The vast majority of successful individuals have very little exposure to offshore financial centres. As a result, the risk of finding themselves in an offshore leak, such as the Pandora Papers, is somewhere between zero and lower than zero.
However, the media and public response to the leak is something that should concern all wealth originators. There is a risk that the Pandora Papers leak does not only do unique damage to those individuals who use offshore structures, but casts a wider and deeper reputational shadow over all wealthy individuals, including investors, entrepreneurs, and others.
There are completely legitimate reasons for using offshore structures. But, regardless of the various reasons for using such structures, there is no doubt that the public, media, and other important stakeholders look upon their use sceptically.
We know from our research that one of the biggest factors that impacts whether an individual is seen positively (or negatively) is whether they are seen to be paying their fair share of tax. People automatically assume that this is not the case if an individual has even the merest scent of an offshore structure as part of their business, corporate, or investment activities.
The high-profile (and very well-publicised) nature of the story will further embed the misperception amongst the public that the vast majority of wealthy people did not secure their wealth through hard work, innovation, or good business sense but, instead, by playing the game, dodging their tax liabilities, and stacking the chips in their favour.
Even worse, much of the reporting on the Pandora Papers has (understandably) focussed on individuals who are using offshore structures to siphon off money or engage in corruption. This leaves the public with the mistaken sense that, firstly, the only reason that someone would use an offshore centre is to hide ill-gotten gains and, secondly, that all wealthy people are doing just that.
All of this is coming at the same time as entrepreneurs and wealthy individuals are suffering from serious perception problems. The coronavirus pandemic has (again, understandably) prompted serious questions about whether successful individuals are paying enough into the system.
It also follows research last year that sentiment about multi-millionaires and billionaires on social media is at its most negative for more than a decade.
Wealth originators were already struggling with keenly felt perceptions problems. The widespread reporting of the Pandora Papers further deepens that perception problem. I'm left with the lingering sense that this is likely to become a generational shift in negative sentiment.