It's true, the rich are different from you and me. Especially rich celebrities.
While researching an upcoming article for our sister publication, CPA Wealth Provider, focusing on financial planning for celebrities, I spent some time talking to CPAs and other financial planners who count celebrities among their clientele.
Now I don’t know what I expected to find out during the course of my research, but I came away from the project with a new respect for any CPA who takes on the rich and famous as clients – because it’s definitely not a glamorous job, and because it’s probably a lot tougher than it might seem.
Financial planners who deal with wealthy business executives may encounter some thorny issues concerning estate planning or perhaps gauging the clients’ true risk tolerance, but such quandaries pale in comparison to what celebrity planners encounter on a daily basis.
First off, celebrities generally have little job security, and may be on top of the world one week, and an industry pariah the next. How the heck can a CPA build a long-term plan around such unknowns? New York CPA Andy Blackman admits it’s far from an easy task, and he finds himself planning only 12 to 18 months ahead for such clients.
Another problem is ego and image. Celebrities are watched and scrutinized everywhere they go. Even if a waiter serves them undercooked shrimp atop overcooked rice and sneers at them while he slams it on their table, a celebrity can’t afford the bad publicity that a measly tip would surely bring.
Many are also newly rich, and can’t shake the itch to over-spend, no matter how often their advisor warns them that they need to reign in some of those impulses.
To compound matters, many celebrity clients want to add you to their entourage and expect you to be at their beck and call for every financial-related issue that comes up in their lives, from negotiating house purchases to buying them insurance to acting as a sounding board for all of their other business transactions.
Then there’s the issue of art versus commerce. Most celebrities view themselves primarily as artists and many don’t want to be bothered to learn about asset allocation or what kind of investments might be right for them. So in many cases they try to force their planners to make ALL the decisions for them.
Sounds easy on the surface, but an uninformed client can turn into your worst nightmare. If their portfolio suddenly shrinks or their manager calls into question your investment advice, they may quickly forget all the power they conferred on you and start looking for revenge – in court.
So for anyone with a nicely humming tax, audit or business consulting practice who yearns to rub elbows with the rich and famous, take heed. There’s a reason why they call Hollywood the boulevard of broken dreams.
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