Insider Scoop: What It’s Really Like to Work with Celebrity Clients
Many decades of assisting celebrities and professional athletes has enabled Jordan Waxman to carve out a successful sports and entertainment group niche inside HSW, a $2.5 billion, New York-based financial planning firm. While he recognizing major differences between athletes and entertainers, Waxman is not awestruck by his clients, whom he never identifies by name.
Such clients need more planning as they are less financially savvy. They delegate quite a bit, because they generally have people running things for them. Beyond some common quirks and dodging autograph seekers, a practice built around athletes and entertainers must specialize in tax management and legal protections, besides traditional asset management.
Unique Planning Needs
It is quite evident that celebs need unique estate plans, and effective asset-protection policies because they are a magnet to frivolous lawsuits. Tax mitigation is a major issue and as clients get paid in many different jurisdictions, often making money through ordinary income, they must avail themselves of various tax-differed vehicles available. Waxman left Merrill Lynch in 2012, and HSW partners Richard Steinberg and Kenneth Hoffman followed, to join HighTower Advisors. At that time, the trio managed $1.4 billion, including a fledgling celebrity niche practice. Though HSW is known for its work with celebrities, the sports and entertainment group only represents about 25% of the firm’s business. The bulk clients are serial entrepreneurs, who would want their money to grow without putting in much work into it. Having worked with celebrity clients for two decades now, Waxman advises newcomers to focus on delivering what is unique and distinguishable, after researching thoroughly what the clients really need.
A Restricted Market
Experts warn that, despite temptations, the celebrity market is not for everyone, as entry is restricted and requires specialized expertise due to contracts, unique incomes and issues related to celebrities. Athletes have lump sums they come into and usually require payments to other agents. Waxman entered the celebrity client space by chance several years ago when a high-profile money manager left the business to become a client and referred many of his own clients to Waxman. An early experience where an athlete client died in a plane crash, exposed the fact that the client avoiding Waxman’s financial planning advice. When Waxman found the client had not executed the plan prepared for him, he decided to never let that happen again while doggedly protecting the identity of his clients, saying its called private client services for a reason.
A Differentiated Clientele
While athletes and entertainers are lumped together, they constitute two unique subgroups of clients. While both groups make much money, entertainers can earn money well into their senior years. Athletes experience the sudden shock of having huge sums of money, but have shorter professional careers. Sudden wealth becomes an issue if they cannot delay gratification. Waxman has very little patience for clients who are unable to follow his financial planning guidelines. If a client fails to listen to them, they fire the client and refuse to work with them, as their mission is to make a lasting massive impact which fails if the client cannot simply follow the plan.
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