Not too close, not too far away

Listening to wealth managers, the two main kinds of economic deviance associated with opulence are spending too much and endless accumulation. Stories of wealth squandering highlight the impotence of wealth managers when facing this kind of situation, who most of the time can do nothing but warn the client. Bruce Williams, a self-employed wealth manager in a small town, recounts his disappointment when the son of one of his clients went “crazy” after inheriting and quickly spending a significant part of a several million euros fortune. Bruce finally decided to kick him out of his office, explaining that he did so “because of [his] father; to honor his memory”. While critical of overspending clients, wealth managers also do not like it when the latter hoard too much capital. Indeed, dormant money and endless accumulation directly threaten the transfer of capital to the next generations. When he praises the intelligence of his clients, Owen Price, a wealth manager in charge of a big bank’s largest fortunes, implicitly illustrates which economic practices he values: “The idea is to keep this capital so that it can be passed on”. Claiming that his clients are not obsessed with their portfolio results, he continues, “Intellectually, it has to be interesting. That’s what our clients are asking us. They are not people who come every month just to check their capital gains”. However, it is difficult to say whether the clients he describes are typical or ideal; this speaks to the main driving ideas about a “good” money management: implement projects, spend in moderation - wealth must not be too conspicuous - and finally transmit the capital to the next generation.

This last principle is also known as the rule of “keeping-while-giving”: the preservation of capital is paradoxically possible through its circulation. Indeed, wealth managers sometimes disagree with clients about capital transmission. Harry Thompson has been a self-employed wealth manager for about ten years since he moved on from heading private banking departments. He recounts that one of his “very wealthy” clients - “a client who may own, I don’t know, 4 million euros” - refuses to make donations and “will die on a pile of money”, despite Harry’s advice. He continues, “Anyhow, I managed twice to force her to make a donation. Twice, I succeeded. But she gave away real estate, so she didn’t divest cash”. The relationship depicted here shows that the role of the wealth manager in controlling their clients’ wealth is limited. The two terms - success and force - reflect the power dynamic in such an instruction, which is supposed to be an injunction, but is, at best, only a convincing argument that does not always succeed when the client does not want to hear it. Interviews with wealth managers make frequent mention of the embodied figures of people labelled has deviant because of their inclination for endless accumulation: elderly clients who categorically refuse to give, pass on or spend their fortune, or stock market enthusiasts who show interest only in stock market gains.

The two economic practices wealth managers avoid are thus based, first, on a simple accumulation logic and, second, on a hedonistic logic. These two poles - reckless spending and endless accumulation - directly threaten their work, either by making it unnecessary (if the client wants to spend everything) or by returning them to their role of asset manager. Through these two repellent images, it is “good” behavior with money that is valued and promoted by wealth managers when they help their clients get to grips with their wealth without holding onto it. However, this normative work takes place in a constraint framework due to the relationships between wealth managers and their clients.

Several sociologists have examined how institutions managing the budgets of those with few resources tend to normalise their economic practices.

V. Zelizer (1994) highlights how agents working in charitable institutions during the 19th century engaged in the domestic economy of the poorest. Similarly, A. Perrin-Heredia (2013) points out all the standards of good management that budget advisors try to impose on the people they are supporting. According to her, normalisation is based on the asymmetrical relationship between budget advisors and the poor families facing them. In our case, such asymmetry either doesn’t exist or is reversed: the social distance between wealth managers and their clients places the former in a role that can become “servile”. Wealth managers pay attention to providing advice in a way that it doesn’t directly hurt client’s feelings, whose status must be protected and supported. Remarks cannot be too direct, otherwise the client may end the relationship. Wealth managers are thus gently shaping clients’ assets and economic dispositions, all the more so since they cannot legally make decisions in lieu of the client, unlike in the United States, where legal structures such as trust make this possible.5

Wealth managers thereby use various techniques to make clients adopt “good” behaviour with regard to their wealth, without pushing them, especially when money arrives quite suddenly (mainly through property sales, or major inheritance). Many wealth managers recount trying to convince clients to avoid any sudden changes in the year following the gain, to give them time to get used to the idea that they now have a fortune and to allow them to think about what to do with it. As a result of this waiting time, clients learn to keep their wealth at a distance, simply because they cannot immediately spend or invest it. Rupert Allen heads a wealth management firm located on both sides of the Atlantic. He works with both French and American clients and has also extended his activity to China. He describes working with his wealthy clients for many years. He recounts asking two things of heirs: “First, if you have one or two things you’ve wanted for a long time, you can buy them right away”; “And then, I would like you to leave the rest of it for now, to have time to ask yourself where you are going”. Clients are then invited to deposit most of the wealth into an account “with a very small interest rate” to “let the shock go away”, so that the client can “dream of the life [he/she will] want”. In doing so - putting the fortune on hold - Rupert Allen not only invites the client to develop a strategy that can be deployed long-term, but also teaches the client in practice to incorporate an ethic of prudence and moderation. This kind of learning is quite convenient: once Rupert succeeds in making the client agree to this first principle, he doesn’t have to directly intervene afterwards, for example, in the control of expenditure. This is reminiscent of the forms of learning highlighted by L. Wacquant (2006) in relation to a completely different object - boxing. The latter points out that most transmissions of pugilistic knowledge don’t involve an explicit intervention by the coach. In our case, the waiting time alone - during which clients cannot use or invest their money - will foster the learning of principles that wealth managers value. Among these principles, the learning of temporal dispositions in which “the representation of the future as a field of possibilities that calculation must explore and control” (Bourdieu, 1977: p. 19) is a key element of wealth managers’ normalisation work.

Wealth managers have a very clear-cut mantra on their educational mission, just as civil servants often highlight their moral mission when talking about their work with poor citizens. Mike Peterson, a self-employed wealth manager working with senior executives, explains that his activity is guided by his “concern for economic education”, stressing that “it is scandalous to see the lack of knowledge of people, who do not know what inflation is, who do not know what is risky and what isn’t, who get different financial approaches mixed up, who do not understand the tax system and who never think about their pension”. However, just after his description of clients’ lack of financial knowledge, Mike explains that this is mostly due to his clients’ very busy schedules. The clients, working as CEOs or senior managers, are too busy to take charge of their own capital. This explanation is often provided to distinguish between different types of clients, depending on their greater or lesser proximity to finance, business and economy. On one side, such a lack of knowledge could go along with a lack of time; on the other, it could suggest difficulties in properly understanding the ins and outs of money management. With the latter clients, wealth managers will then use more direct teaching skills than with the former. Clients described as less skilled in understanding finance are often those for whom the relationship with wealth managers is the most asymmetrical. Young heirs, lottery winners, women and, more broadly, the few people for whom the fortune was made quickly and suddenly, are often targeted as clients who need specific teaching. With future inheritors, the work done by wealth managers covers a wide spectrum: from providing them with education on financial and tax issues to teaching them how to use their money, which can be considered as a more prescriptive idea. Some family offices have launched a series of programs and seminars to train younger generations who will become rich in the future. Derek Davis, a wealth manager who opened his own family office ten years ago, explains that he once set up a tailor-made program with “НЕС” - the most prestigious business school in France - teachers in a very short time for the son of one of his clients whose father died suddenly and who thus suddenly inherited a fortune: “Twice a week, he spent half a day here in the meeting room with НЕС teachers: education, training, preparation, etc.” For a few thousand euros, the French family offices association (AFFO) offers families a programme delivered by experts and conceived for their children: training them in money, but also teaching them about “the way of life to adopt when the person inherits a fortune”. This last option is led, not by a specialist working in finance, but by a psychiatrist “specialized in neurosis related to money”. The training is first and foremost “psychological and moral”. B. Camblain, who has chaired the AFFO for several years, outlines a method by which to pass on the essential principles of “good” asset management to the younger generations from an early age in his book on family offices,6 This is based on a system of envelopes. In a first envelope, young future inheritors are supposed to deposit money that will be saved; in a second one, they deposit money they want to spend soon; and, in a third one, they deposit the money that they will give. Saving, spending and giving are the three main pillars that guide the learning of moderation, prudence, calculation and control. Wealth managers often experience less pressure with the younger generations and they can explore far more methods of training with them. The role they undertake with their clients’ children might even lead them to bypass the parents’ views when they consider it necessary. Owen Price recounts that he has sometimes lent money to a young adult with “a business project”, against the parents’ w'ishes, putting forward his “educational duty to get children w'ho will have assets to manage tomorrow ready”: “you don’t lend two million euros of course. But small sums, even when you are rich, 50,000 euros for instance”. Since they want to become protectors of the family fortune, and not only of one client’s fortune, w'ealth managers sometimes take the risk of disregarding clients’ opinions - in this case that of the parents - on the grounds that they know' better what interests need to be protected. The rebalancing of an inheritance plan deemed to be unfair or the lending of money to children deemed incapable by their parents is then seen as a way to contribute to the endurance of capital.

 
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