Serving the Super-rich The Bottom Line


Serving the Super-rich

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Now on BBC News, The Bottom Line with Evan Davis.

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There are a couple of thousand billionaires in the world, a couple

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of hundred thousand wealthy individuals of assets of $30 million

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or more. How do you get money out of those people? You may be able to

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think of a number of ways, but one is to work for them, sell to them,

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serve them. As the rich get richer, many people are finding themselves

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doing just that. Businesses large and small are having to meet the

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demands of ultrahigh net worth individuals. Today people here about

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some of those businesses and about life on planet super`rich. Each

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week, influential business leaders gather in London at the BBC Radio

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Kent programme, the Bottom Line and you can see it as well as he wrote.

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`` as well as listen to it. Three guests with me around the

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table representing businesses serving the super`rich.

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Richard Wilson, the CEO of Billionaire Family Office. Based in

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Portland, Oregon. You will have to explain at the outset what is a

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family office? We help manage the capital of people

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with a lot of money. A dedicated team who takes care of all aspects

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of your capital. A kind of financial advisor?

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Yes. Many things under one roof. We all talk to each other closely. That

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is the extra value we provide. There are Single`family office is

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and multi`family office is. What is the difference?

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A single is dedicated to one individual or family, but a

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multi`family office serves many different clients. They must

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register depending on which Government you have. They could

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serve 200 clients work to clients, but that would make them a

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multi`family office. So, I am Rich and I have my own

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office and they are looking after my finances. That is a Single`family

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office. My staff, entirely private. But they might come to you as well

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as an external contractor to help add support?

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Correct. Why would they come to a family

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office as opposed to going to a large bank?

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We could discuss that in a whole show! You have different managers

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and different teams dedicated to your needs.

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My next guest. Karen Clark, the Director and Head

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of Private Clients, SandAire. Another family office. We have 18

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families that we work with based in London. We have roughly 2 million

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assets. How rich you need to be to get into

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your books? ?120 million is what our average family is worth. At our core

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we are a discretionary investment manager. We manage all of the liquid

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assets of families. In addition, we spend a lot of time working on how

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to prepare the family for the money. That has to do with education,

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engaging with a next`generation, so that they are well prepared. That

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could be for financial education to other skill sets, such as having the

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appropriate level of self`esteem. That would be to take on roles as

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heads of companies, to manage and be responsible for a great amount of

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wealth. How do you do that? You are helping

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the younger generation not lose the money that the family has built up?

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Absolutely. We're trying to defy the worldwide phenomena of shirt sleeves

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to shirt sleeves in three generations. That means that the

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first`generation pizza and by the time the third generation comes in,

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they lose it. `` that means the first`generation comes in and by the

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time the third generation comes in, they lose it. My third guest.

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Lucy Challenger, manager of Bespoke Bureau. We have clients who are

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wealthy. We find them butlers and nannies and chefs. We create the

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skeleton of the house. We also have the British Butler Academy. We train

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the staff. More and more we find that people want to come into this

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industry and do not have the right skills. So we teach them. Then we

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place them in amazing jobs. Permanent climate? A single night?

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We do permanent placements, temporary placements, it may be

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cover for a certain amount of time. On the whole, it tends to be

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permanent placements. Maybe someone who needs a butler or an estate

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management for several estates around the world. That of course

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changes the salary. We will discuss that more. But tell

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me about the staff. Who are these people? You have the traditional

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background, hospitality. People who have worked in hotels, restaurants,

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commercial ventures. The private industry is very different to a

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hotel or restaurant. In a commercial environment you have set hours. In

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private industry it is very different because a butler may work

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an 18 hour shift. He may have two leave at late notice and jump on a

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private jet to New York on business. Your life is much more involved in

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the life of the employer. You are much better paid, of course!

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How much? A good butler at the top of their game can earn anything from

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?200,000 plus per year. Not bad. But you have to give up a

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lot of your life? In a way, you become part of somebody else's wife.

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`` somebody else's life. Tell me about the clients. Who are

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the? A lot of my clients make their money

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from operating in business. They perhaps sold their business or to

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cut public. 80% of my clients come from private sector. That is the

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same for our client base. Successful entrepreneurs who have sold the

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business and are looking to do either nothing much or actively

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looking for additional things to do with their time and money. We also

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have clients from emerging markets. Places like China, the Middle East.

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Relatively new money. It occurs to me, you talk about

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family offices and the staffing thing, it does feel as though their

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lives may be quite compensated. I wonder whether simplicity isn't

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something that is useful in life? You people are in a way the hangers

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on who handled the complexity. I had one client who sat me down and

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showed me his balance sheets and there were only four items on it. He

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was a millionaire. He had personal residences.

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You need someone to manage that and then someone to manage them and

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someone to manage the managers! Not necessarily. A lot of the gentry are

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downsizing. They do not need ten staff, just one person in their

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house. A butler or a house manager who can do all the housekeeping.

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That is what gave rise to the concept of the family office. It is

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intended to signify matters. That is one of the things that we do. Most

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of our clients come in having had experiences elsewhere. They have

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been other service providers and have a network that they do not

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understand. Assets that they don't know where those are, they don't

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know if they are achieving their goals... It is our job to come up

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with a solution that works for them. Most often, it is quite simple at

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the end of the day. When it is not simple, it is up to me to manage.

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One of my clients might be missing millions of dollars and does not

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know, so he must trust me to check that. He wants to hire people he

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trusts. This is fascinating. You started on

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this, Karen, it reminded me of Rockerfeller going to a tailor and

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Taylor tried to sell him shirts. He said these shirts are nicer. Your

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sons Bob these. And Rockefeller said that the difference between me and

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my sons if they have a rich father! But isn't the problem managing a

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generation? Trying to give that generation the motivation to have

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drive and ambition in life? That is the primary concern of our clients.

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Ringing up their children in essentially the same way they were

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raised, ie without the money. But of course they do have money. It is

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very difficult therefore to know what discussions to have when, how

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much do you let them know, when do you let them know? Do you control it

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beyond the grave? Truss structures? Warren Buffett says he wants his

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kids to have enough money to do anything but not so much that they

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can do nothing. I think the problem in trying to treat them like they

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are normal, is it is kind of impossible to recreate. For example,

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one client in Monaco had to fly somewhere far away and could not

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take their normal plane and so they used a commercial plane and his son

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turned around and said, why are all these people on our plane? These

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kids have gone to an expensive school, are driven around by a

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chauffeur, and are visiting multiple countries each year. Their friends

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do not do that, so it is hard to recreate that situation for them. I

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had a call from a lady in California who wants her son trained in

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etiquette so that when he goes to parties he knows how beat the Royals

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and interact. He is about 17 years old. We are arranging to train him

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in etiquette. How to present himself as a gentleman.

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Are you hiring people to bring up children? No. We are giving them

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skills that the parents perhaps do not know themselves. There are

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different mannerisms. You do not want to insult or upset people.

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different mannerisms. You do not want to insult Studies have shown

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that the extreme wealth for a child can be as bad as extreme poverty. If

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they are not allowed to go and play with another child... Or taught not

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to trust their potential girlfriend because she may be a gold`digger...

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We enjoy things day`to`day without giving it a second thought. You have

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to understand the messages. Here is a personal question. Somebody noted

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that con set of SIDs. `` concepts. This is people who walk with other

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people who are on a different income level to them. Do you think that you

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are sometimes, is it a struggle? Drinking the offensive line? ``

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expensive wine? If you're socialising with people and you

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reach for the cheque, if you are the wealthiest person at the table, they

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are quite surprised. I think a lot of wealthy individuals think that

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because they have so much money that it should be on them. They still

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appreciate and understand the value of money. I think we've got a good

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idea about the clients you serve. Don't we need to talk about the

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macro`economics? The problem the world has with the super rich is

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that it's hard for them to spend the money they accumulate. But we need

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money to circulate. But we need them to so other people are earning! We

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can't have the super rich building up and saving all that money? How

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can we circulate the money? The concern is conserving the capital.

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It depends on the generation, location and so on. I think you are

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correct. It's about recruiting staff. To protect the money. Most of

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the clients we have are paying a fair amount of tax. That contributes

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to the wellbeing of certain countries. They put money back into

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the community through their foundations. Philanthropy, is it a

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big part? For almost all of them. It is not about the benefits of giving

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back from a tax perspective but most billionaires cannot spend what they

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are. `` what their assets are. The downsides to communism and insights

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to capitalism. These are the winds. None of these people want the

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lottery. They did not inherit all of their money. They are very active.

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They are always buying and growing businesses. I can see when people

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have concerns about an economy which is relying on a large percentage of

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the people who have as much wealth as most of the people on the planet.

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`` small percentage. What do you think about the inequality? I think

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it is exciting. The more billionaires than ever before. The

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industry is booming right now. That is more equality now than there used

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to be. I think we are all struck by the inequality of wealth which has

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come to be in the last 20 years. I think that is very little we can do

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to change that. We are trying to inspire people in the

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next`generation to make the right decisions so that those who have

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great wealth also have great influence and use it to good effect.

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For the three of us, that is what they are trying to do. We are

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trained to help individuals. Inspiring people and wanting to

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succeed... If you get a lot of wealth and that is that award. ``

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the reward. We should be encouraging people to want to work and be

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successful. Our clients are role models. The biggest criticism would

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be around the existence of the super`rich. Working for the

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super`rich now that we have them. It does feel as if you read one of

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these 19th`century novels... It does feel as though the world has entered

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or returned about to that kind of past. Even the word Butler, what do

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you mean? He is a wealth of information and support. He runs the

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beautiful house and make sure that the life is easy. One of our clients

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did not know where to shop or eight. `` eat. His Butler gave an insight.

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She told him where to go and where to eat. `` He. I can think about

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things that the world needs to do right finding a cure for malaria.

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But in terms of inequality, the big growth businesses and top end retail

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is oriented towards where the money is rather than were the leaders. ``

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where the need is. Wouldn't it be good if we get not worry about that

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handbag and we could be slightly more concerned about something like

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the cure for malaria? You do not want to shut down wealth creation so

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how do you deal with that? People with money also have to have fun.

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They could be working on the cure and fitting and millions and

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millions that they would also like to go on holiday and Spencer team at

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the children. `` spend some time. Some people are spending their money

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and child to spend it faster. Some people cannot find enough things to

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buy with their money. If you look at what Bill Gates has done, it is

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remarkable and it has brought a lot of attention to how much giving away

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has in contrast to just waiting for your death. Bill Gates is pretty

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good. Not all of them are passing along all of their wealth of giving

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it away. The children are not merely conspicuous consumers. Some people

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listening with think I would never want to do what you are doing. There

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are others who are probably thinking this is a good line of business. It

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is growing. They might think this is where the money is. How do you

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start? You don't cut your teeth on office clients. You progress in

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terms of financial services or the private bank. But it is not an easy

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world to get into. It is all about the trust and this is not the nine

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to five job. I have spoken to my clients at 2am and 4am. If you are

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not cut out for that then it is not the right place for you. You will

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not go anywhere. If they can't get a hold of you when the energy you have

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violated the trust. You have to be on the terms... We are not servants

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and we are not yes`men but there are boundaries. You have to know what

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you're getting into. It is growing and growing. Our clients can look at

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our website and contact us. They like to mix with each other because

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what they are doing is increasing and meeting billionaires to

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billionaires. Once you have placed somebody in one house and they trust

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you then do a friend will trust you as well. Their neighbour. So it

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goes. It is looking to a different world and it is fascinating. But we

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do need to draw to a close. My guest today were Richard Wilson, Karen

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Clark and Lucy Challenger. Thank you. That is the last in this

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current series. I hope you enjoyed listening. Downloads are available

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online. Good evening. It has been a weekend

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of contrast. For many people it has been lovely with the sunshine but

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unfortunately it has not been like that for everybody. It has been the

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