This blog post concludes the series on the Fantex, Inc. IPO by analyzing the need for competent, and honest, financial attorneys with respect to managing the wealth of high-profile clients.<\/p>\n
It is hard to imagine that NFL running back Arian Foster received legal or financial counsel before signing his brand contract with Fantex. Under the terms of the agreement, Foster assigns 20 percent of his gross earnings to the company in return for a one-time payment of $10 million, intended to be raised through the company\u2019s IPO. The contract remains effective indefinitely and grants Fantex the right to audit Foster\u2019s finances. Moreover, the only earnings excluded from the 20 percent assignment provision are any movie and TV roles where Foster does not portray a football player, as well as any music that he produces or writes. The one-sidedness of this contract\u2014and the fact that Foster actually signed it\u2014shows that Foster\u2019s advisors, if any, did not have his long term financial interests in mind.<\/p>\n
In the professional sports and entertainment industries, there are countless examples of how quickly individuals can fall into financial ruin. It is easy to blame celebrities, like Foster, for not seeking the advice of a competent lawyer or to point the finger at an incompetent lawyer, if there is one. However, the real onus should be on financial attorneys to seek out these high-profile clients as part of providing assistance to the individuals who are in dire need of financial services.<\/p>\n
But how do financial attorneys begin to seek out, much less relate to, high-profile individuals such as Foster? As always, the first step is to appreciate the client\u2019s needs. Many athletes and entertainers are more than capable of handling their personal finances, but the same cannot be said as far as managing their wealth. Wealth management consists of sophisticated, financial decisions related to real estate, securities, estate planning, business formation, taxes, etc. Therefore, financial attorneys must first appreciate that while many high-profile individuals are capable of budgeting and saving, they are not capable of making the type of long term, financial decisions that affect successive generations.<\/p>\n
The second step in helping athletes and entertainers manage their fortunes is changing how we view advising such clients. Typically, attaining a celebrity client is viewed as an achievement by the financial professional. However, this attorney-centric view must be disregarded for one that places the focus on the needs of the client, whether high-profile or not. When it comes to wealth management, the best way to focus on the needs of high-profile clients is by viewing these clients similarly to low-income individuals. Put another way, if you strip away the money, the fans, and the glamour, little difference remains between assisting a low-income client regarding his or her finances and assisting an athlete regarding his or her wealth. This approach to advising high-profile clients ensures that decisions are made with the client\u2019s long term, financial interests in mind, rather than the attorney\u2019s financial interests.<\/p>\n
Even if a financial attorney appreciates the needs of a client and focuses on these needs, there is an undeniable language barrier that these attorneys must overcome. Any successful financial attorney will admit that the ability to speak the language of corporate clients is critical in understanding, and addressing, the needs of these clients. On the other hand, financial attorneys that seek out athletes and entertainers as clients must learn not only how to communicate with, but also educate, these non-corporate clients with respect to navigating the financial services industry. Effective communication, in general, is challenging; but like communicating with corporate clients, financial attorneys who can speak effectively with high-profile clients will be able to add the most value for these clients.<\/p>\n
Therefore, the value provided by an attorney should be measured by the extent to which his or her client\u2019s interests are both protected and furthered. By appreciating and focusing on the wealth-related needs of high-profile clients\u2014as well as communicating more effectively regarding these needs\u2014contracts like the one entered into between Foster and Fantex can be avoided.<\/p>\n
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This blog post concludes the series on the Fantex, Inc. IPO by analyzing the need for competent, and honest, financial attorneys with respect to managing the wealth of high-profile clients. It is hard to imagine that NFL running back Arian Foster received legal or financial counsel before signing his brand contract with Fantex. 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