Times are still very tough in the United States and don’t think that the wealthy are escaping the ravages of the downturn.
Bernie Madoff has made off with the savings, the mansion has halved in value and politicians around the world are looking for ways to tax the rich. Then, just as the captains of Wall Street were getting back in the money-making groove, Obama has to come along and spoil the mood with some particularly draconian proposals on bank regulations.
All this gloom has forced cutbacks and as Robert Frank explains on his wealth blog on the Wall Street Journal website, home is where some of the deepest cuts are – specifically, struggling millionaires have been forced to slash their household staff numbers.
Having a butler, nanny and maid is out, and instead many wealthy families are looking for generalist housekeepers (or domestic assistants, as they prefer to be called) who can cook, clean, mind the kids, pay the bills and plump the pillows at night. As Frank beautifully puts it, Jeeves is out and Alice from The Brady Bunch is in.
Of course, household staff are just one part of a wealthy entrepreneur’s support team. Here some of the other crucial staff and advisors that many rich people rely on.
Spouse or partner
Without doubt the most important part of any support team. In many cases, a spouse of partner will often work in the business during the start up phase, later taking a more behind-the-scenes role of the company expands, or running a different part of the family empire.
Some of Australia’s best-known husband-and-wife entrepreneurial teams include Bill and Imelda Roche (cosmetics and property development), Charlotte and Ervin Vidor (hotels, including the Medina brand) and Diana and Rino Grollo (property development).
Executive assistant
A key part of any entrepreneur’s team, in charge of regulating access to the boss, keeping the diary, dealing with the media, ensuring appointments are kept, booking travel, remembering birthdays and anniversaries and generally making life easier.
A good EA will often work with an entrepreneur for decades – Gerry Harvey and James Packer are two wealthy business people with long-serving assistants – and can earn salaries above $100,000.
Household staff
Not as common in Australia as in the United States and Europe, where many wealthy entrepreneurs will keep a household staff – some living in the home full-time, others coming and going like normal employees. Common roles include the household manager (basically the head of the household staff), administrative household manager (charged with looking after the running of the household, managing staff, procurement, scheduling), laundry specialist, housekeeper, chef and, of course, nanny.
Entrepreneurs with multiple properties or large properties will often employ caretakers or gardeners to ensure grounds are maintained. Salaries range from around $US50,000 to $US80,000 although this can include living expenses.
Personal trainer
Healthy body, wealthy wallet – many top executives employ personal trainers to keep fit and sharp. Top personal trainers in Australia charge as much as $100 an hour for wealthy clients, while top personal trainers in the US can charge even more.
Tracy Anderson, the current flavour-of-the-month trainer who works for Gwyneth Paltrow and used to train Madonna, charges $US900 a month for access to her studios, plus a $US1,500 initiation fee.
Accountant/Lawyer
Depending on the size of complexity of their empires, wealthy entrepreneurs may keep accountants and lawyers on their payroll permanently, although expertise in certain areas – such as tax – will be brought in as the need arises.
Some professional services firms specialise in working with high net worth individuals, such as Melbourne-based firm Arnold Bloch Leibler, which claims on its website to represent a large number of the members of BRW’s Rich 200 list.
Private banker
Australia’s private banking sector is nowhere near as large as it is in Europe or the United States, although most big banks and investment banks have a division dedicated to high net worth individuals. The private banker can perform a number of different of functions – managing investment portfolios, facilitating loans and other funding arrangements, stock broking, accessing private equity and other funds, succession planning and estate planning.
Private banking went through something of an expansion during 2006 and 2007 as Australia’s economy boomed, but the market appears to have cooled during the GFC. That’s mainly because of the economic climate, but it could also be because private banking doesn’t necessarily generate the huge profits you might think.
A Reuters article last year quoted one Spanish private banker as saying profit margins were better from affluent customers as opposed to very rich ones, perhaps because the super rich are better able to shop around and drive good deals. Typical fees are around 1% of assets under management.
Wealth counsellor
The rise of the wealth counsellor is a very American phenomenon. According to a report from research organisation Wise Counsel Research, there are between 200 and 500 of these counsellors who advise on the “non-financial” aspects of being rich – the emotional, social and even spiritual side of wealth. Looking at the research, it appears a lot of the advice given by these counsellors centres on family dynamics. Costs vary, with retainers ranging from $25,000 to $200,000.
It’s an interesting role and one which is typically carried out in the past by lawyers and the tight circles of friends and advisers many entrepreneurs have. However, as Australian entrepreneurs confront generational change, there could be a role for independent counsellors as in the US.
Barber
You’ve got a look the part when you’re rich, which is why beauticians, hairdressers and barbers are an important part of any support team. Even Warren Buffett has his own barber, Stan, who runs a shop in the basement of Buffett’s building. There is a great anecdote in a recent article on Buffett from US magazine Harper’s, which tells the story of a Wall Street banker who booked the entire shop out, just so he could sit in the same chair where Buffett has his hair done every other week – anything to get close to the Oracle.
Other staff
Wealthy entrepreneurs might use a range of other staff at various times, particularly security staff, pilots, yacht crews, caterers and horsey types to look after the polo ponies or thoroughbreds.
And if you’re wondering how close these staff really become to their employers, don’t forget the story of Kerry Packer’s helicopter pilot Nick Ross, who donated one of kidneys to the Big Fella. As Packer said at the time: “Imagine having a friend who’s good enough to do that”.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
