Financial Planner and Wealth Manager
No person’s career story should be viewed as ‘typical’ for everyone else within the same career path. That is certainly true of the following story, which – on the surface – seems to realize ‘The American Dream’ for the child of Asian immigrants. But below the surface, as in most careers, there were challenges to be met. The next chapter in MS’ career story is yet to be written but she will likely proceed successfully along a new path, using her determination, formal education, and mature judgment.
FAMILY BACKGROUND
MS was born in a large U.S. city to parents from South Korea, who were determined to see her “fulfill the American Dream (as MS’ parents defined that dream): go to Ivy League schools and become a doctor or a lawyer.”
CHILDHOOD INTERESTS
As a child, MS was ‘socially aware’ that many adults in her city neighborhood worked hard but were paid less than a fair or minimum wage. She believed she could try to help underpaid people by organizing and participating in protests directed at legislators who could adopt laws requiring employers to pay a living wage to their employees.
While MS was determined to chart her own American career path – not involving medicine or the law – she also heeded her parents’ advice to do well in school to qualify to attend a good college or university.
EDUCATION
As a result of her superior academic performance in high school, MS was admitted to an Ivy League university – on a full scholarship due to the low level of family income – where she took a wide range of courses, ranging from business, technology, and writing, so she could be prepared for whatever path she might choose to follow after graduation.
While still a university student in a city-based campus, MS was drawn to the punk and goth scenes and to ‘progressive’ politics.
Editor – Progressive political philosophy focuses on support of social progress and reform. Progressivism holds that it is possible to improve human societies through political action involving government’s direct or indirect support of advancements in science, technology, economic development, and social organization. At the other end of the political spectrum, Conservatism generally favors less government involvement in such activities, believing that the private sector is more efficient and permits more individual freedom for individuals to pursue such goals in their own way. It is possible for any person to hold some progressive views and some conservative views at the same time.
Following college graduation, MS moved across the country to a city whose population she thought would support her political views. There, she campaigned for a higher minimum wage to be enacted by the city government, affecting all city-based employers. She planned on finding a way to earn a living while pursuing a career in activism.
FIRST JOB NEVER A BINDING CAREER COMMITMENT
MS’ first adult job was as an administrative assistant within a non-profit corporation. After organizing and leading large civic protests during her off-duty, personal time, she found her limited-focus duties to be too repetitive.
INTEREST SPARKS A CAREER PATH
While working at the nonprofit business, MS developed an unexpected fascination with her small but hopefully growing, retirement account. She began listening to stock analyst calls with C.E.O.s, buying stocks for herself on E-Trade and watching with great happiness as some of her picks spiked much higher in value. Within a few years, she left the nonprofit world for finance because “That was where the real levers of power were,” she said, adding, “My parents were so relieved.”
ENTERING THE WORLD OF A CAREER IN FINANCE
MS started her career within the financial industry by working as a receptionist and studying at night to become a financial planner. Once she was certified as a financial planner, she signed up clients who wanted to “align their wealth with their values.”
Editor – A financial planner works with clients to help them manage their money and reach their long-term financial goals. A financial planner needs a thorough knowledge of personal finance, taxes, budgeting and investing. They may specialize in tax planning, asset allocation, risk management, retirement planning or estate planning. Planners advise and assist clients on a variety of matters, from investing and saving for retirement to funding a college education or a new business while preserving wealth.
Financial planners are considered “fiduciaries.” This means that they are legally bound to act in a client’s best interests and can’t accept payments from any third parties when recommending specific financial products for their clients.
WORDS AND NAMES WITHIN A CAREER PATH MAY CONSTANTLY EVOLVE
When MS started her career in finance, hoping to work with clients who shared her views about supporting only businesses which cared about the physical environment, climate, fair treatment of their employees, she had to master a shifting vocabulary with the financial world.
The first term MS heard to describe investing for reasons other than only profitability, was ‘socially responsible investing.’ But soon, that phrase was replaced by ‘E.S.G.’ – referring to environmental, social and governance issues. Then such investing strategy became known as ‘impact investing.’
“We would work out tax-efficient strategies to move clients out of ‘legacy’ (inherited) positions and into a new portfolio that was more consistent with their personal conscience,” said MS. For clients who had investments in “offender industries,” such as fossil fuels or private prisons, MS could help them sell the stock and plant trees in the Amazon, structuring the trades to minimize the cost in taxes.
FRIENDS IN BUSINESS (YOUR “NETWORK”) OFTEN REFER NEW BUSINESS
While meeting people who interacted within the world of finance – such as lawyers and stock salespersons – MS was told by a lawyer about a potential client who might benefit from MS’ expertise: a young woman in line to inherit part of an iconic American fortune, who turned out to be a granddaughter of a long dead oil tycoon, once declared the richest living American.
Luckily (defined within these career stories as “experience meets opportunity”), MS and the potential new client (“C-1”), both females, found they had an “an instantaneous meeting of the minds.” Despite the differences in their family’s backgrounds, the two women shared political views and an irreverent posture toward the money around them. C-1, in addition to being a multi-millionaire heiress, was a multimedia artist, identifying herself on some social media as a “bastard princess” advocating support for “environmental conservation, animal welfare, human rights and reforming the way the justice system handles gender violence, racial inequities and bias and transphobia.” C-1 seemed eager to pull money out of the petroleum investments that had built the family’s multi-billion-dollar wealth and repurpose it, in a spirit that MS likened to reparations.
Editor – It’s possible, legal, and ethical to work with clients – in any business or professional relationship – with whom your personal beliefs do not coincide. This applies to anyone, for example: lawyers representing bank robbers and doctors treating people injured after starting a shoot-out with police.
Where the fiduciary’s and the client’s personal beliefs are not aligned, the fiduciary must be extremely conscious to avoid trying to influence the client’s decisions by injecting the fiduciary’s personal preferences into the factors to be considered for final decisions by the client. The fiduciary must choose between disclosing their difference of opinion or never mentioning it. If the situation becomes too awkward or stressful for the fiduciary to continue working with the client, the fiduciary should withdraw from the business relationship after providing adequate advance notice.
At the outset of their financial planning relationship, MS and C-1 got along well. C-1’s financial worth was about five million dollars. Initially, C-1 moved one million of it to be invested through MS, who agreed to manage that investment for an annual fee of one percent of the assets, a standard industry rate. Theire business relationship flourished so C-1 soon transferred the rest of her assets to be managed by MS and introduced her to one of her sisters, who also became a client (“C-2”) of MS.
The two sisters asked MS to help run their mutual trust fund, for a salary in addition to being paid percentage commissions for stock transactions on behalf of each sister’s individual assets. As her duties expanded, MS assisted C-2 with insurance and real estate issues. She helped C-1 manage art projects, pay bills and navigate family dynamics. However, after about 8 years, their personal and business relationship underwent a spectacular rupture.
CHALLENGE – POTENTIAL CONFLICT OF INTEREST
One of MS’ important duties was monitoring the matter of where her clients lived and conducted their business. To minimize state income taxes – which vary considerably from state to state – it was important to have records establishing where business activities and residences were located each tax year. The differences in tax payments can be measured – in the case of C-1 and C-2 – in literally millions of dollars. Thus, to avoid paying high taxes to state A, MS helped C-1 and C-2 buy real estate in state B. And MS kept track of the time each spent in state A. It became a game of counting the days each client spent in each location.
One particular ritual was always observed: four times a year, to maintain the claim that their trust investments were not run from state A, the sisters boarded jets to some locale beyond A, before casting their official votes on investment decisions. They would fly to a different place each quarter.
After four years of crisscrossing the country to attend to the sisters’ finances, elements of the job were making MS increasingly uncomfortable. Her employers had refused to contribute to her health insurance or her payroll taxes, to avoid the appearance of operating in the state where MS lived.
A more important complicated factor was that the sisters didn’t always get along. There were disputes about the dispensation of funds. C-1 supported animal-advocacy groups, such as the World Wildlife Fund, but MS advised her instead to donate to the Amazon Basin, to protect the landscape and its Indigenous people from environmental harm. “I care about those things as well, don’t get me wrong,” said C-1. “It’s just the fact that MS picked it and I felt manipulated.”
There was also friction about MS’ compensation. She had started to work for the sisters’ mutual trust account at a base salary in addition to her fees as an investment adviser and though her salary eventually more than doubled for her services beyond investment advising, MS discovered that some other suppliers of advisory services to the same trusts had collected much, much more for the same duties. She complained to the sisters, who agreed to increase her compensation, but the issue left a sour taste among all of them.
CHALLENGE – POTENTIAL PARTICIPATION IN ILLEGAL OR UNETHICAL CONDUCT
Another debate between the financial planner and her clients was far more sensitive: MS began to suspect that members of her clients’ extended family might be violating state A’s tax laws. By getting on planes four times a year, they had successfully evaded paying millions of tax dollars to state A. But MS came to understand that substantial business continued to be conducted in state A. On one occasion when MS had participated in interviews about hiring a new set of advisors, “All of the candidates flew into (state A)”, noted MS.
At first, MS thought that some members of the family might agree with her, that all the tax avoidance strategies were a dubious charade. But other trust heirs and their advisors disagreed. To confirm her opinion (for the dual purpose of advising her clients and protecting herself from possible charges of involvement in illegal tax avoidance strategies), MS wrote to her clients: “I don’t think we’re (acting in accord) with the spirit of the law. I’m compelled to tell you the truth here, even though it’s an ugly show and not of either of our makings.”
Eventually, MS wore out her welcome. She was fired first by C-1, followed soon by being fired by C-2. MS asked the sisters to pay her a ‘severance’ in recognition of MS losing future earnings from what MS believed to be an unjust termination. Initially, the sisters agreed and made some installment payments but on advice of their attorneys, stopped those payments and filed a lawsuit against MS, alleging that MS had breached her fiduciary duties and deceived her client into agreeing to a severance payment. MS’ response was to hire attorneys to file a court claim against the sisters in a different state – where MS resided – claiming the sisters breached their promise to pay her a full severance and have ruined her professional reputation. (As this story is written, the lawsuits are pending.)
FIDUCIARIES RARELY SPEAK PUBLICLY ABOUT SPECIFIC CLIENT PROBLEMS
Pursuant to long established, informal practices within the finance world, MS kept private all her concerns about her clients’ tax activities and their former relationship. Until, of course, MS felt obliged to defend the sisters’ lawsuit by filing her own, which required a detailed account of the facts which MS believes are relevant for the court to eventually consider in ruling for the sisters or herself.
The laws of some states and the federal government permit ‘whistleblowers’ who advise the appropriate government about someone else’s alleged tax fraud, to receive a financial award from the government if the claim is eventually resolved in the government’s favor. But meanwhile, MS concedes that “My career in finance is over.”
CAREER SATISFACTION
Looking back at her – now former – career in finance, MS noted that she had fulfilled a lot of her parents’ ambitions for her: she reached the heights of wealth management, expanded her role from merely buying and selling stocks, to earn high pay while her pending lawsuit might result in receiving millions of dollars more.
During her years as a financial planner, MS had helped some wealthy Americans move their assets away from businesses which were harming the environment. And hopefully the lawsuits will lead other wealthy people and their financial planners to follow both the letter and the spirit of tax laws.
This career story is based on an article written by Evan Osnos, published within The New Yorker magazine on January 23, 2023.
