A few decades of working with celebrities and professional athletes has
taught Jordan Waxman one thing: "They're no different than anyone else;
they put their pants on one leg at a time."
Mr. Waxman, managing partner at HSW Advisors, has helped carve out a
successful sports and entertainment group niche inside the $2.5 billion, New
York-based financial planning firm.
While he recognizes several differences between working with athletes
and entertainers, Mr. Waxman is well beyond being awestruck by his clients,
whom he refuses to identify by name.
"These kinds of clients often need more planning help because
they're usually less financially savvy," he said. "And they tend to
delegate quite a bit, because they're used to having people run things for
them."
Beyond some common quirks and characteristics of well-known people who
often have to dodge autograph seekers, Mr. Waxman said a practice built around athletes and
entertainers needs to specialize in the areas of tax management and legal protections,
in addition to traditional asset management.
"We recognize that they have unique estate planning needs, and they
also need asset protection strategies because they have bull's-eyes on their
backs, often involving frivolous lawsuits," he said. "They have to
worry about things like palimony suits being filed against them, and prenups
are critical."
Things that most noncelebrities rarely have to think about can become a
top priority for many of Mr. Waxman's clients.
"Tax mitigation is a major issue," he said. "These
clients often get paid in many different jurisdictions, and they often make
money through ordinary income, which is why they need to avail themselves of
all the tax-differed vehicles available to them."
Mr. Waxman broke away from the Merrill Lynch Private Banking and
Investment Group in 2012, along with HSW partners Kenneth Hoffman and Richard
Steinberg, to become part of HighTower Advisors. At the time, the trio was
managing $1.4 billion, including a fledgling celebrity niche practice.
Even though HSW has become known for its work with celebrities, the
sports and entertainment group only represents about a quarter of the advisory
firm's business.
The bulk of its clients are "entrepreneurs and serial
entrepreneurs," Mr. Waxman said.
"I've been working with celebrity clients for about 20 years, but
only in the last five years, since we became independent, did we decide to
capitalize on it and put some resources behind this part of the business,"
he said. "And once we did, it really started to flourish."
Mr. Waxman said about 40 of the firm's clients are athletes or
entertainers.
Although he realizes some advisers might have one or two celebrity
clients, he doesn't recommend making a full commitment to the
niche without understanding the space.
"You need to focus on what you can deliver to the client that is
unique and distinguishable, and you need to research what it is these types of
clients need and focus on that," he said. "If you're an interloper in
this space, you're not going to do anybody any favors."
April Rudin, president and chief executive of The Rudin Group, a
financial services marketing firm, warned that, despite the temptations, the
celebrity market "is not for everyone, and you can't just enter that
market."
"It requires specialized expertise because of things like
contracts, unique incomes and other special issues related to
celebrities," she said. "Athletes. for example, will have lump sums
they come into and usually require payments to other agents."
Mr. Waxman said he entered the celebrity client space by happenstance
several years ago when a high-profile money manager left the business to become
a client and referred many of his clients to Mr. Waxman.
He cites an early experience in which an athlete client died in a plane
crash, exposing the fact that the client had not been following Mr. Waxman's
financial planning advice.
"When I found out he had not executed the plan we put together for
him, I vowed to never let that happen again," said Mr. Waxman, who
doggedly protects the identity of his clients, saying, "It's called
private client services for a reason."
While athletes and entertainers are lumped into the same general
category at HSW, Mr. Waxman said they actually constitute two unique subgroups
of clients.
While both groups can make a lot of money, entertainers will be able to
earn money well into their senior years. Athletes, though, often experience the
sudden shock of having a lot of money, but relatively short professional
careers.
"Sudden wealth is an issue if they can't learn to delay
gratification," Mr. Waxman said.
Mr. Waxman has very little patience for clients who don't follow his financial
planning guidelines.
"If we advise a client and they don't listen to us, we fire them as
a client," he said. "Our mission is to make a massive impact that can
last, and we can't do that if the client isn't following the plan."
Click here for the original article from Investment News.