In 2006, we coined the phrase “celebrity family office.” In the book Fame & Fortune: Maximizing Celebrity Wealth (2008), we further documented the unique world of celebrities and how it intersects with wealth management and lifestyle services.
Since then, many private wealth industry professionals have embraced the concept of a celebrity family office to varying degrees. This trend continues and is accelerating at an ever-faster pace. However, the celebrity family office of today and tomorrow is meaningfully different from when we first described it and will continue to evolve as the private wealth industry, fintech and society evolve. For example, celebrities were once defined as entertainers, athletes and the professionals supporting them. We add social influencers and their infrastructure, which did not exist when we developed the first celebrity family office.
For clarification, we need to define a family office. A family office is an expert coordinator of experts. The experts can be in-house or external to the firm but always under the close supervision of the family office's senior management. Critically, senior management of the best family offices has a deep understanding, almost preternatural insights, of their clients, enabling them to deliver superior results consistently.
The Nature Of The Celebrity Family Office
The wealth of successful celebrities is increasing incredibly. The superstars are amassing tremendous fortunes through their vocations and business endeavors driven by their stature. Moving beyond business management or financial advisory services, looking to holistically and comprehensively address a broad and diverse set of needs and wants for exceptionally successful celebrities is the celebrity family office.
Celebrities seeking to optimize their financial and personal lives are attracted to the celebrity family office, which integrates core aspects of a business manager’s job with a broad array of financial, legal and lifestyle expertise. They are turning to celebrity family offices to help them navigate their financial and personal worlds and are agile enough to offer business strategy and support services specific to them.
Celebrity family offices require a deep understanding of accomplished entertainers, athletes and social influencers and the world of high-performing single-family offices to deliver exceptional value. By overlapping these ecosystems, celebrity family offices enable clients to capitalize on the most sophisticated, cost-effective wealth management and lifestyle expertise available.
The celebrity family office offers successful entertainers, athletes and social influencers two critical advantages. One is an in-depth understanding of the celebrity world specific to their particular cohort. At its core, there is a deep knowledge of celebrity contractual arrangements. For example, with generative artificial intelligence becoming a major factor impacting entertainers and social influencers, involvement in these celebrities' agreements for their services and products is essential. Celebrity family offices work closely with agents to maximize wealth from the start.
Being able to offer business strategy and support, assisting in structuring licensing agreements or business ventures with the celebrities’ names attached, and helping them capitalize on their success to generate significant monies is integral to a celebrity family office. All too often, less knowledgeable professionals will let celebrities not well versed in these areas dive into business deals that lose money and cause emotional and reputational damage.
The other critical advantage of the celebrity family office is its ability to bring the multiple advantages single-family offices deliver to the super-rich, those with a net worth of $500 million or more, to those less affluent. For example, rainy-day funds enable celebrities to create a safety net where the growth of their investments is entirely tax-free and accessible when needed or provide a way to transfer significant wealth to others.
While a celebrity family office will solve specific issues, problems and needs, its wealth management and lifestyle services can be all-encompassing and comprehensive, delivering exponentially greater value. For example, entertainers’ ability to “leverage” their loan-out corporations, thereby mitigating taxes owed, can prove extremely profitable, especially when done within the context of their overall tax planning.
The Promise
While most high-profile successes appear to have a charmed life, they usually have an intense backstory filled with frustrations and anxieties that cannot be overlooked. Even when they have achieved levels of fame and fortune long sought in our culture, most celebrities find their status has drawbacks.
Moreover, many entertainers, athletes and social influencers have a limited window in which they can earn consistently high incomes and further leverage their status economically, so they need a strong team of professionals around them complemented by an extensive network of specialists to help protect and leverage their assets including their personas into something greater, all the while mitigating adverse situations. This is the promise of the celebrity family office.
Those celebrities for whom a single-family office is not viable can have most, if not all, of the same benefits available to the super-rich by engaging a celebrity family office. For example, as these celebrities expand their ability to generate revenues through endorsements and business ventures, celebrity family offices enable them to use onshore and sometimes offshore structures to mitigate taxes extensively, protect themselves and their wealth from unsubstantial yet potentially disastrous lawsuits, and significantly grow their wealth.
As celebrities' lives are often closely intertwined between personal and professional, celebrity family offices provide more effective and efficient wealth management and lifestyle solutions for celebrities than other providers. Celebrity family offices are not appropriate for all entertainers, athletes and social influencers. However, they are exceptionally worthwhile for accomplished celebrities, enabling them to optimize their financial and personal lives.
Jerry D. Prince is the director of Integrated Academy, part of Integrated Partners, a leading financial advisor firm. Richard J. Flynn is the managing partner of FFO, a leading celebrity family office. Russ Alan Prince is a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.