Celebrity fortunes tend to rise and fall more than those of other high-net-worth people, at the same time that stars are under pressure to live a lavish lifestyle that often results in out-of-control spending. High divorce rates and a demand for anonymity also complicate matters.
It is "a different world, without a doubt," says Michael S. Fredlender, managing director, Provident Financial Management, which manages the financial affairs of people in the music, television and sports industries, as well as business executives and others.
Movie stars, for example, must deal with studio and endorsement contracts. A financial advisor who works with them needs to understand the basics of these contracts, just as someone who represents a wealthy oilman must know oil and gas law.
Business manager Steven H. Levitt, a shareholder at Sobul Primes & Schenkel, certified public accountants in Los Angeles, downplays some of the differences between working with celebrities and other wealthy people. The goal, he says, is the same: to make money grow and preserve it for generations. Stars are no more out of control than any other group, he insists. Like other types, they include some wild spenders and some very conservative savers.
The "tried-and-true" approach remains the best for entertainers, as for other wealthy people, he adds. In fact, Levitt recommends the same estate attorneys to all of his clients, whether they be celebrities, business executives, or others.
The demands of celebrity are behind the development of at least one kind of special estate planning tool, known as a privacy trust. These trusts are often used to keep the location of a star's house a secret, and use completely fictitious names. The trust may be named, say, the "Lemon Shortcake Trust," and the trustee is a person somehow related to the star, but with a different last name.
Estate attorneys also do a lot of divorce-proofing when drafting documents for celebrities. Prenuptial agreements are de rigueur with second marriages. Attorneys deal with this issue with other kinds of clients, to be sure, but in the entertainment industry, must be "a little more sensitive to it," according to Karp.
Copyright © 2010 Dow Jones & Co. Inc.
Aspiriant Buys Deloitte Investment Advisors
California-based Aspiriant has announced that it acquired Deloitte Investment Advisors (DIA) from international financial services giant Deloitte Touche Tohmatsu.
The purchase, completed last month, gives Aspiriant an operation consisting of 40 employees and six offices across the country. The wealth management firm now serves nearly 800 clients with more than $7 billion in assets under management.
In addition to existing offices in San Francisco and Los Angeles, Aspiriant now has offices in New York, Boston, Cincinnati, Milwaukee Minneapolis and Detroit. Terms of the agreement were not disclosed.
Aspiriant was founded in January 2008 when Kochis Fitz in San Francisco merged with Quintile Wealth Management in Los Angeles. The firm is employee-owned and was created with the goal of pursuing an aggressive growth strategy. At the time of the merger, the firm set a five-year goal of growing to $15 billion in assets under management. That was later reduced to $12 billion due to the global financial crisis.