Oct 20, 2014|
Managing Celebrities Money - Lee Rawiszer, Paradigm Financial Partners by Barry and Kim
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Text your questions or comments this X 8680 its Barry Armstrong and can carry him on the financial exchange radio network. Can you remember if. If basketball player for the Boston Celtics 8:1 o'clock. We have of course I do in my I think unfortunately most people remember Antawn for the fact that he was dead broke. Moments after he stepped off the court as opposed to. He'll huddle he played in 810 million dollars during his NBA career US and star but he said he became saudis first round draft choice. He's a big name here in Boston for awhile he lets you guys that down. 810 million bucks and I think. He's pretty much flat broke religion apartment shared an apartment with another guy analyst I heard just trying to you know make against it that. Well anyway the reason I bring this up as we're joined by Lee were all threes of managing principal. For paradigm financial partners and he manages money for the rich and famous Lee howry today grant how are you good so let's talk about that because. We we've all heard the stories NFL. Any channel and be a baseball players straight in make all this money. And then you read about them I think Allen Iverson is he's living on the streets of Philadelphia company that what why does that happen. It happens because a lot of them when they come and all this money it's such a young age they don't realize. Infinite period of time they're going to be making a big amount of money. They think it's gonna go on forever they think they're going to be the next Derek Jeter to have a twenty year careers going and endorsements. And you know not all of them are lucky enough to get those endorsements problem at least clean lines like Derek Jeter really stayed out of trouble. You know throughout his whole career yeah you know the Michael jordans of the world. If you look at the statistics the average NBA basketball players like three point six years and it fell but the same Major League Baseball. He'll be up five point six years. And they don't realize that this infinite period of time Wittman makes majority of their wealth more than most people make a 35 a forty year career. But here's the problem right ear to ear talking about the average income household income across the country fifty or so. It's real hard for me to feel a lot of sympathy. Guys make it five million bucks here well that might be true but having said that you could you also have to remember. A panic in five million dollars a year might be living in a world where body with him is making twenty million dollars a year so he's trying to live that same lifestyle his life is very different than what. My life is. And so he spent in money left and right to keep up with the Jones was literally. And then all of a sudden he finds out that needs I've been hurt or he's been content and its own. But what happens is a lot of them are very young when they come right is money they're not financially sophisticated a lot of them come from and cities from very poor families. And what happens is as soon as they make the big bucks Shula family members are coming with a hand up to one might have my parents house which is admirable that wanna help the mom and dad who raises their whole life. On the get into bad marriages and make it all these you know investment schemes being thrown at them to invest and wild investments let's. Back to the bad marriages has. Adrian Peterson comes to mind right. What is he had something like seven kids from six month lately is that common in in our. And is it just athletes are that it athletes and entertainers that happens we're entertainers you know to what we meet with them with their business. Particularly in sports we try to educate them. That sports is not a career it's an opportunity he wants it's what you do with your life after sports. And we phrase we've point irreplaceable capital that the money that earnest very short period of time. If you invest it right. Q it's Smart should last you liked on your lifetime children's lifetime and grandchildren. Benefit guys make in the two back to that well. You tell us who it what's the income age or income amount and some of your clients. While some of them can be anywhere from five in the examples of these that's on the low end. I'm alone look at and then we've entertainers literally making 203040. Year big concert tour on the old days pleased to make the money on the cell records people the pirate I download. Many people don't pay for their music is legal downloads. And in the iTunes immediately make pennies and download they make their money going on tour these worldwide chorus. So let's say Evan an entertainer. Nick human sure. Again pitcher he does an icon like that lower right. The Vietnamese winner Tim Taylor Swift Taylor Taylor Swift fantastic heart. So they they make that big money. Do you go to them and say you need to say EESP twenty million last year like how much do you encourage them to say. While we're debate did do you get to that part of the conversation. I don't get to that part of the conversation we typically how the dialogue with business the business manager pace the celebrities athletes bills. Does it taxes usually usually CPAs. And using the paid your bills like literally the credit cards and everything so these celebrities never touch a credit check never see a bill never ever now like which is totally. Insulates them from reality of financial situation and making a lot of money and the business manages my experiences in the actually genuinely care about there. Non clients and they really try to talk about it extra expenses. Com like a fifteen car fuel needs Kimi re right mom you know some of these like extravagant over the top expenses. And they seemed a lot of their clients crash and burn. And they are trying to prevent that with a client really try to reach. And sometimes and how much they talk. They kept it one manager how to clients called stupid they want to abide this senior roles it's whatever. Haven't signed I was advised not to by this and he calls the stupid yeah. And Bentley to Ronald pull up this letter does financial surprisingly. Even with the team of CPAs and business interest. A lot of them owe back taxes should know your whole body type of people making twenty million bucks a year in the united taxes. They haven't paid their taxes some of them because it really cooperate with the you'd think that it's not that total control over the finances so many stories about the IRS coming after these celebrities. Willie Nelson remember him I only it pays taxes have proudly when he got big track you know who's who's the actor who. Oh let's let's let's Wesley Snipes equally he linkage he went to jail. And Nicolas Cage makes movie after movie house was under foreclosure. Oscar beautifully now Vegas. He had one bad movie after another a lot of that career didn't you know it seems to be the when you have someone else managing your money in and you'd like you just said you never see a bill you don't have any concept of how much money's going out they hit it it's just the leaking of they have no concept. I use. An anomaly I used when I called Paul McCartney and I I I do get front of these celebrity via use. Paul McCartney example recently. As late sixties he sold out Yankee Stadium. And I tell my clients think about Paul McCartney started with The Beatles in the early sixties. When you like twenty your little curious he's over seventy today tougher fifteen year career. Still making albums still doing concerts are still producing music how many of those celebrity's. Can you see it and say it won't even count maybe and Frank Sinatra park Streisand or Madonna even from the early eighties is still going yup Paul McCartney for six mic Jagger and The Rolling Stones. But how many of them how many can you kind of an ally ice the one ring one to right member eyesight they sure he was super hot in the eighties now he can't get arrested him. So I try to use that as an example exe which hopefully in. You're going to be the next Paul McCartney and you're talented you don't know so we have to preserve your assets we wanna grow it but we gotta do it sensibly. And even dude there anyway and even save and a lot of their money yes I'm Lamar but you know a lot of them. Don't think it's aren't gonna go on for a. Then of course we raw lyzard joins us today he's the managing principal paradigms and its partners that we can backward talking about apple pays him. Send. It's Barry Armstrong and can carry him right here on the financial exchange radio network. So we are still joined by Lee row wiser he's managing principal paradigm financial partners and I see you there were talking about athletes and and we're going to be at least text questions but only if you have any questions for our text numbers 68680. The 88 seen. Like we read more often than not worthy players and candor and about our entertainers as bad as players in your opinion. Yes it can be just as bad and they also have a very infinite life span again like I mentioned Paul McCartney is an example. But he's really more the exception rather than the rule. You can have an entertainer who could have saved three to five year period. Where there really productive they're cutting albums in the peak of their of their popularity they're selling out you know stadiums and concert Taurus. And then all of a sudden they lose favor with their fan base up where their fan base grows up and has a different taste and I. Like Britney Spears and that's right like a perfect example he made a lot of money that would choose seventeen. And he held the Britney Spears being. When he probably believes she'd want if Ernie you may be thirty and I write but she's put she's a carpeting element. You know and then you look like Michael Jackson long career in bomb tools unfortunately. Maria age. But if you look at people like I mentioned earlier on the eighty's yeah she still populist cells stadium yup. Com and then people like Paul McCartney project Rolling Stones they're gone and they still do enters the union guys I don't know wheelchairs. I just know that's exactly right now but I mean it's amazing these guys in the seventies Paul Simon it's another example that you look at as part Art Garfunkel right you know on. Here anymore acting career. Billy Paul Simon really went solo and he's had a very adoring you know career still perform the whole world. But that's why we try to impress upon the celebrity athlete. You have this opportunity. It could be three to five years could be fifty years and we don't know half the plan and invest your money prepare for three to five correct and blessed with fifty capsule. So like more athletes nowadays are getting this a little bit better than the outside subs are you looking like Peyton Manning. He doesn't sign an endorsement deal Tom Brady there outside endorsement deals with allocating equity of sums up the we had Manning got 25 Papa John's franchises and we sign on his endorsement deal. Now this crisis as an actress yeah it Smart advice around Sophia people. All torn up five. He got yes 125. I I actually saw and then I saw Tom Brady being interviewed in Bollywood revealed very much recently and armor stop that and his wife as well. When she she just signed onto the right front and earth wind and he's got some hugs peck and his gut right he's not taking not in most of those situations he's not taking cash as much in Morrissey is just on. How Smart. That's something you would advise would you two would you tell someone to do. Absolutely cuts mean. That's definitely a great idea to get equity if you can have an ownership limit something that you're doing rather than just being a hired hand in making money for very short period of time I think. Derek Jeter is surrounded himself with a lot of Smart people think he's gonna have a tremendous. After sports career and other these retired from the New York Yankees does he may be end up in managing typically team one day but endorsements are not gonna end he's definitely a future hall of Famer. Sure are gonna take a break but your short third trivia question of the day. What amendment wasn't they gave. African American men the right to vote if you know the answer that question Texas 68680s. Or text number which amendment gives app. African American men the right to vote will be. Well best in business is right here. This is the financial exchange on the financial exchange radio that. All right CNN live that he Blackmun the right to vote him with the fifteenth amendment. And here's your final trivia question of the day which amendment abolishes slavery. If you know the answer to that question you can text us at 68680. I'm told him that Brittany spears will turn 33 years old on December 2 now I feel terribly. That does that doesn't see them on it no it doesn't thirty three. 33 have you ever represented a young entertainer like I like idea that I Indo tell us any names for content confidentiality purposes but. I got thinking he weekly policy rate ECB or Brittany great outlet where she sixty. Oh absolutely we just are startling just can't. I. And how does that work is that there there'd be you know the drinker. The only you have to deal breaker boat and everybody got up at that. Age yet. It's. Guardian that aren't. Trustees. Ross. Duties. To protect its. And so all communication. It. Trustees. So if you're managing the money poor famous entertainer right. Do you see do you have to talk to that entertainer detective and athlete about your performance and did it they do they even open. So it's all it's all communicated through this trying to. You know courtly. Review meetings. On the phone with that is your business matches gatekeeper so they're gonna say EG why did you buy that stock. How does that differ and like I have a if you know you have a finite period of time Friday professional would you say football player mr. you have fears would three point six years. T know. You're going to Ian. Rate in you know they're amateur career maybe I'll an old football players that are written so you know asking of this finite period of time how does that differ. Then managing money for somebody who's a dock and and a thirty year old dot. It's a good question burial give you a give you perfect example a lot of these. Athletes and young entertainers when it pitch by other financial advisor this is what set us apart they went in and said hey your nineteen years old. You know this that you're gonna have this money 3040 years she needed. All of you can be aggressive you know be 100% equities and when we went the opposite we said it's you know it's irreplaceable capital wanna preserve and grow it. So we recommend building a portfolio of investment grade bonds which is that you know challenging in this low yielding environment but. Surrounding it was blue chip large cap you know growth stocks and US and also high dividend stocks have produced regular cash flow. Bulls head surrounds him retirees absolutely or somebody use your euros treating these kids as if their five years from retirement. What they are that we can debate but high dividend stocks large cap growth stocks and bonds. Which also alternative. Well. And we some. International emerging market exposure. Cage but nothing really super aggressive because we don't know what the times their careers security. And that's going to be appoint any income portfolio career ends. Less successful endorsements. We'll run media gigs for example of the sports and becomes a sports in the rebellion you know you become a gods for raining down in honor of Derek Jeter maybe manage. And share our own line. If you look at that like you look at again let's use Derek Jeter's and had ample. He used me in his last contract I think about sixty. Last year and if he becomes a man with a manager. And inhibit that but we're worse. Before. But usually that Tedy Bruschi UC. I think he's a better example I think he would be the better team can't be making. Much work pre SP they want you know he was like I was making about three million dollars is football player a year he Fries don't. Well maybe you know now I think I think probably make him now he's making a million maybe with the combination of mind does endorsements he does have a good source. Joseph Torre. Yeah that's an unusual that two X two right at the beginning when the manager in the Cleveland team Cleveland Indians giving. No. Team right market right. Let's Tedy Bruschi is a perfect example he's perfect example so he's an athlete who made 35 million dollars for the Spain of his career. Sold the span of his career let's say that he made 45. Million dollars went a long time for so now. You're right now he's not making. Four or five million dollars a year I would assume that's probably true but if you invested with someone like cute Smart just like what you're saying I mean your linebacker your guy who at any minute can be done. So every place tomorrow squeaky right if you invested Smart he's living. He can live big for the rest of his life on their income but he's making now and the investments that he is may well not. Gold tonight with the irreplaceable capital right you know that I that I like to talk about is it you can turn on the portfolio level off that and ending com and you know eventually bond yields go up we purpose and we built a bond portfolio and keeping it very short then it's a new generation of 30 last. On that when he went went rising interest rate environment in the bonds come due we can replace at a higher coupons. So we talk about that setting up the portfolio it's crazy long bombs you couple that with high dividend stocks large cap stocks. And dial also alternative investments that it providing come once they retire. I'll repeat the sounds like retirees while you're right you know white seems to me that a guy like Teddy Bruschi can actually of the rest of his life as comfortably as he did the days he was playing. And maybe even more so with time iffy investments were right and if he made the right moves when he was a player so why do so many of them. Make terrible decisions because they all have it they are happy to straighten it paid her agent with three or 4%. Let's negotiate the contracts is at the same as the businessman. Agent to. Negotiate the contract that you know. And without three of 4%. Typically I've missed by priests if I'd buy it does is. It nature which they make up 20%. Regal. Hole in the wrong we are just said let's just down right in which. It bills. When concert. Budgets and every one the payroll every it's very. And is it is it carries a business manager. If he fewer. Recent Britain's your Britney Spears businessmen or somebody else's business managers while it does have one on most of a lot to be that is that's an analyst. It. It. These guys all in Italy in your. Lot of the rappers on an. Honor. Usher. Who's there. That it. I don't have nothing. He thinks that someone at the movie theater he just out big cash at one when Justin Bieber. Came. It. To audition for sure shoes and Austin recording. Career. Usher salt. And my favorite singers all time. Great. Pretty good business person apparently we're definitely in the wrong with telling you. I think it's called me back is now. It just isn't a bit of the front they'll listen hire us vary it up in a weapon that talent and dominated. The thirteenth amendment is the amendment that abolished sleep in the works. For him. Lee thanks for coming in to. Are. Perfect to me. But it was suitable organs.