Through talent and a bit of luck, some entertainers capture fame and fortune. And like other wealthy individuals, these celebrities have a variety of financial needs, from investment management to advanced planning-from administrative services to lifestyle services.
While celebrities do have some of the same generic needs as everybody else, what sets them apart are those issues specific to the entertainment business. These require special expertise and an intimate understanding of the celebrities' world if an advisor is going to get the best results.
Celebrities can especially benefit from he coordinated approach characteristic of a multifamily office. More than ever, there are some tremendous opportunities for advisors in this space to do advanced planning and offer business strategy and support services.
Issues Faced By Celebrities
First, though, let's consider what celebrities' concerns are. To become a financially successful entertainer takes not only a tremendous amount of hard work but the help of providence. This might seem to apply to anybody who has amassed great wealth. But it has likely been a particularly intense ride for celebrities, who might have once been members of the wait staff eager to be discovered. Or who were once members of bands looking for their big break. Or who were once models afraid to eat before a sensational photo shoot.
Even when they have made it, achieving levels of success long sought in our culture, they then find that celebrity status has its drawbacks. For nine out of ten wealthy famous people, the entertainment business is rife with stress (Figure 1). Three of five are plagued by an intense fear of failure. This can lead to psychological problems- from drug and alcohol abuse to anxiety and depression (Figure 2). Complications like these can make their lives more complex and problematic.
The Evolving Multifamily Office
What we find is that celebrities seeking advisors are increasingly attracted to the multifamily office model, which integrates core aspects of a business manager's job with a broad array of financial and legal expertise.
Because of the great amount of personal wealth that's been created in the last couple of decades, the multifamily office model is evolving in a number of different and intersecting directions. Such offices must increasingly be able to handle a variety of interconnected financial situations. They also have to specialize more if they want to serve specific niche groups, celebrities being just one.
Multifamily offices tend to offer four basic categories of service: (1) investment management; (2) advanced planning; (3) administrative services; and (4) lifestyle services. Many of these services are outsourced while the advisors in the office itself focus on working with the clients.
Successful entertainers are turning to such a business model because the multifamily office can help them navigate their financial worlds and be nimble enough to offer business strategy and support services particular to the entertainment field.
To better understand the differences between a traditional multifamily office and the celebrity multifamily office, let's look at a couple of examples of advanced planning with celebrities, as well as an example of how the advisors provide business strategy and support.