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JULY 19, 2010 | WWW.FORBES.COM
JULY 19, 2010 | WWW.FORBES.COM
The Celebrity1OO
The Richest, Most Powerful
Movie Stars, Musicians
And Athletes
ROBERT PATTINSON
$17 mil
SANDRA BULLOCK
$56 mil
KOBE BRYANT
$48 mil
TAYLOR SWIFT
$45 mil
KRISTEN STEWART
$12 mil
PROMOTION
The
Celebrity
Family Office
Keith M. Bloomfield, the president and CEO of the Forbes Family Trust,
draws from his new book, The Family Office: Advising the Financial Elite,
to explain an increasingly attractive type of multi-family office.
I
n order to address the needs and wants of certain
unique wealthy populations, multi-family offices are
continually developing new operational structures. One
example of this is the celebrity family office, which is
designed to meet the needs and wants of highly successful
entertainers and athletes.
Celebrities can especially benefit from the coordinated
approach characteristic of a multi-family office. One byproduct
of this strategy is a staff that is well versed in the concerns
and priorities of a high-profile clientele and can oversee the
integration of investment management, advanced planning,
private investment banking, business strategy and related
support services.
Issues Celebrities Face
While most high-profile successes appear to have a charmed
life, there is usually an intense backstory filled with frustrations
Stress Among Entertainers
N = 1,045 Entertainers
(based on 203 entertainment attorneys)
88.9%
High levels
of stress
Source: Fame & Fortune:
Maximizing Celebrity Wealth
(Elite Traveler, 2008)
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 its drawbacks.
For example, nine out of ten wealthy entertainers find that
the business is rife with stress (see figure).
Athletes don’t fare much better. Every move an athlete makes is
observed, analyzed and frequently second-guessed by coaches,
managers, teammates, fans and members of the press. Since
a great number of people and organizations, such as sports
federations and commercial sponsors, rely on winning athletes
to generate revenue, it’s understandable that most athletes
feel the pressure and are afraid of failure.
We find that celebrities seeking a financial advisory relationship
are increasingly attracted to the multi-family office model, which
integrates select core aspects of a business manager’s job with a
broad array of financial and legal expertise. Successful entertainers
and athletes are turning to such a business model because
the multi-family office can help these high-profile individuals
navigate their financial worlds and is nimble enough to offer
business strategy and support services specific to celebrities.
Working With Celebrities
Celebrity multi-family offices offer a broad array of expertise,
including advanced planning, which is a suite of cutting-edge
services that help wealthy individuals and families structure
their assets to be as tax-effective and secure as possible. Based
on the research cited in Fame & Fortune: Maximizing Celebrity
Wealth (Elite Traveler, 2008), successful entertainers very much
want to reduce the amount of money they pay in taxes, yet only
20% of them have taken steps to curtail these taxes by taking
advantage of their unique sources of income. For example, their
ability to “leverage” their loan-out corporations can prove
extremely profitable.
Advisors in multi-family offices can also offer business
strategy and support, handling licensing agreements or
business ventures with the celebrities’ names attached and
helping them capitalize on their success to generate significant
monies. All too often, less knowledgeable advisors will let
celebrities not well versed in these areas dive into business
deals with a very limited chance of success.
When celebrities call on advisors to develop a business
model, it means the advisors must go beyond the role of a
traditional multi-family office, business manager or management
consultant, because they’re tackling the client’s financial and
tax issues all along the way. One increasingly critical component
of this process is private investment banking. Included here is
the ability to obtain financing for business ventures as well as
personal interests and needs at preferential terms and pricing.
It’s the equivalent of bringing top-tier investment banking
talent to support the business aspirations and lifestyle concerns
of successful celebrities.
Successful entertainers and athletes
are turning to celebrity multi-family
offices because they can help
these high-profile individuals navigate
their financial worlds and are nimble
enough to offer business strategy
and support services specific to the
entertainment field.
The celebrity multi-family office offers two critical advantages
to successful entertainers and athletes. One is an in-depth
understanding of the celebrity world. More important, however,
is the ability of the multi-family office to address the needs
and wants of the successful entertainers and athletes in a
holistic manner.
While a top-notch multi-family office will provide solutions
to specific issues, problems and needs, its services should
also be all encompassing and comprehensive. This will allow
it to provide more effective and efficient solutions for
celebrities, in whose lives the personal and professional are
often closely intertwined.
The Advantage of Being Holistic
Can successful entertainers and athletes work with advanced
planning specialists to mitigate taxes? Can celebrities work with
business consultants to develop new initiatives? Can successful
entertainers and athletes obtain all the expertise of a celebrity
multi-family office on an à la carte basis? The answer to all of
these questions is: Of course they can.
Mr. Bloomfield is a veteran of the
wealth management business and
one of the leading authorities on
the sophisticated financial and
lifestyle needs of the world’s wealthiest families. For more
information, visit www.forbesfamilytrust.com.
Reprinted by Permission of æ Media LLC © 2010 - Reprints contact 212.620.2399