How to invest an actor's money
Rule No. 1: Be skeptical of restaurantsHollywood can be a financial roller coaster.
Top financial advisers say that the best way to withstand career peaks and dips is to keep a year or two of cash on hand in a liquid account, with the rest in a portfolio of bonds and well-diversified stocks.
"It depends on where they are in their career cycle," says Pamela Rosenau, a financial adviser to many celebrities at financial services giant UBS. But the less risky, the better.
To that end, many business managers actively involve themselves in making investment decisions for clients. If the client wants to buy a yacht, a business manager will try to negotiate the best price. If a client wants art, a business manager might hire an art consultant.
Then there are the frequent investment opportunities that come about because many stars are rich, famous and social.
"A client who is successful automatically becomes the bank of fill-in-the-name-of-client's-friend, who wants a loan," says Richard Koenigsberg, a business manager in New York who handles writers, producers and directors.
Celebrities get approached with all sorts of outlandish business propositions, but managers are particularly skeptical of restaurants.
"We have a saying here," business manager Barry Greenfield says. "Never ever ever invest in a restaurant. Too risky."
Other business managers will allow the indulgence to a limit.
"I don't mind restaurants if the ownership share is small enough," business manager Marty Fox says. "It's almost like joining a social club. Being part-owner means getting immediate reservations for a table."
Business managers are famous for fighting clients over spending habits, but just as often they'll serve as the public face for talent who know their limits but want to avoid awkward situations.
"Clients don't want to be the person who says no to a friend," Koenigsberg explains. "So as a service, we'll take the brunt and be the deliverer of bad news."