The majority of today’s private wealth has been generated and is still controlled by business people. Wealth derived from the entertainment industry makes up a fairly small percentage of the total, but because celebrities from the entertainment world are so visible, they represent a unique class of clients.
Most affluent individuals choose to live their lives out of the spotlight and shield themselves from unwanted attention, but this is not possible, nor desirable, for many high-profile entertainers and athletes. There is a nearly insatiable interest in how celebrities spend their time and money and, as a result, a number of media outlets are dedicated to the subject. This scrutiny adds a facet to the lives of entertainers and athletes that that does not exist for other affluent people.
The advent of the 24-hour news cycle and the emergence of the celebrity billionaire have obliterated many of the remaining distinctions between wealth and fame. More than ever, the public is fascinated with all forms of exceptional performance, from dominating athleticism to uncanny investment acumen. Maintaining a strong and visible personal brand can support a nearly limitless range of entrepreneurial, artistic, philanthropic or political goals. At the same time, this exposure leaves wealthy individuals and families more vulnerable to physical and financial risks. Balancing these divergent interests can quickly become a conundrum for celebrities. Finding the right solution requires an evaluation of both fiscal objectives and philosophical principles.
Celebrities often attract a disparate group of people who are looking for something—employment, connections, friendship, endorsement-by-association, introductions, opportunities or a piece of the action.
Moreover, celebrity wealth is also often fleeting—characterized by windfalls in short periods of time that can quickly dry up when circumstances change. These reasons alone are enough to distinguish celebrities with wealth from rest of the affluent universe.
Wealthy celebrities are also often much younger than most individuals with comparable levels of wealth and therefore have longer to live. Youth is a double-edged sword for most celebrities. On one hand it can mean they have longer to earn and manage their money. On the other hand, if the window of opportunity has closed quickly, as it frequently does for actors, entertainers, and athletes, it can mean they must find other ways to fund their lifestyles and other obligations in the decades ahead. This is why celebrities, more than any other segment of the wealthy population, need sound financial guidance.
The celebrity market can be very lucrative and rewarding for financial professionals, including wealth managers. However, it is often considered a difficult market to succeed in. To be successful requires insight into the mind-set of wealthy celebrities.
Russ Alan Prince, president of R.A. Prince & Associates, is a consultant to family offices, the ultra-wealthy and select professionals.