Chasing Wealth
Twenty-five years ago, I was in my second career at the same bank. I had spent fifteen years rising like a meteor at Bankers Trust, a white-shoe bank of the old order (positioned originally at 16 Wall Street at the famous corner of Broad and Wall across from the NYSE, Federal Hall and JP Morgan). Lately the bank had become a renegade, exiting the retail banking business and focusing on “Merchant Banking”. It sounded very cool at the time and the bank’s tag line was that we were “Architects of Value”. Creativity and innovation were our mantra and I was one of the young bucks on the scene. I had done a bunch of creative stuff including launching the firm’s options and futures business (which turned into the derivatives business) and launching the firm’s Emerging Markets Department (the first of its kind anywhere on Wall Street). Then I had hit the proverbial wall when a cotton merchant in Memphis defrauded us out of $125 million. It was on my watch and it got me banished to Gulag Toronto for two years of penance. When I got paroled, I chose to run a big operating unit called Retirement Services, which I was thoroughly enjoying.
One day the President called me and told me he needed me to switch it up and take over the firm’s private banking business. What used to be a banking backwater was quickly become an important new business line for us and most other banks. Demographics and increasing wealth concentration were driving a growing need for high net worth money management of a new variety. Creativity was needed where walking-the-dog service had been the order of the day in days gone by. I did what I always had done, I saluted and asked how high they wanted me to jump.
That began a six-year run (particularly long for me at the time) of building and running a global private banking business that taught me many things about wealth and about life. I would like to start with a disclaimer. The private banking business of Deutsche Bank that is getting all the press these days for both banking Donald J. Trump and for Russian money laundering, is the successor business of the one I built in the 1990’s. I cringe every time I hear it mentioned on MSNBC and wonder if bad implications can be traced back to things we had done in the Bankers Trust Private Bank in those early days. I think not, but it constantly gives me pause.
Having built the bank’s Emerging Markets business in the late 1980’s, I was all too aware of the concept of money laundering. With all the flight capital tendencies in regions like Latin America, private bankers were thought to be people who carried suitcases of money from places like Argentina, Venezuela, Brazil and Mexico to onshore (Miami) or offshore (Panama and Cayman) locations. There was truth to the existence of flight capital and I will not say that no bankers ever transported money for clients, but it was more a joke than a reality. The level of sophistication of wealthy Latinos in getting money out of their capital-constrained countries was amazingly advanced even in those days. Law firms existed in their entirety to just serve those people. We were vigilant and cautious about who we took money from and the source of that money. We spent inordinate time and effort to protect our reputation from the schmutz that was in excess supply.
I learned several valuable lessons while running the private banking business:
- I learned that wealth is somewhat random, and it comes as much by luck as by merit.
- I learned that intergenerational wealth transfer does nobody much good. Happiness comes from achievement and inherited wealth stifles achievement more often than not.
- I learned that extreme focus on wealth impedes happiness.
- I learned that the more you chase wealth, the more elusive it becomes.
As I have moved on from wealth management in my career, I am much happier in more “productive” pursuits. The pay may not be as good, but the rewards are far greater. Meanwhile it seems that everyone I know in banking has gravitated to some form of wealth management. It makes me think that our economy has certainly concentrated wealth way beyond the productive level and that this will be bad for the economy sooner rather than later. When people are too focused on preserving wealth and less focused on creating wealth and making the pie bigger for everyone, we all suffer.
Here’s the funny thing to me. I got into private banking, not by choice, but by virtue of the needs of the army. I was pleased to see that it had morphed from a walk-the-dog service business into a creative financial engineering business. Now, when I am inundated with creative young private banking types, looking to get a piece of my meager wealth management business, I find that I prefer to keep my money where it has been because the level of service is high. I don’t ask them to walk my dog, and I never bother to look at the returns they achieve. I am decidedly not about wealth accumulation. I would like to preserve what I have to last so I don’t have to think about money. What greater pleasure can there be in life than to not have to think about money. As Forrest Gump’s mother used to say, “one less thing.” Let the others chase wealth (I doubt it will ever stop being an obsession to many), I will focus on chasing butterflies and other flights of fancy.