In the accounting profession, CPAs are typically in a position of trust and loyalty with their clients. For many high-profile or “celebrity” clients, the trust and loyalty placed in their CPAs is even greater.
Many celebrities come into fame at a relatively young age with little understanding of finances and how to plan for the future. As an example, professional athletes tend to sign contracts soon after graduating college (and sometimes even before graduating). In their early twenties and with their first big pay check, it’s important that the CPA meet with these young clients and get them involved with their finances from the start. Careers of professional athletes are typically short-lived so it is imperative that they effectively plan for the future. CPAs can advise them during contract negotiations, by reviewing the contract and focusing in on their client’s best interest. In addition, they are also there to assist with estate planning, insurance protection, entity selection and structure, asset protection, budgeting and planning, state tax compliance, offshore investments, organizing and controlling the athlete’s cash flow —even on a daily basis, if needed. In order to help extend their short-lived careers, CPAs can provide assistance in generating lasting value by effective brand creation and management.
There’s a benefit of having a CPA, a Certified Public Accountant (contrary to a “Celebrity Personal Assistant”), not only for those new athletes inexperienced with their new fortunes, but also for the more “seasoned” veterans. CPAs can help advise their client in investing opportunities and new business ventures by performing projections, an investment analysis and matching the investment to the celebrity’s long-range goals. For example, Warren Sapp, defensive tackle for the Tampa Bay Buccaneers and Oakland Raiders filed for Chapter 7 bankruptcy in 2012. According to the Tampa Bay Times article dated April 13, 2012, Warren Sapp stated his financial troubles started with the wrong construction deal at the wrong time. CPAs may have been able to help avoid some of Sapp’s financial troubles by performing an investment analysis and helping Sapp determine whether the investment in the construction project was in his best interest financially. Occasionally, assessing risk can be the most important thing a CPA can do.
For those more musically-inclined celebrities, CPAs may be able to perform an analysis on contracts to identify the royalty rates, payment schedules and discover any unpaid royalties due to the artist and copyright holders. Young music artists, like Justin Bieber and Miley Cyrus, are similar to those young athletes who need guidance on handling their day-to-day finances and planning effectively for the future. CPAs that are able to provide trustworthy recordkeeping and a realistic future planning strategy can help maximize the artists’ personal net worth and long-term wealth.
With a successful music career, artists typically tour the country and the world showcasing their music. CPAs can help properly budget for upcoming tours, in order to avoid mismanagement of the artists’ finances. Pop music star, Rihanna, recently sued her prior accountants for failing to do just that.
All of the services provided by CPAs for celebrity clients are not exclusive or unique to that type of clientele. Even the non-celebrities of the world can benefit from the financial advice, future planning and management of finances by a CPA.