and we finally had to resign as trustee, because we couldn’t work with the daughter.”

Determining whether a professional is worthy of such trust and intimacy is understandably a major concern of elite clients. Several participants in my study of wealth managers told of clients who purposely demanded extraordinary acts of service in order to assess their trustworthiness in the early stages of their relationship. For example, one manager told of a new client who called her office in Geneva to say, “I’m outside a restaurant in London and I just lost a bracelet—I need you to find it.” In other words, the client was asking her to locate a bracelet outside an unnamed restaurant in another country. She somehow did this, billed for her time, and earned a loyal client for decades to come. An English wealth manager based in Dubai explained that such outlandish requests are surprisingly common in the profession, in part as a way of testing whether the practitioner is “worthy” of the client making a long-term investment in the relationship: “The very rich are willing to pay for that extra-special bespoke service, just like suits. And they don’t like change: they want to go to the same doctor all their lives, the same dentist, and the same lawyer or fiduciary.”

With this in mind, elite clients may ask wealth management professionals to undergo a contemporary version of the trials of Hercules. Another English practitioner who is nearing the end of a forty-year career in Hong Kong had a particularly impressive story of an impossible task set him by a client bent on testing his trustworthiness:

I was phoned up from Osaka once, by a client who said, “I’m sitting across from Owagi-san, who speaks no English, but we are bowing to each other. He has just said to me through a translator that he needs a thousand sides of smoked salmon by Tuesday, and I’m relying on you to get them.” I said, “I’m your wealth manager, not your fishmonger.” And the client said, “Well, today you’re a fishmonger.” So I had to ring up a friend who knew the guy from Unilever who runs the smoked salmon plant in Scotland. And the plant manager made it happen. So I found out later that my client was testing me by setting me an impossible task—he told me that he was trying to see if I was really up to the kind of job he wanted me to do.

The story is reminiscent in some ways of the tales of knightly quests, complete with seemingly insurmountable obstacles and abject humiliations (“today you’re a fishmonger”)—with a shipment of smoked salmon in place of the Holy Grail. The question behind the impossible task remains consistent: Are you truly devoted?

Clients may also have a pragmatic reason for posing these tests: They allow the client to discover whether the wealth manager possesses the kind of social networks and influence necessary to provide extraordinary personal service. In this case, being “up to the kind of job” the client wanted depended not just on personal resolve but also on knowing the right people, in this case a friend with connections at Unilever. This is consistent with previous research showing that elite professionals serve their clients in part by acting as commercial “matchmakers,” facilitating opportunities that are not available publicly. For example, a study of 19th-century British lawyers showed how their familiarity with clients’ business dealings allowed them to create whole new industries, such as the country’s railroad system; the professionals established a kind of private market, accessible only to the upper crust of British society. Access to such opportunities hinged entirely on trust between clients and professionals, and the related perception of exclusivity. As the study concluded, “To avail oneself of opportunities, one has to be ‘one of us.’”

But in keeping with the quasi-familial role wealth managers often acquire in relation to their clients, the trust accorded to the professionals can lead to opportunities beyond the realm of business. An English practitioner based in Singapore has become a literal matchmaker for his clients, many of whom are too busy to date. Other participants in the study mentioned providing services of a highly personal, non-financial nature. Several specifically mentioned helping clients get treatment for their drug-addicted children—a particularly common problem in wealthy families. A practitioner in the British Virgin Islands said, “I’m not qualified to counsel anyone on the use of drugs, but I can say, ‘There’s a facility that other clients have used for rehabilitation.’” The same social networks that allow many elite professionals to create special business opportunities for their clients give wealth managers—with their unusually intimate access to their clients’ lives—the ability to offer an additional level of personalized service that distinguishes them from allied fields of work in finance and law.

This article has been adapted from Brooke Harrington’s book, Capital Without Borders: Wealth Managers and the One Percent.