Agents of Inequality: How Wealth Managers to the Super-Rich Undermine Society and What We Can Do About It


Recent years have seen a tremendous amount of scholarship and commentary on the growth of inequality in the United States and what can be done about it. Lots of energy has been focused on public policies that “raise the floor,” or directly help out those at the bottom, by doing things like boosting the minimum wage or taxing high-earners and investing the proceeds in ways that help the public good.


Part of the inequality problem, however, is that trillions of dollars are being shifted off the ledger, hidden from measurement and taxation. Some of this “hidden wealth of nations,” as Gabriel Zucman calls it, is kept in offshore tax havens like the Cayman Islands and Panama that function as secrecy jurisdictions with minimal transparency or reporting requirements. Trillions more has been hidden in trusts and other complex financial arrangements available only to the very wealthy. New researchsuggests that households in the top 0.01 percent, those with wealth over $40 million, evade 25 to 30 percent of person income and wealth taxes—about 10 times more than the general population.

This process is aided and abetted by professional wealth managers who facilitate and lubricate the process of hiding wealth. Many of them work in private family offices that serve wealthy families. These are not mom-and-pop financial planners who help protect families from running out of money. We’re talking about the well-compensated professionals that serve the richest one-tenth of one percent of Americans.

To better understand the work of these wealth managers, and their effect on economic inequality, I spoke with sociologist Brooke Harrington, a professor at the Copenhagen Business School in Denmark, and the author of a new book, Capital Without Borders: Wealth Management and the One Percent. Harrington spent several years being trained as a wealth manager in order to gain firsthand insight into the the secretive world of this discreet profession. By obtaining professional certification through the Society of Trust and Estate Practitioners (STEP), Harrington built relationships, trust, and access with 65 wealth advisors around the world. To conduct interviews, she traveled to 18 countries, including notorious offshore tax havens like the Cook and Seychelles islands.

Chuck Collins: Why should we care about the role of wealth managers?

Brooke Harrington: One driver of inequality—economically, politically, and legally—is that so many wealthy people avoid taxation. In the United States, there are billions a year that could be invested in building roads, schools, and infrastructure. This level of tax avoidance wouldn’t be possible without wealth managers.

For as long as there have been taxes, going back to the early Greeks and Romans, there have been well-to-do people who haven’t wanted to pay their fair share and who deploy a variety of strategies to achieve that. As the stakes got higher, a whole professional class of people emerged to accomplish this goal.

If wealth managers disappeared from the face of the earth, there would still be tax evasion. But it couldn’t happen on the grand scale that we are seeing today without expert intervention.

CC: Could we fairly say then that the wealthy themselves are becoming stateless?

BH: Yes. Wealth is not just detaching from states but from the nation-state system itself. You have these huge piles of private wealth floating around the world, untouchable by states or state authority, through the machinations of wealth managers. And people who own the wealth also detach from states. There’s a certain group of well-to-do people who don’t want to be subject to the laws that bind the rest of us. They don’t want anarchy, because that would be inconvenient. They still want roads and the rule of law. They want murderers to go to jail. They just don’t want the laws to apply to them, because it’s a bummer. So, with the help of wealth managers, they put themselves above the nation-state system by changing passports at will, having multiple residences, and bouncing around strategically to ensure that no national laws apply to them.

CC: Would there be a system of “offshore” tax avoidance without wealth managers?

BH: It would be much smaller. The “offshore” system requires expertise to understand the tax systems of foreign lands and which institutions to trust. And it’s not just learning to work in one country like the Cayman Islands or Switzerland or the Cook Islands. It’s managing wealth in a whole global ecosystem that is orchestrated by wealth managers who often write the laws in these places. It’s like a complex instrument or machine that only they know how to operate.

CC: What do you mean when you say that this “offshore” wealth-defense system is on a “collision course with civil society”?

BH: “Collision course” is a quote from a critical accountancy professor named Prem Sikka, who talks about the ways that legal and financial accounting expertise has been developing counter to the common good for a long time. A segment of the very wealthy have been free-riding on the benefits of society while not paying their fair share. This threatens to unravel civil society itself. There are signs of this everywhere, including in a news story about how the city of Omaha, Nebraska, has stopped paving its streets because of insufficient tax revenue to fix potholes.

CC: In the profession of wealth management, you write that the formal training process is part information and part “socialization.” What kinds of people become wealth managers?

BH: The Society for Trust & Estate Planners (STEP) talks about this in their training manuals. Frankly, the people who have the easiest time getting into this profession are those “to the manor born”—those with the elusive skills that make them trustworthy to their clients. Historically, this means they were white and upper-middle class—the people born rich but not so rich that they don’t have to work.

In his book Old Money, Nelson Aldrich talks about the “curriculum of old money.” Being born into a family with wealth is not something that just happens to you. There is a training program that starts when you are a tiny child, with nannies, table manners, and private schools. All your life you are taught to interact with individuals and society in a particular way. That gives them an enormous leg up in becoming wealth managers and working with other old-money families.