When I was at Simmons & Simmons a partner in the corporate department, Richard, collared me in the corridor, ‘I don’t know what you do exactly, but could you meet two brothers; clients of mine, who are about to sell their company for hundreds of millions of pounds… they would like someone to talk to!’
Of course, the answer was yes, I saw them and they became clients of mine; a relationship which lasted many, many years – but, what did I do for them?
To answer this question, we need to understand the real concerns of my clients. They were a little concerned about tax, a little concerned about succession and a little concerned that the family would remain harmonious when the fruits of their labour – the shares in their family company – were turned into cash, but none of these aspects really bothered them – what was of real concern, was who could they trust once their money was in liquid form.
It was my relationship with these two brothers, which sparked the idea for my book – ‘When you are Super Rich who can you Trust?’.
To explain, let me turn to Johnny who is five years old. ‘Imagine you have lots of sweeties, Johnny, and none one else in your class has any sweeties, what would you do?’
Johnny might say ‘I would give some sweeties to the people I like, Rupert and Jessica, but I would not give any sweeties to Max – because I do not like him. I would then put the sweets left over in a jar, and give them to Mummy to keep safe until I want them.’
I might then say to Johnny ‘What would you do, if your Mummy does not like you having sweeties and will not let you have your sweeties back when you ask for them – what would you do then?’ Johnny might say ‘I would not give her my sweeties, I would put them in a jar and hide them’.
Most wealthy people are like Johnny. They have had their fingers burned by people they have trusted and so are more cautious. Instead, they would prefer to put their money offshore where hopefully no one will find it. The problem is that with the introduction of the Common Reporting Standard, there is nowhere to hide wealth now – so the issue of who to trust has become more important than ever.
The challenge which I address in my book ‘When you are Super Rich who can you Trust?’ is to ask each adviser, ‘How do you make your money and what keeps you awake at night?’ I then compare the situation of a wealthy individual with a shareholder. A business owner does not trust just one person to run his business, he appoints a board – and so it should be with the management of personal wealth.
I encourage my clients to form an inner ‘Ring of Confidence’ – a team or cabinet, who will decide which investment manager, lawyer, accountant, art adviser, yacht broker to pick. This team then monitors their performance and reports back to the wealth owner once a year at the ‘Annual General Meeting’. However, I have not always been successful in persuading clients to accept the wisdom of this advice.
A client of mine with whom I worked with for many years insisted on having a professional trustee not only to administer and manage his substantial wealth, but also to be responsible for making the decisions – who to engage to invest and how much and when to give to a beneficiary.
On his death, without the client to guide the professionals, their duties and responsibilities began to strangle them. They were first fearful of losing the business – their biggest clients, secondly, they were fearful of being sued by one or more of the beneficiaries and thirdly they were fearful of being in breach of their compliance obligations. They were therefore reluctant to make any decisions without a legal opinion or a court order.
As a result, the trust fund became stagnant in its operation and stilted in its duty to act in the best interests of its beneficiaries. Their indecision and prevarication, which was perfectly understandable given their circumstances, served only to drive deeper the differences between the beneficiaries – despite a forty-page Letter of Wishes.
The outcome of nine bitter years of feuding and fighting was the division of the trust between the beneficiaries. During this time, the only parties to benefit were the professionals. The beneficiaries, although the rightful heirs, were powerless to pull the professional noses out of the trough which was intended for them. They could do nothing, but watch their father’s hard-earned fortune filter down to the families of his trusted advisers.
So, what do we do for our clients?
We can be trusted to provide personal, professional, independent planning for wealth ownership. We identify what your priorities are, how you wish to preserve your wealth and what your vision is for the future. We work closely with our clients to provide a very personal service in a legally compliant, cost effective and efficient manner.
In short, we are ‘Wealth Protection Planners’
To get an independent trust review or discuss all matters relating to privacy, control and protection of your assets please contact us direct.
Contact : email@example.com
020 3740 7423
To buy Caroline's books please press here: