CELEBRITY FINANCIAL DISASTERS: Top Advisor Offers Advice
As another celebrity riches to rags story hits the press (see Nicolas Cage), it leaves most wondering how people with all that money lose it so quickly? Jason Hill, a financial advisor who assists professional athletes and entertainment personalities, says it is due to a variety of factors. “For some, it is a matter of the company they keep. They travel in circles with people who can easily spend $10k for a night on the town, and they start following suit.”
Expensive socializing is only part of the problem, however. “For others, it is a matter of investing in areas they don’t understand and putting money in so many different areas that it becomes impossible for the client to track.”
Reports indicate that Cage is laying the blame for his downfall at the feet of his financial advisor—but hill says too many people use a financial advisor in the wrong way. “A financial advisor’s job should never be to just handle the money and show the client returns at the end of the year.”
To be a responsible advisor, Hill says, “you have to teach clients how to invest, how to budget, and how to track what they own. At some point, the goal really is to set them up so they don’t need your services in their day to day affairs.” According to Hill, far too many financial advisors and brokers simply tell the client they will handle the business end and never educate the client about the substance of the investments or strategies used. “If a client does not understand it, they should not be invested in it.”
Similarly, Hill believes many advisors complicate matters by over-diversifying to the point that it is unmanageable. “Diversification is good, but only to the point that the client can track all of his own investments—if he can’t, then he is spread too thin. Keeping it simple is the key.”
When asked about the back taxes owed by cage, Hill says that kind of tax problem also happens all too often—and sometimes it really is a matter of listening to bad advice. “Some financial advisors and attorneys tell clients to take advantage of questionable tax loopholes; then years later it turns out the IRS disagrees with that stance. At that point the client ends up owing huge amounts in back taxes and penalties, but the money has already been spent.” Hill says the tax advisors and attorneys he works with are careful to avoid that potential. “Here again, while you want to take advantage of legitimate write-offs, the more complicated the loophole, the less likely it is to be legitimate. So we keep it simple and don’t put clients in risky situations.”
Hillside Financial, based out of Oklahoma, has carved out a niche helping the wealthy who have found themselves in trouble get back on top of their finances. “We go in and basically help the client clean house—selling off assets, paring down investments, and training the client in how to budget and control their expenditures.” Hill says the key to his success is focusing on simple, conservative investments, eliminating debt, and developing strong budget guides to keep clients on track. “We keep things extraordinarily simple in the way we do business, and we use the same philosophy when advising clients.”
For More Information contact: Karen Ammond – KBC Media- kbcmedia@att.net