Stardom and financial solidity
2 October 2017
We all have watched movies and some of us may have envied the stars for being in a job that joined passion and profitability but probably few of us ever thought about how these stars managed their finances. I was just reading an article today and was surprised to see certain names of stars who purportedly are « broke ».
For those of us « mortals » with defined income streams at modest to slightly higher than modest levels, it can appear difficult that someone earning millions to tens of millions could ever be « broke » in a lifetime let alone in a decade but the truth is just staring us in the face. While the emphasis is on the stars in this article which I attach a link to below, it is clear how the same can be applied to the uber rich or the Very High Net Worth Individuals (VHNWI) including high earners in the sports arena.
In this context, it is clearly visible that not only the financial advisor to a star (or a VHNWI) has to have a proper “backbone” and try to talk them out of the impulsive spending but also a star (or a VHNWI) has to seriously consider – at the onset of the relationship – entering into a contract where the financial advisor is sufficiently empowered to curb such spending. Where required, a projected budget taking into account spending requirements of the star (VHNWI) should be made on an annual basis. Reaching a balance between a good lifestyle as desired and leaving a proper cushion for future availability of cash should be one of the top priorities for such contracts. Sadly, as with most advisors dealing with VHNWI, advisors do not approach the subject allowing their clients to deplete their wealth inconsiderately.
For those of you advisors who are able to mitigate your clients’ request and convince them of appropriate spending habits in line not only with their current earnings but also keeping in mind their projected earnings and lifestyle over their lifetime, I salute your temerity and hard work as I know it is a difficult task. Till then, you can read and be bemused like I was at some of the names in the article.
Article on stars who are “broke”