Financial and tax advice for wealthy clients. Positive for society?

Stroot1

Hi, I'm considering taking a position as a junior adviser with Openwork (a multi tied financial advisers) Some of the work would be advising wealthy clients (top 10% I believe but not often the top 1%) on insurance/mortgages/pensions and I believe this would be beneficial for society/the economy by providing an efficient service (despite the drawbacks of multi tie rather than independent) However some of the work would involve tax mitigation and legal avoidance. Even though I wouldn't be dealing with it directly at first, the harder I work, the more clients we will deal with I believe. I'm obsessing quite a lot over whether legal tax advice for wealthy clients, whilst beneficial for them, would be detrimental to society and the economy overall. I've read a lot about how concentrating wealth even more towards those who already hold a lot can be detrimental to the rest of society.

Due to obsessing within a quite depressive state I am worried that I'm overthinking things and not looking at it from a balanced view. I wonder if you can lead me to some literature/evidence of how cutting top end taxes/helping people to save on tax can help the economy and society more than if the tax level remains the same/ wealthy clients aren't advised on how to reduce their tax burden. I ask because the most comprehensive recent studies I have looked in to below, including evidence from the non-partisan Congressional Research Service, talks of how tax cuts for the rich fail to boost the economy. Also that higher taxes on the rich do not impede economic growth, investment or job creation. I've therefore been stressing a lot about how my work could be counter productive.

I would also like some honest views on whether you think multi tie advice on pensions/insurance/mortgages/tax/investments is generally positive for society/the economy or not. Thank you for your time, it'd be much appreciated if you are able to lead me to some viable counter evidence to the above and some advice on whether my potential job may have more positive or negative effects on society in general. I'm interested in whether growing wealth for the wealthy through tax advice as well as other financial advice would generally help the well being of the rest of society or whether the further inequality created would have negative effects on the masses. Sorry if you've already seen a similar post from me a fortnight ago, I still haven't really resolved things in my head and am trying to reach out for some genuine guidance.

Stroot1

I am unable to post links due to being a new user. But the articles were "No Correlation: Economic Growth and Tax Rates on the Rich" on ocpp.org and "Recent Studies Find Raising Taxes on High-Income Households Would Not Harm the Economy" on cbpp.org

missile

scholes22 wrote: »

.... I believe this would be beneficial for society/the economy by providing an efficient service ....

There was a very interesting programme on TV which disagreed with the notion that trickle down from the mega rich contributes positively to society. It was suggested that mega rich are actually a burden on society. To take employment helping them contribute less would seem a strange choice of employment for one with your altruistic aspirations.

PeacefulWaters

I assume you were unhappy with the responses you got last time.

https://forums.moneysavingexpert.com/discussion/5206176

bowlhead99

Firstly, you already have a thread going on this. If it didn't help, you could have at least told people where to find it so they didn't duplicate. Cheers Peacefulwaters

These are the links he/she was talking about
http://www.ocpp.org/2013/03/26/fs201...-growth-taxes/
http://www.cbpp.org/cms/?fa=view&id=3756

As I'm not an academic I don't have lots of research to hand and I don't have a lot of interest in seeking some out to help you come to your conclusions. Have you already given yourself a basic grounding of the issues by taking all the macroeconomics courses that one would typically find in an undergraduate-level degree ? Then you'll have the basic theories put forward over the years by the major economics thinkers. At least do the A-level work.

People carry out research all the time so there is always something new to refute. I don't think some 2013 research from Oregon is relevant, when you don't know how partisan or not, the public policy center actually is. Aside from the fact the Oregon or US economy does not necessarily operate in tandem with our own due to different policies and industries and demographics, Oregon is just one state whose economy is not necessarily representative of US as a whole. Whatever they do to you with local state taxes on income or gains, you still pay your federal taxes. Just because not many people 'migrated' from Oregon to nearby Washington State to chase a slightly lower tax rate during a short period of review doesn't 'prove' anything.

Did you know that corporate earnings and employment plummeted in 2008/2009 right across America including the great state of Oregon when we had the credit crunch? Yes? So you wouldn't be surprised that in 2010/11 after the effects of the quantitative easing had taken hold, state GDP rates spiked upwards? The fact that at the time, Oregon had a temporary increase to top marginal taxes is neither here nor there. It proves you can have high temporary taxes and still get growth (people can't do anything about it in the short term). It doesn't prove the growth would not have been even higher without those high temporary taxes. Notably it is not possible to go back in time and see what the results would have been without the higher taxes.

We increased our tax rate over here to 50% from 40% for the highest earners following the credit crunch. It was a temporary political move, not a particular money-raising success and was (partially) reversed as expected in due course

Just because people sucked it up and paid a 90% top rate tax in the US in the decade post-WWII, the 1950s (what else were they going to do), and GDP growth was high during this boom period while annual GDP growth was relatively lower in the 2000s when the top tax rate was lower, doesn't mean the high growth rate was caused by taxes nor that the more sensible level of 35% tax hindered growth.

All of the 'lack of correlation' cases are just examples where they say the two things don't seem to be related. You could find other instances where they do appear to be related. It is quite difficult to prove correlation vs causation. Or you could just theorise as hundreds have done.

Conclusion, you can 'prove' anything you like with statistics about tax rates on the rich or anything else. It doesn't make it valid. I made some points on your previous thread and several more via a long PM in response to your specific questions that you PM'd me on. I'm sorry if they didn't help, but I'm out.

If you think rich people should pay higher taxes than the government wants them to, by NOT using all the tax breaks available, because you think it is generally better that the government taxes them more; and you think rich people should not be assisted to grow their wealth by making investments or saving money on mortgage payments, because any wealth they can create or preserve may not filter down to the 'poor' when they spend or invest it, and that the government is better at allocating resources than the market (communism vs capitalism) - then do not take a job advising 'wealthy' clients.

Some of your work as a junior would be advising wealthy clients? Top 10% is not particularly wealthy. One in ten people in the country has that level of wealth or income, right? It stands to reason that they would be the people that can afford financial advisory services. Some people have even higher wealth. What is top 1% these days - 6 figure salary? Should it be outlawed? You are probably not going to work very closely with many of them as an office junior.

If you are good at what you do you will end up helping them over time. If you don't want to help them because you think it is better for society if they avoid investing and avoid minimising their taxes, and pay too much for their mortgage interest or their insurance products to reduce the gap between rich and poor - DO NOT TAKE THE JOB.

TakeCareOfThePennies_2

scholes22,

I can't believe what I'm reading !

You simply DO NOT bring your personal, political, religious or other beliefs with you to work in the financial sector. You leave them locked up at home.

Either (a) you should not be contemplating working in the financial sector full stop or (b) you should not be contemplating working in financial advice.

Whichever way, if you think you're unable to separate your personal beliefs from what is required of you at work, then soon enough your employer will figure that out too and you'll be back on the streets looking for another job.

I hope the above did not come across as overly harsh, I am just telling you like it is.

Imagine you wanted to open up a standard interest bearing bank account at a high-street bank and were being served by someone who follows certain religious traditions .... would you (a) want them to treat you with utter contempt, and possibly lecture you on why you shouldn't open an interest bearing account, or (b) just get on with their job, process your paperwork and open your account, thus leaving their religious beliefs at home ?

Stroot1

Hi All,

PeacefulWaters, I did mention in this post that I did start a similar thread a fortnight ago but I tried to be more direct here and ask about the specifics of tax advice and also to ask for assessments/evidence on the effects on society of general advice which will help wealthy clients, rather than going too far off track. I did respond to and appreciate the people who tried to help me in my first post.

Bowlhead I did appreciate your PM's as I said at the time and the insights were very helpful. Whilst I could see the benefits of the efficiency of the private sector and the investments wealthy people can make I still remained unsure as to whether overall a lower tax take from the wealthy would have a greater positive impact on the country hence my post now. The Oregon link as you point out may not be as relevant if it cannot be extrapolated to a wider level but I felt the other link specifically and much that I've read on a lack of trickle down seemed to follow a logical line of reasoning. Yes I am grounded in macro theory but in practice I am unsure as to the whether the benefits of tax advice to wealthy clients outweighs the negatives. I do agree I think that better insurance and mortgage advice is beneficial though as you're getting at. I know you're trying to tell me it clearly would trickle down and help in the last few paragraphs as surely spending and investing etc. will be positive. My worry is some of the preservation through saving and asset investment actually causes more inequality and slower growth. This is talked about clearly in "the wealth that failed to trickle down" in the independent online by Ben Chu (again I can't post the link) I hope this will explain my point better than myself! Thanks very much for your points and I'm sorry if I have frustrated you by my obsessions not stopping as a result of the points you made.

TakeCare I completely agree about beliefs being left at home whilst working which is why I'm trying to take steps to see if I'm looking at things in an unbalanced way. I want to work out whether I would be comfortable working within this sector and if I'm obsessing over things I needn't be so hung up on or if I have specific values that I would be opposing if I got in to financial advice. I basically don't want to be in an industry if overall I feel working harder within it will mean I'm having a negative effect on society.

I did not mean to offend anyone with this post. I'm sorry if I should have pointed out I have a similar post and if I seemed unappreciative of any comments attempting to help on that post, I did try to reply to people's comments. I'm quite ill at the moment worrying relentlessly over this and my concern is that the more wealthy people that are advised, the greater negative impact this may have on society. I'm not looking for a sympathy vote because of that, but I am genuinely looking for some kind-hearted assistance and I feel like some people on here and the other post are getting annoyed at me and maybe having a go at me due to perceived rudeness. That is not my intention, for example Peaceful Waters and the people thanking your post maybe you think I'm intentionally doing something wrong, I am simply trying to get help with some more questions. I did take some of the responses quite personally last time as it seemed people were being rude or short with me. So I thought maybe I could try and explain what I was struggling with and required better this time, focusing more on the direct consequences of advising rather than political decisions.

Herbalus

Perhaps if you are becoming ill about a job before even having started it then it is not for you.

Or you could consider that once you actually start work you'll realise that you're a small cog in a big machine and that taking on the world isn't going to happen. If you don't take the job, somebody else will, and society will be richer/poorer/whatever regardless.

You'll find that it's the people you work with, not what you actually do, that makes a good job good.

missile

If it is making you ill just thinking about it. I feel this would be a very bad career move for you. You are a young man and I would suggest you should be looking for employment opportunities where you will be happy at work. This may not make you rich, but is money worth sacrificing your health?

Stroot1

Thanks for your responses guys, you may be right that the fact it is making me ill means I should consider not taking it. I'm just worried that I'm overthinking it and then I'll look back after and think I should of taken it, I can get obsessive over decisions if my depression is bad and it might not necessarily mean the potential job is a bad choice. Whilst I agree I'd be a small cog in a big machine and the people help, Herbalus, I still want to be in a position where the harder I work the more of a positive difference I am making rather than negative.

Stroot1

To try and get to the point, this is one of the articles I found quite prominent when obsessing about the potential negatives of tax advice for the wealthy. http://www.independent.co.uk/news/business/analysis-and-features/the-wealth-that-failed-to-trickle-down-report-suggests-rich-do-get-richer-while-poor-stay-poor-9989183.html It argues that there is a strong intellectual backing behind cutting tax for the rich leading to - it being mostly saved + invested in assets/havens - greater inequality - more debt accumulated by the poor - slower growth. This is backed up by Picketty's "Capital in the 21st Century" so users here can get some idea that these ideas are based on proper research rather than pure theory and rambling by me!

I'm struggling to convince myself therefore that financial advice work with wealthy clients would actually be positive overall for society. I would be dealing with mortgages/insurance more than tax and investments at first though so maybe that would be positive (even though I'm working for multi tie!?) however I feel that the more clients I prospect and help with related advice, the more that may be inclined to subsequently get tax advice. So much to try and calculate, I don't mean to offend anyone with different views on capitalism/financial advice, I'm trying to make the effects on society in relation to the harder I work, central to my decision.