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Athlete, Celeb Clients Aren't for Dabblers

By Crucial Clips     August 19, 2015
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.
Source: FA-IQ, Aug. 12, 2015 

STEVEN LANG, REPORTER, FINANCIAL ADVISOR IQ: Hello, I’m Steven Lang with FA-IQ. I’m here with Jordan Waxman, a HighTower advisor who works with well-known athletes and celebrities.

Jordan, what experience do you have in advising these clients, and how are they different from other clients?

JORDAN WAXMAN, MANAGING DIRECTOR, HSW ADVISORS: Well, we have over 20 years of experience working specifically with athletes and entertainers. They’re very different from other clients, in the sense that they’re in the private — they’re much more private — they’re in the public eye. So they have much more of a need for privacy, security and asset protection. They have large entourages and numbers of handlers, so you have to set them up with independent fiduciary advice for checks and balances — because there are so many people that want to take advantage of them. And they have long retirements. They can have a two- or three-year career that’s substantial enough to sustain them for some period of time and then a 40- or 50- or 60-year retirement.

STEVEN LANG: Why don’t they treat their money as a business?

JORDAN WAXMAN: Well, many of these athletes and entertainers come from modest backgrounds. They may be the first in their family or their community to have wealth. And it comes all of a sudden in a large quantity. In addition, young athletes and entertainers often feel the pressure to live like older, more seasoned athletes and entertainers. So they’re tempted to live that way. Or the hazing rituals among rookies are to pay for the expenses of the older players. So they start to live ahead of their means.

STEVEN LANG: What changes do you help them make?

JORDAN WAXMAN: Well, the first change is to think like a business owner and say this is how a good steward of capital will accumulate wealth over some period of time. Give them the rule of thumb that — let’s say that they wanted to retire at some point in time — ask them what kind of lifestyle they would want to support, and show them what portfolio value they’d need to have in order to support that lifestyle. And build a plan around preparing for that event.

Once you break it down in very simple terms — in terms of what’s left for cash flow — it tends to make them more alert, make them more of a steward of their own capital rather than someone who’s just spending the money as it comes in.

STEVEN LANG: Finally, what advice would you give other advisors who want to serve this client group?

JORDAN WAXMAN: The advice I give to advisors is it can’t be a sideline business. You can’t be a mile wide and an inch deep. You need to be an inch wide and a mile deep. In other words, specialize. Understand the real risks and opportunities that this clientele faces, and be a real expert. And not to have hundreds and hundreds of clients, but focus on relatively few. Because, in addition to understanding the needs of the clients, they’re much more of a consumer of service. They need service and hand-holding and people to help them, because they’re very busy during the season. So I would say that specialization is critical.

STEVEN LANG: Thanks, Jordan. Thanks for being here.

JORDAN WAXMAN: Thanks for having me, Steven.