Say you’ve won tens of millions of pounds and you’ve already opted for anonymity, having been paid already. But you now need to see about getting those private advisors - can you trust them to keep quiet and actually act in your best interests?
People always say, “now you have enough to get private financial advisors” - but can you, (1) trust them to keep quiet about the funds (presumably they’ll put 2 and 2 together and see that you’ve been very “lucky”); and (2) can you trust them to act in your best interests (they might try to milk you dry, surely?).
Financial advisors also manage the assets of people with far higher net worths than lottery winners (multi-hundred-millionaires, billionaires) and it seems to me that they aren’t generally going around blabbing to people, stealing money and otherwise breaking confidentiality.
That’s not to say it doesn’t happen but it appears that on the whole people in that line of work do their jobs properly. I’m sure you need to look for people with a good track record and certified in their particular field of course.
I’d imagine that’s standard procedure, similar to the attorney-client relation. Handling other peoples money as a profession wouldn’t work very well if the advisors couldn’t be trusted to be discreet.
As far as “why” I can think of several reasons.
I don’t want my money to lose value so that means investments.
I’m not an expert investor so I’ll need some assistance making wise choices.
I’m not up on all the tax codes so I’ll need help making smart decisions there to minimize the tax bite.
I want to do worthwhile things with my money and that may require some sound advice and planning (even as simple as “make sure my retirement which starts today is funded through the end of my life” or “provide for my kids college education”).
I don’t want to make “managing my money” a new full-time job.
I’m not sure I completely understanding the questions. Are you worried that the financial adviser will reveal your identity to the press, or blackmail you by threatening to do so? I don’t think there’s much of a case either way. There’s usually a press announcement when a big lottery winner comes forward, but I can’t see them paying for that information. There wouldn’t be any incentive for your adviser to out you. As for blackmail, the information he has isn’t worth much. If I won a lottery, I might prefer to remain anonymous, but I’d hardly give up the millions to buy someone’s silence on the matter. I’d just say “fine, tell the world who I am, but you’ll be fired by the end of the day.”
Any reputable advisor would rather continue in business. If he blabs about you, nobody will ever hire him again. Toss in the fact that, as Valgard mentions, these people routinely deal with billions of dollars and you can see that it just doesn’t happen.
Unless you are asking Uncle Lou for financial advice. Then all bets are off.
Surely there are some out there that don’t do that much business, for whom robbing, say, the recent half billion dollar winner blind would set them up for life.
Of course, in that case, it’s just a matter of hiring someone who does, and that kind of info is surely not difficult to find.
If I came into that kind of money I’d give a reputable company such as Vanguard a call (I do some relatively small investing with them), ask to speak to the “High Net Worth” group and inform them that I’ve got $20M that needs proper management, can we discuss strategies.
They handle kajillions of dollars. While tens of millions is staggering to the average person, to a good investment firm it’s no great shakes.
My BIL is a financial advisor. I couldn’t tell you a single client of his. You’re either discrete in that business, or you’re not in it for long.
But in any event, having someone else handle your money requires a bit of due dilligence and attention. You need to be aware of where your money is going and more importantly, exactly what you’re being charged for and why.
And don’t ever hire someone like Billy-Bob’s Pornatorium and Financial Services Group.
Why would they think blurting out your name and that you won big would be of any benefit to them?
Sure, they might get their name in the papers as an untrustworthy financial advisor and you might also get 10 minutes of fame. Then what? You’re quickly forgotten because of the latest episode of [add mind-numbing tv show here] is on and the advisor is out of business.
Of course they stay quiet, or you take your money (and their fees) elsewhere.
A friend of mine is a portfolio manager and doesn’t even mention subjects about individual clients.
If I managed to win the lottery and keep it secret, I don’t see what my financial adviser would gain from telling people about my win. He would lose my business, and thus not be able to collect fees from me for managing my account. He would also lose his license, and not be able to collect fees from anyone else either. Who’s going to pay him enough to make that worthwhile? I would have already changed my phone numbers and e-mail addresses, and gotten used to hanging up on telemarketers and shooing away those who come to my door to bother me.
As to how I know they aren’t going to milk me dry, I already have an investment account, albeit not one in the tens of millions range. My adviser and I meet quarterly, and he shows me quite clearly where I stand, and my profit and loss for the quarter/year/last five years/etc. I suppose he could forge the documents, but that would be a lot of work, and I can also go online and check my account to be sure it agrees with what he tells me. It is a fairly large firm that handles my account, so I don’t think he can hack the website and deceive me that way.
I like my financial guy quite a bit. He is scrupulously fair and above-board with us, and has done a good job at getting a good-to-excellent ROI even in a down economy.
I doubt he would handle a twenty million dollar account any worse. Just a slice of a bigger pie for him.
In terms of bleeding you dry I recall an Oprah show (I know, I know but stick with me here) where she interviewed lottery winners, and her big piece of advice to them - given very seriously and clearly from personal experience - was “Sign all your own checks”.
The idea being, if you are signing checks, and not allowing your financial adviser, or some assistant do do it, you’ll know where your money is going. Or at least have the opportunity to ask. I don’t imagine I’ll ever get lottery-winner-rich, but I’ve always remembered that advice.
That is, yes they will keep your identity quiet if that is your expressed wish. People who rely on their clients’ confidence but fail to keep their secrets quickly find themselves out of work. Nobody wants an accountant they fear might just blurt out “And you wouldn’t believe how many of their daughter’s abortions they’ve made me pay for” in the pub over drinks.
Most of them are trustworthy, but don’t just blindly trust that they won’t steal from you. Everyone has their price. Bernie Madoff seemed like a trustworthy guy, ask his investors how trusting him worked out.
Being rich is a full time job. You are going to have to learn enough about how investment works to tell when someone is lying to you(*). You are going to need to hire multiple advisers and ask them to check each other’s advice.
It won’t be easy, but you can find people worthy of trust. Still, don’t trust them completely.
Unless you are rich enough that you just don’t care. “Hmm, my accountant stole $800 million from me. Bother, I guess I’ll have to have more modest breakfasts for a few months. Jeeves, see about finding me some mercenaries to hunt him down and kill him. Can’t afford to have people thinking they can get away with robbing me.”
There’s someone on this board who posted in a “What would you do if you won the lottery?” the following plan: Hide some large amount of money (10 million?) so it’s completely untouchable by anyone but you. It’s only purpose is to be used to track down and assassinate any advisor or consultant who steals from you. Apprise all advisors and consultants of this fact.
I wouldn’t do it though because I’d be worried about scaring away the type of investment manager I’d want - one who prefers to avoid risk - and working for someone who anticipates they’ll be a victim must be risky.
