The Dark Side of Wealth How the Super-Rich Are Coping with the Crisis
The super-rich lost a great deal in 2009, with hundreds of unfortunates losing their billionaire status. A Swiss private banker talks about the ugly consequences of the crisis for his elite clientele and the discreet services he is sometimes asked to perform, such as buying secret apartments for clients' mistresses.
When he speaks, Heinrich Weber sounds like a psychotherapist. But his profession involves addressing the worries of people who might normally be considered to have little to worry about. It's an area that Weber, 46, knows well. He has heard plenty of tales of woe from his super-rich clients.
"Those who were born rich have seen the dark side of wealth," says Weber, who is wearing a gold watch, a pinstriped suit and a pocket square, as he talks about his everyday life as a Swiss private banker. He isn't being ironic.
People worth hundreds of millions of Swiss francs, dollars or euros, says Weber, suffer from the "high expectations they are expected to fulfill." Besides, he adds, they are mistrustful, believing that people are only interested in them for their money. This often causes "emotional problems and leads to isolation," says Weber, with a sympathetic look on his face. Some of his clients even "deliberately wear old sweaters and drive old cars, so as not to appear rich."
Since the collapse of US investment bank Lehman Brothers, the clients in Weber's world are faced with another painful reality. They are losing money -- a lot of money. According to the US business magazine Forbes, the present net worth of the world's billionaires shrank from $4.4 trillion (3.1 trillion) to $2.4 trillion during the financial crisis. And the number of dollar billionaires worldwide declined from 1,125 before the recession to only 793 in March 2009.
Some of these prominent former members of the billionaires' club lost part of their money in Germany. US investor Christopher Flowers, for example, had to say goodbye to his billionaire status as a result of his stake in the now-nationalized German mortgage lender Hypo Real Estate. Madeleine Schickedanz, a major shareholder in the now-insolvent trading company Arcandor, lost much of her fortune. German businessman Adolf Merckle even committed suicide when his empire threatened to collapse.
Financial consultants like Heinrich Weber are very busy these days, even though his line of work is so discreet that he doesn't even want the exclusive Swiss private bank for which he works mentioned by name.
"If you're the kind of person who has an irrepressible urge to tell his family or friends about these high-flying people, you shouldn't work as a private banker," says Weber, who recently published a handbook for working with the super-rich co-authored by industry colleague Stephan Meier. In the industry jargon, these people are known as "ultra high net worth individuals," or UHNWIs.
The Need for Discretion
"Fortunately, my wife doesn't have a problem with the need for discretion," says Weber. "As a gynecologist, she is familiar with the concept of doctor-patient confidentiality." And his two small children aren't exactly a risk factor either. When the family recently took a trip on the luxury yacht of Weber's best customer, the children did ask "why the man has such a big ship," but they are still too young to be interested in specific names and facts.
Weber uses a quote from Goethe to describe the way he goes about his business: "Whoever wishes to keep a secret must hide the fact that he possesses one."
And there are still plenty of secrets to go around, with about 20,000 UHNWIs living in the world today, more than a quarter of them in the United States. Germany, say experts, is home to an impressive 1,150 UHNWIs. What they all have in common are personal assets of at least $50 million. For some time now, discreet crisis management has been in demand in their milieu. "We work like a coach who asks the right questions," says Weber.
Family-owned companies, in particular, "have faced difficulties," he says, adding that many are deeply in debt. "For instance, I am urgently seeking a buyer for an enormous art collection," says Weber, who only shows limited pity for his clientele.
There is a reason for his relative lack of compassion. Those affected by the financial downturn generally do not need to change anything about their lifestyle, as selling their villas or luxury cars would simply not bring in enough money, and the running costs represent a negligible share of their total income. And, of course, they can still afford to pay for the services of someone like Weber, even though the traditional culture of banking secrecy in his native Switzerland is gradually crumbling.
- Part 1: How the Super-Rich Are Coping with the Crisis
- Part 2: Obsessed with Secrecy