For the most part, wealthy entertainers use business managers. They also often engage several other professionals from private client lawyers to various money managers. Today, more and more wealthy celebrities are taking advantage of family office practices designed to advance them.
While there are variations, most business managers deliver customized accounting expertise. Examples of this include:
- Personal account management.
- Budgeting and bookkeeping.
- Preparing financial statements.
- Tax preparation.
Several business managers also provide royalties and participation assessments as well as tour accounting. Business managers often work with the other professional's wealthy entertainers depend on.
To better meet the demands of their wealthy entertainer clients, some business managers are building out their practices. A percentage of them are seeking to replicate some of the considerable advantages high-performing single-family offices provide the super-rich (net worth = US $500 million or more). At its core, a high-performing single-family office is an expert coordinator of specialists enabling them to provide high-impact solutions to their very wealthy families.
According to PJ DiNuzzo, founder and president of DiNuzzo Middle-Market Family Office and author of the Wall Street Journal bestselling book, The DiNuzzo Middle-Market Family Office™ Breakthrough: Creating Strategic Tax, Risk Cash-Flow and Lifestyle Options for Successful Privately-Held Business Owners and Affluent Families, “Successful entertainers can usually benefit from the well-coordinated approach of a family office. By adopting some of the best practices of family offices, business managers can significantly upgrade the value they provide their clients. This is all the more evident when successful entertainers diversify their revenue streams such as when they start companies or leverage their brands.”
Family office practices are quite proficient at navigating the tax code and identifying opportunities for wealthy entertainers to further increase their net worth. According to Peter Sasaki, managing member and family office expert at Odeon Capital Advisors and co-author of Maximizing Your Single-Family Office: Leveraging the Power of Outsourcing and Stress Testing, “There are various strategies celebrities can use to significantly lower their income taxes and grow their wealth tax-deferred by leveraging their loan out corporations. However, most times these strategies are never considered. As many business managers and investment professionals are unfamiliar with all the available options, their celebrity clients can sometimes end up with less.”
Family office practices are also able to help ensure wealthy entertainers remain wealthy even after their careers have come to an end. “Making sure that accomplished entertainers have the financial resources they need later in their lives can sometimes be a challenge,” says Vince Annable, CEO and founder of VFO Advisory Group and co-author of Your High-Performing Virtual Family Office: Maximizing Your Financial and Personal Lives. “There are plenty of examples where celebrities burnt out, overspent, and crashed. While some entertainers can continue to make a lot of money for decades, many are not so fortunate. They often have a limited time in the spotlight. So, they must build a foundation that protects and grows their wealth.”
Additionally, a growing number of family office practices provide business strategy and support, handling licensing agreements or business ventures with the entertainers’ names attached. All too often, less knowledgeable advisors will let celebrities not well versed in these areas dive into business deals with a very limited chance of success.
While a high-performing family office practice will provide solutions to specific issues, problems, and needs, its services are also very encompassing and comprehensive. This can deliver a brand range of high-impact solutions for entertainers, whose lives personal and professional are often closely intertwined. All in all, the considerable advantages of family office practices are drawing the attention of wealthy entertainers and professionals.
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals
