Advisers to the Rich and Famous-and Demanding
Giving advice to celebrities can mean saying 'no' to people who aren't used to hearing it
It can be challenging to provide financial advice to an investor with $200,000, a family and one home, say many advisers. So what is it like to manage the finances of a celebrity with $20 million, an entourage and five homes?
It's complicated, say those who cater to famous clients.
Yes, managing a celebrity's money sometimes comes with perks—maybe an invite to a private party thrown by an A-list star, they say. But the job also typically involves working longer hours, handling last-minute requests and sometimes saying "no" to people who aren't used to the word.
For example, while most clients—even noncelebrity ones—want to know they can reach their advisers when they need them, some stars take the need for access to the extreme.
Darell Krasnoff, an adviser in Los Angeles, says he makes it a point to be readily available for clients, checking in with his office on weekends and giving clients his home number. He doesn't, however, share the number to his weekend retreat. On weekends, clients must call his office, which contacts him at the weekend number. Mr. Krasnoff then calls the client back.
"It is one thing to make ourselves available, but we [the firm] can't do a no-boundary relationship," Mr. Krasnoff says.
Nevertheless, the assistant of a celebrity client recently called Mr. Krasnoff and told him she needed to get the number to his retreat house or she would lose her job. Her boss wanted to have Mr. Krasnoff's number "at all times," he says.
Not wanting to put the assistant at risk, Mr. Krasnoff says he gave her the number but stressed it was for emergencies only. "She promised me the client would never use it," he says. That Saturday morning, shortly after Mr. Krasnoff arrived at his weekend home, the client called. "He just wanted to say 'hello,' " Mr. Krasnoff says. "He's a wonderful person, but it underscored his need to have me available anytime, anywhere."
Celebrities' busy travel schedules also can add a layer of complexity for financial advisers.
Tony Lucas, an adviser in Beverly Hills, Calif., says he once had a celebrity client who was vacationing in Jamaica but wanted to buy a home in Malibu for cash. The money needed to be wired to the escrow company immediately, says Mr. Lucas, who had to fax the necessary documents for the wire transfer to a nearby hotel because the one where the client was staying had no phones.
Despite international hurdles and time-zone differences and the fact that his offices were closed the evening the client made the request, Mr. Lucas was able to arrange the wire transfer and get the deal done.
Managing uneven income and a tendency to overspend is another challenge that can crop up when managing a celebrity's finances, say advisers.
Making sure a pro-athlete client has sufficient insurance coverage in case of a disabling injury is a consideration for Rob Wolfe, a South Florida-based financial adviser whose clients include some NBA players.
Because many of these athletes can't obtain traditional disability insurance, Mr. Wolfe helps them retain coverage through excess-risk carriers and sorts through different coverage options for them.
Tim Speiss, meanwhile, is advising a prominent fashion model whose multiyear contract is about to expire. The New York-based certified public accountant says the client doesn't know what her compensation will be over the next three years or if she will get a new contract.
At one point, the model was paying for multiple residences and eight employees—including three housekeepers and two nannies.
Mr. Speiss says cash-flow management and forecasting is crucial for this client and other celebrities. They often have very high expenses, but may not know how much they will earn in the next year.
He helps them assess their spending and staffing needs and explore other opportunities for income generation that aren't always related to what made them famous.
In the case of the model, "we asked her if she really needed all the homes and housekeepers," he says. "Her life would be a lot simpler without all of that." The model pared back to one home and one housekeeper, he says.
Jeff Fishman, a Los Angeles-based financial adviser, says celebrities' affinity for real estate can put them in financial jeopardy.
Mr. Fishman sometimes fields calls from excited clients wanting to buy yet another home in another state. He often talks them out of it. "If they're only going to be at the home twice a year, it's probably not worth it," he says.
Todd Morgan, who is also based in Los Angeles, says some celebrities have about 50% to 70% of their net worth wrapped up in their homes. "I try to tell them, 'You know, you don't get an investment return on your home like a commercial piece of real estate,' " he says.
Then there are the emotions that go along with advising people who have a lot to lose.
Mr. Morgan says that at the height of the economic crisis, he received a call from a celebrity client who wanted to buy "several million dollars" worth of gold bars and have them sent to a bank in Switzerland.
Mr. Morgan says he explained to the client the cost of buying and storing gold. The client took his advice and bought some gold-mining stocks instead.
"When things get bad, it becomes much more painful and frightening for celebrities then your traditional businessman," Mr. Morgan says. "My job is to keep them even-keeled."
And then there are the celebrities who rarely hear "no."
Margaret Black-Scott, a Beverly Hills-based financial adviser, recalls a story about a well-known heavyweight boxer.
He wanted to withdraw money from his account and couldn't understand why his adviser couldn't give him $2 million in cash immediately.
"He said he wanted, 'Cash! Cash! Dollar bills!,' " she says. "When told the institution didn't have the cash, he threatened to throw the adviser out the bleeping window," she says.
"It wasn't a good day for that adviser," she says. Fortunately, his behavior is more the exception than the rule, she says.