Orbiting Stars

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Orbiting Stars
Depp

Hollywood’s elites employ an array of professionals to help handle everything from fetching morning coffee to buying private islands.

While it is industry standard to lean on a team of agents, assistants, publicists, lawyers, and business managers, consequences rear their head once entertainment power players remove themselves from the normal routines of adult life, as evidenced by recent troubles faced by Johnny Depp.

The financial woes of the “Pirates of the Caribbean” star point to the acute problems faced by actors, writers, producers, and studio executives who don’t know how their money is spent, according to Danielle Prunier, a managing director at Century City’s Merrill Lynch Private Wealth Management.

“Problems arise when clients lose touch with their own bills and how much they are spending on a monthly basis,” she said. “Bill pay service for actors can be extremely necessary, but you get further from the reality of the expenses you incur. It can snowball.”

Wealth managers – who are often in a more distant orbit than business managers and agents – are a sort of backline defense for entertainment industry clients, helping solidify fortunes. Prunier said her relationships with Hollywood clientele typically run through business managers, and the amount of direct contact varies.

“Some clients have business managers that do everything soup to nuts and might just use us to manage money and nothing else, while other business managers bring us in to help manage the whole picture,” she said. “Some want clients to be invested in a relationship with us and what we’re doing, and other times clients may be way too busy and use their business manager to manage assets without their direct input.”

Prunier has no personal preference in how an account is handled, but she said it is critical to get clients on board with a savings plan that will support their lifestyle during down periods in their career.

Georges Khneysser, J.P. Morgan Private Bank’s L.A. market manager, said that is best achieved by showing how careers can be up and down.

“Once they understand the cycle of their career, it becomes easier to institute discipline in savings,” he said. “But there’s a learning curve.”

Cash crunch

Nowhere is that learning curve more apparent than with Depp, who financed a lifestyle that included $2 million in monthly bills, according to lawsuits between the actor and his business managers at Beverly Hills’ Management Group.

Depp filed a $25 million suit in Los Angeles Superior Court in January alleging fraud and mismanagement, among other causes of action. Management Group countersued, claiming the firm is owed payment by the actor and that Depp was the architect of his own financial problems.

Depp, who has earned an estimated $650 million over the course of his career, has been offloading a number of assets in an apparent attempt to raise cash. He sold one penthouse unit in downtown’s historic Eastern Columbia Building for $2.5 million in October and another in the building for about $3.1 million in November. Another three of his properties there are on the market. The actor also reportedly sold his 156-foot luxury yacht, Amphitrite, to “Harry Potter” author J.K. Rowling for roughly $28 million in January 2016. Another prized asset, an estate in the south of France, is reportedly listed for close to $40 million.

While the Depp case is certainly extreme, the actor is far from the only Hollywood player to fall on financial hardship after stunning career success. David Milch, a writer and producer behind TV hits such as ABC’s “NYPD Blue” and HBO’s “Deadwood,” was reportedly on a strict allowance in 2016 after gambling away almost all of his $100 million fortune on horse racing. Nicolas Cage, another actor with a lavish lifestyle, burned through tens of millions of dollars, according to court papers. Like Depp, both blamed at least some of their financial problems on mismanagement by business managers.

Wealth managers such as Prunier and Khneysser – who both have a roster of entertainment industry clients – said these cases illustrate the need for Hollywood stars’ professional advisers to work together.

“Our success as private wealth managers is based on the relationships between the client’s different advisers,” Khneysser said. “Business managers are often our strongest partners because they help us get to know them and know their needs.”

Both Khneysser and Prunier said they help clients understand the need to cut back on expenses or stash more for retirement by giving them relatable examples.

“Because we can say to a client we have worked with another cast member on a TV show who was in a career position just like you … that helps model it for them,” Prunier said.

While the demands of entertainment industry clients are different in many ways than those who made their fortunes in other industries, there’s at least one unifying factor.

“When times are good – markets are appreciating, clients are working – there’s less involvement from clients in managing their money,” Prunier said. “When times are bad, they suddenly want to come in and learn more about their assets.”

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