One of the central truths I've discovered over my 20 years of working with wealthy individuals is that wealth often creates as many problems or dilemmas as it solves. I've always found this to be ironic, seeing how hard most of us strive for it. But it's true.
Case in point: the lack of privacy most wealthy people experience. The wealthier you are, the more difficult it is to be private. It doesn't matter how you came by your wealth - by selling a business, by being a senior executive of a public company, by inheriting it, by winning the lottery - here in the Google Age, family members, friends, co-workers, and the general public can gather a lot of information about you and your finances by typing your name into a search engine. (Try it on yourself for a quick privacy self-assessment.)
At best, this lack of privacy can be unsettling. Social alienation, awkward requests for financial "help" from family and friends, and endless solicitations for charitable donations are some of the unique challenges wealthy individuals must confront once the news of their services becomes public knowledge.
At worst, the constant assault on privacy can become a source of stress and anxiety. Once people label you as wealthy, you may become a target for telemarketers and others whose tactics may have a profound impact on how you and your family live your lives.
What can you do to stop this erosion of privacy? Unless you're willing to sell your home and live on some island, complete anonymity is an unrealistic goal. However, there are things you can do to push back and maintain some privacy in an increasingly public world.
Teach your family to value privacy
Those who know you best know the most about your wealth. That's why it's important to establish ground rules with your immediate and extended family about how much to discuss wealth, business interests, philanthropic interests and your lifestyle with others.
This is particularly important with teenagers and children, who can sometimes talk about where the family went on vacation, what car(s) mom and dad drive, or what they received for their birthday without truly understanding the implications of those discussions on family privacy. Family members need to learn the true meaning of discretion.
Make confidentiality a priority
One way to better ensure your privacy is to ask the professionals you work with (bankers, accountants, lawyers, wealth advisers) about the specific steps they take to keep financial information private.
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Your goal is not necessarily to receive a detailed rundown of a given firm's privacy guidelines. Rather, what you're looking for is an attitude: an acknowledgment of how important confidentiality is to wealthy clients. If the professional answers your questions openly and empathetically, explaining specific systems and procedures intended to safeguard your financial information, you can be reasonably sure that privacy is an important priority at the firm.
Limit access to financial information
Beyond policies and systems, you'll want to limit the number of individuals who have access to financial statements and other confidential information. This is easy enough to do at home, but it's important to stress this point with professionals as well.
This is particularly important given recent cases profiled in the media where private information has been sold for financial benefit. While there are no guarantees, the best defence is to deal with firms where there are clearly documented and visible privacy procedures to protect your personal information.
Consult a security professional
Many wealthy families I know have consulted with security professionals to ensure their property and their families are well protected. A professional consultation will require a minimum investment of your time, but will more than pay for itself in peace of mind.
This assessment should cover a number of areas: home security, security systems at your business or place of work, and the personal safety of your family. Depending on your level of wealth and your lifestyle, you may wish to enhance security systems at your home, purchase specialized insurance for your property or your person, or even change your family's daily routines.
Established a donor-advised foundation
Once you're wealthy, you can expect to be pitched by charitable organizations on a regular basis. These solicitations come from a good place, but they can still be an intrusion.
The solution is to create a vetting process or structure that maintains a degree of governance between you and charitable solicitations. A private foundation is one possibility. Instead of making charitable decisions yourself, you delegate those decisions to your foundation's board of directors. Your board reviews formal requests for donations on a regular basis (say, quarterly) and makes decisions accordingly. The next time you receive an unwanted solicitation, you simply invite the charity to submit a formal request.
The points above will help you to fly quietly under the radar.