What's It Like To Be Rich? Ask The People Who Manage Billionaires' Money

Oct 25, 2016
Originally published on September 27, 2017 1:25 pm

What are the lives of the planet's wealthiest people really like?

Several years ago, sociologist Brooke Harrington decided to find out.

She knew she'd have a hard time gaining access to the world of the ├╝ber wealthy, so she did something unusual: She took courses to become a wealth manager.

In the course of this training, Harrington met other wealth managers, who agreed to be interviewed for her research.

She discovered that, in order to manage money for the super-rich, these professionals learn a lot about the private lives of their clients.

What they shared, Harrington says, shocked her.

"The lives of the richest people in the world are so different from those of the rest of us, it's almost literally unimaginable. National borders are nothing to them. They might as well not exist. The laws are nothing to them. They might as well not exist."

The Hidden Brain podcast is hosted by Shankar Vedantam and produced Maggie Penman, Jennifer Schmidt, and Renee Klahr. Our supervising producer is Tara Boyle. You can also follow us on Twitter @hiddenbrain, and listen for Hidden Brain stories each week on your local public radio station.

Copyright 2017 NPR. To see more, visit http://www.npr.org/.

SHANKAR VEDANTAM, HOST:

This is HIDDEN BRAIN. I'm Shankar Vedantam.

When The New York Times showed that Donald Trump may have used a legal loophole to avoid paying federal income taxes for years, many people expected the self-described billionaire to be embarrassed. Instead, in a debate with Hillary Clinton, Donald Trump said...

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HILLARY CLINTON: He didn't pay any federal income tax. So if he's paid zero...

DONALD TRUMP: That makes me smart.

VEDANTAM: ...That makes me smart. It got us thinking about a new book by Brooke Harrington, a sociologist at the Copenhagen Business School in Denmark. She decided several years ago to explore the secret lives of billionaires. She took an unusual path to enter this world. She herself trained to become a wealth manager.

In the course of this training, she gained unprecedented access to other wealth managers who agreed to be interviewed for her research. She discovered that in order to manage money for the super-rich, these professionals also learn a lot about the private lives of their clients. What they shared, Brooke says, shocked her.

BROOKE HARRINGTON: The lives of the richest people in the world are so different from those of the rest of us, it's almost literally unimaginable. National borders are nothing to them. They might as well not exist. The laws are nothing to them. They might as well not exist.

VEDANTAM: Today on HIDDEN BRAIN, the sociology and psychology of some members of the billionaire class and the professionals who enable them.

Brooke Harrington, welcome to HIDDEN BRAIN.

HARRINGTON: Thank you for having me on the show.

VEDANTAM: For wealth managers to do their job, Brooke, I understand that they need to find out everything about a client's life, not just a client's financial life but everything about their life. Give me some examples of the kind of conversations people have with wealth managers, and the kind of issues they bring up about their personal circumstances that might affect how their wealth is managed.

HARRINGTON: Well, it usually starts with what's called know your client activities. So if you were to come to me with me acting as the wealth manager, I would first ask to see some proof of identity like your passport. And then we would talk about what goals you had for your wealth. And that begins the series of increasingly delicate and increasingly intrusive questions.

Then usually we get into whatever real reason is bringing you to me. Maybe you want to avoid your taxes. Maybe you really don't like your family. That's surprisingly common among wealthy people. For example, if you have a relative or if you yourself are engaging in some activity that might get you extorted - it may not be illegal but it might be socially shameful - that's a financial risk that your wealth manager needs to know about. If you have a son or daughter with a drug problem, that's a financial risk that your wealth manager needs to know about.

There can also be issues like, I think I'm headed for a divorce but I don't want my spouse to get half my assets. How do I hide those assets, preferably offshore so that whatever is legally provable as mine is such a small amount that it's not worth fighting about?

VEDANTAM: So it's really interesting because these professionals in some ways get to know their clients better than the client's own family or friends or even their own spouse.

HARRINGTON: Yes. It's apparently something of a cliche in the offshore world that the average client is a man in his 50s with a secret family somewhere. Might be a gay lover, might be a common law wife and some children. But there are usually all sorts of secrets that these wealthy folks wish to keep hidden, and that they have the additional privilege of being able to hire people to take care of in secret.

VEDANTAM: So I understand you conducted about 65 interviews in 18 countries for this book. Tell me a little bit about the people you met. To be a wealth manager, you have to understand financial law. But this kind of role also calls for a certain psychological makeup. What kind of person becomes a wealth manager?

HARRINGTON: Well, several of the people I spoke to described themselves in only somewhat joking terms as social workers for the rich.

VEDANTAM: (Laughter).

HARRINGTON: So you have to have empathy and a desire to help people, but also a very high tolerance for people who would otherwise seem to be so extremely privileged that you might be otherwise inclined to smack them around and say snap out of it, you're lucky.

VEDANTAM: You write in your book about the extreme lengths that some managers go to please their clients or to provide services to their clients. You write about a manager named Eleanor (ph) in Geneva, who said that one of her clients once called her from outside a restaurant in London. Tell me that story.

HARRINGTON: So this is one of the first stories that I heard that really made my eyebrows raise. It was while I was training to be a wealth manager. Eleanor told this story over lunch of receiving a phone call from a client who was in another country saying I've just lost my bracelet outside of a restaurant. Help me find it. And the client didn't identify the restaurant by name.

VEDANTAM: (Laughter).

HARRINGTON: So imagine having someone call you from another country. I mean, obviously the country was identified but not anything remotely approaching a location. So you have to sort of marvel at the immaturity of the client, expecting someone else to help her fix a problem like this.

But Eleanor somehow did it. She determined where the client was and what exactly had been lost and got the local authorities on the case, found the bracelet and billed the client for all the time. And apparently the client was happy to pay.

VEDANTAM: There are sometimes clients do make requests like this, not because they are acting childish but because they actually have an ulterior motive. They actually want to test the loyalties or ability of the wealth manager. You tell the story of a wealth manager in Hong Kong named David (ph).

HARRINGTON: Yes. He got a call early on in his relationship with a client in which the client said that he was in Japan and he was meeting with a Japanese gentleman who had expressed a desire for smoked salmon. And that this client had promised him, I think, a thousand sides of smoked salmon straight from the factory in Scotland, and was now calling David saying get me the salmon. And David said, well, I'm your wealth manager, not your fishmonger. And the client said, well, today you're the fishmonger.

And so David happened to know someone who knew the head of the smoked salmon factory in Scotland and he fulfilled the client's wish. And the client later told him, I basically made up that story. I wasn't sitting across from a Japanese fellow who wanted a thousand sides of smoked salmon. I just needed to see that you had the connections and the will to do what I wanted, when I wanted and not ask any questions.

VEDANTAM: It was almost a test of his ability to jump and sort of perform this outlandish request, perhaps as a guide to sort of other requests that would come further down the road.

HARRINGTON: Exactly. And also it was a test of what kind of powerful social connections this wealth manager might have. Because one of the wealth manager's roles is to set up private markets for deals. So it's not uncommon for them to have several clients, each of whom owns incredibly valuable real estate, art collections, yachts and so forth.

And since these clients are very, very concerned about maintaining their privacy, they don't want to list these things on the open market for sale. If they need to raise cash they want to do the sales as quietly, as discreetly as possible, with as little public recording as possible.

VEDANTAM: One thing that I got from your book is that there are important ways in which the very rich are very much like the rest of us, and ways in which they are not. So wealthy people, unsurprisingly, turn out to have troubled marriages and wayward children, just like, you know, everybody else. But wealth, you argue, can compound those challenges.

HARRINGTON: Well, apparently it's not uncommon for the wealth manager to be asked to find or recommend rehab facilities for kids. Or a parent will ask a wealth manager to break some bad news to the next generation - to his or her own children.

Sometimes the wealth manager has to broker a truce between feuding family members. Say one family member feels that they've been done done by unfairly in the inheritance plan and has to be somehow brought back in so that they don't sue the family. The big risk here is if you have a disgruntled family member who sues. The lawsuit process in many countries makes public many, many private documents that would reveal the extent and nature of a family's wealth, all of which have been carefully guarded secrets.

VEDANTAM: When we come back, I'm going to talk to Brooke about how the rich lead very different lives than you and I. They don't just eat differently and travel differently and live in bigger homes, they sometimes play by an entirely different set of rules. Stay with us.

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VEDANTAM: This is HIDDEN BRAIN. I'm Shankar Vedantam. My guest today is a sociologist - Brooke Harrington. She spent years trying to understand the lives of people who are so wealthy that they're able to circumvent the constraints of national laws and borders. In the course of her many interviews with wealth managers, Brooke talked to one professional in Switzerland who told her a revealing story.

HARRINGTON: So this wealth manager and her boss had been summoned to a country outside of Europe by a client who was sending a private plane for them. She showed up at the Zurich airport with her boss waiting for this plane. And she discovered that she'd left her passport back home in a different purse. And she said to her boss, I've got to go home and get my passport because we're leaving Europe. And he said don't worry about it. And she said again, no, they're going to check my passport. They won't let me leave Switzerland, much less enter another country. I've got to go home. And he said, no, really, don't worry about it.

So she didn't say anything further, figuring, you know, it would be his problem if she got refused the right to leave. Sure enough, the private plane pulls up. They get on it. Nobody checks a passport. It lands in this other country outside Europe. Nobody checks a passport. They get into the private car sent by the client. They're taken to the client's home. They have their meeting. Private car takes them back to the private plane. Private plane flies them back to Switzerland. They get off the plane and go home. At no point has anyone encountered passport control or a customs agent.

And this wealth manager's comment was the lives of the richest people in the world are so different from those of the rest of us, it's almost literally unimaginable. National borders are nothing to them. They might as well not exist. The laws are nothing to them. They might as well not exist. It's potentially very, very dangerous. And I think she's right about that.

VEDANTAM: You spoke with a wealth manager named Dieter (ph). I think this was a German wealth manager who talked about how his job allowed him to schmooze with powerful people, but also in some ways discover things about foreign countries before even the citizens of those countries would find out about those important things.

HARRINGTON: Yeah. He was very proud of the fact that when he was working in Africa, he would have parties and the heads of state of the various countries he lived in would come to his house. And he'd get them drunk and they'd be spilling state secrets by 2 in the morning. And then people like Katharine Graham, the late publisher of The Washington Post, would call him up for advice. And, you know, he could speak authoritatively about at least affairs in some African countries because he'd heard it directly from the mouths of the people who made those policies.

It reminds me a little bit about what we learned when the Panama Papers scandal broke. I kept seeing photos or drawings of the faces of people whose names turned up in the Panama Papers. And it was really a rogue's gallery of people from all walks of life, as well as heads of state and corporate leaders. People who you would think have nothing in common with each other. But at one level, the fact that they are so rich gives them these very important things in common, which is to say, for them, national boundaries and laws are all optional. Taxes are optional. All forms of law are essentially optional at that level of wealth.

VEDANTAM: So this has come up recently in the U.S. presidential election, when Donald Trump suggested that not paying federal taxes or avoiding federal taxes - legally, I might add - for several years made him actually someone who was smart. And he actually said that makes me smart.

As you're telling me about these very rich people drawn from different walks of life who have this thing in common - the fact they're very wealthy - talk a little bit about their attitude toward taxes and their attitude and obligations if - in some ways to footing the common bill.

HARRINGTON: Some of them actually do sound a lot like Donald Trump. When I heard Donald Trump say that not paying taxes made him smart and that if he had paid his taxes, they would have been wasted anyways. I was like, yep, he's the voice of a lot of very wealthy people around the world and their wealth managers, who said essentially the same thing to me.

They - they're very committed to neo-liberal ideology and very committed to the idea that these elite clients are doing the world a favor as wealth creators. And that their initiative should be protected against the government and what they regard as theft by taxation by incompetent governments that would just waste any money they collected anyways. They also, by the way, regard redistribution of collected tax as immoral because it creates dependency on the part of the poor.

VEDANTAM: So I'm fascinated because what you're saying is that, in effect, the wealthy and their tax managers don't just think they're doing something that's practical and expedient. You're saying they actually feel like they're doing the moral thing?

HARRINGTON: There is a very strong component of ideology here. And you see this in the wealth management training program. You see it among at least - about a quarter of the people I interviewed really seemed to believe quite unironically in the justice of protecting the wealth of their clients from taxation. They literally view taxation as theft. And they view government in general as being incompetent at best, corrupt at worst. And they're deeply suspicious of any sort of welfare state programs because they see it as destroying initiative.

VEDANTAM: So the picture you've painted for me, Brooke, of the wealth manager is someone who is, you know, a loyal person, an honest person, a resourceful person, trustworthy. And I fully imagine that lots of wealthy people are probably very good people, high-minded people.

But I want to talk for a moment about the professionals whose clients are very clearly, you know, sleazebags. How do you, as a wealth manager, serve the interests of someone who is cheating his country on taxes, cheating on his wife, cheating his employees? How do you serve a client like that and then go home, tell yourself that you're a good person and sleep well at night?

HARRINGTON: Well, some of them don't. And I think that's one of the reasons why we're seeing a wave of leaks recently, that some people are so troubled by what they're seeing that they just can't stomach it any longer. And they blow the whistle, often with dire personal consequences. About a quarter of the people I interviewed I would characterize as being conscience-stricken about the larger impacts of their work. And they had a range of strategies to reconcile themselves to the implications of that for their own conscience.

One of the ways that they dealt with it was to encourage their clients to donate to charity to offset the negative impact of depriving the state of revenues. Other people I interviewed, including one gentleman in Panama City, said he would actually lecture his clients on the work of Amartya Sen and Joseph Stiglitz, basically on the theory and practice of inequality in the world. And he would point out to them that as they sat in his office in Panama City, a couple miles away people were living in cardboard shacks and had no access to clean drinking water. And what did the client think about that?

Now, that may seem mild. But it's a fairly risky strategy to pursue with wealthy people who are used to having people fawn over them and not challenge them. And, you know, frankly, most wealth managers are replaceable. There aren't a lot of them in the world. But if you find one a little too in your face, you could always go get another one or get another one within a different company.

VEDANTAM: I think a lot of people have impressions of the lives of the very wealthy and imagine what life must be like when you're jetting around in a private plane and being waited on by service staff all the time. And I'm wondering in your conversations with wealth managers, whether any of your own assumptions or beliefs about the connections between wealth and happiness were either confirmed or challenged?

HARRINGTON: I was struck by a man I spoke to in the Channel Islands who talked about how suspicious wealthy people are. It jibed with some things that I've seen personally. And what he said was when you're really wealthy, it's not uncommon to have the experience that everyone is out to get a piece of you. It's like what happens to lottery winners. All sorts of so-called relatives come out of the woodwork asking for loans, asking for help of some sort. Con artists come out of the woodwork looking to get a piece of you.

But that's what happens throughout the lifetime of wealthy people. And so it breeds a kind of suspicion. Why do you want to be my friend? Why are you being nice to me? Are you just trying to get me to give you something? And that must be very unpleasant. And you can see how that would lead at the extreme to a sort of Howard Hughes-ian (ph) retreat or isolation from people. Because if you can't trust anyone, why bother?

VEDANTAM: I mean, the sad thing that you're saying is that the wealth manager might end up being perhaps among the very few people that a rich person can trust.

HARRINGTON: Yeah. I think that seems to be a common story. It's wealthy people and their servants. It almost comes to the point where you can - if you're a wealthy person, you are more trusting of the people you pay to be in your service than the people you don't pay. Because with your family, you might have sort of a King Lear problem. You know, which of my children actually loves me and which are out to get something from me?

But at least when you are having a transactional relationship with an employee, at least the boundaries there are clear. You're paying them for certain services. And you can assess whether they are giving you those services at the standard you require. If they're not, you fire them. If they're doing a good job, you keep them on. There's a simplicity to that that is not present in emotional relationships.

VEDANTAM: Brooke Harrington is a sociologist at the Copenhagen Business School in Denmark. She's the author of the book "Capital Without Borders: Wealth Managers And The One Percent." Brooke, I want to thank you for talking with me today.

HARRINGTON: Thank you.

VEDANTAM: The HIDDEN BRAIN is produced by Maggie Penmen, Jenny Schmidt and Renee Klahr. Our supervising producer is Tara Boyle. This week our unsung hero is Michael Cullen. Michael is one of NPR's audio engineers and the person who seems to know how to solve every technical challenge we have. This week he spent several hours troubleshooting our connection to the Danish studio where Brooke Harrington is based. Michael, thanks for fixing our technical woes with such a kind and calm demeanor. We really appreciate it.

You can find more HIDDEN BRAIN on Facebook and Twitter, and listen for my stories on your local public radio station. If you liked this episode, please make sure you're subscribed to this podcast and please tell a friend who might enjoy the show. Thanks for listening. I'm Shankar Vedantam and this is NPR. Transcript provided by NPR, Copyright NPR.