What Can a Financial Advisor Do For Entertainment Professionals?

Escient Financial works with entertainment professionals on both sides of the camera or microphone, across various disciplines, including movie and television production and post-production crew members, producers, directors, actors, athletes, writers, musicians, choreographers, dancers, and other entertainers and creatives. Escient Financial knows your challenges & solutions in the media and entertainment industries including film, television, music, multimedia, and sports.

It’s important for entertainment professionals to find a financial advisor who is familiar with fluctuating income, and understands the complexities of having to pay various entities, managers, and business managers with their income. Most financial advisors are only familiar with working with executives and individuals with 9-5 jobs who have a flat salary or know what income and expenses will look like each year. For many entertainment professionals, income and expenses change yearly, monthly, weekly, and even daily, and sometimes those changes can be very drastic. It’s important to have an advisor who understands the dynamics of the finances of an entertainment professional and knows exactly how to manage the planning for somebody working in the entertainment industry.

Some Entertainment Professional Scenarios

Below are some scenarios that many entertainment professionals find themselves in as they work in media and entertainment.

Non-Stable Income

Those in the entertainment industry come across unusual business challenges during their career. One such financial challenge is that income might not always be steady from year-to-year. Many entertainment professionals fall under the category of “gig workers.” These professionals don’t know when they’ll be working next or how long the next gig will last. They still need to pay bills, even when they don’t have any income. During times between gigs, they may be collecting unemployment at a considerable lower amount than their usual income. With that unemployment income, they may or may not have federal taxes withheld, and if they do, the 10% federal tax withholding may be considerably less than their actual tax rate. A financial planner can help entertainment professionals determine the correct amount of quarterly estimated taxes to pay to avoid underpayment penalties later during tax season, along with other solutions for handling the dynamics of their income.

Non-Employee Income

Entertainment professionals working as gig workers may be receiving income that is non-employee, usually with a 1099. This type of income has no federal or state tax withholdings, so it’s important to have a financial planner and advisor that understands the type of income that is being received and how to properly plan for paying taxes.

Not only does this non-employee income have no federal or state tax withholdings, there is no Social Security withholding either. This means these entertainment professionals are not earning Social Security credits or having income reported to Social Security to be able to collect higher Social Security benefits in retirement. A financial planner that understands this kind of employment for so many entertainment professionals is important so that they know to pay the correct type of taxes to earn those credits and also to plan for the possibility of lower Social Security benefits in retirement.

Entertainment professionals that typically receive non-employee income also typically do not participate in any employer-sponsored retirement plans, such as a 401(k) or pension. Thus these entertainment professionals must find their own way to save and invest for their retirement.

Even entertainment professionals that may be gig workers, but receive employee income because they’re a member of a union, may find themselves with fluctuating income and a need to plan ahead for retirement due to the uncertainty of future Social Security benefits. They may also be receiving income that is combination of employee income and non-employee income, making it important to properly plan for tax season and avoid underpayment penalties.

Sudden Large Amount of Income or Wealth

Some entertainment professionals, such as actors, directors, writers, and musicians, may suddenly receive a large amount of income, but then not receive additional income later or have a longer period of time before they receive additional income.

Everyone’s heard the stories of celebrities (whether they be actors, athletes, or other entertainers) who made millions in a relatively short period of time, but squandered their sudden fortunes and in later years found themselves broke. Having a lot of money all of a sudden will make anyone want to splurge. The important thing is to maintain control of spending, which is harder than it sounds. A financial planner and advisor can help maintain control of spending by helping to establish a budget and monitoring the entertainment professional’s financial plan to ensure spending stays within limits, as well as finding the right investment plan tailored to the entertainment professional and their situation. This enables the entertainment professional to enjoy their newfound fortune for many years to come, and even pass it on to future generations.

Short-Lived Careers

Some entertainment professionals’ careers may be short-lived. This is especially true for many athletes. It’s important to have a game plan in place for what life will be like after retirement from their athletic career so they can live comfortably later in their life and provide for their family for years to come.

Entertainment Professional Businesses

Some entertainment professionals have their own business or, especially in many cases with actors, a loan-out company. They call it the entertainment business for a reason, and that’s because it is a business. Like any business, an entertainment-related business needs tax-planning like a business. There may be ways of receiving extra tax deductions by having certain expenses go through the business instead of personal accounts. And business income, depending on the type of business entity, can be taxed differently than personal income. It’s important that the financial planner and advisor understands these differences, as well as how some entertainment-related expenses may actually qualify as a deductible business expense even though they would normally not qualify as a deduction for other individuals.

Frequently Traveling For Work

Entertainment professionals may travel a lot. This includes movie and television shoots that take crews and actors to other states and countries for long periods of time, athletes traveling for half or more of the year for games, exhibitions, and competitions all around the country and the world, and musicians on tours. It’s easy for finances to get away from you, especially when you're away from home for extended periods of time. A financial planner and advisor can monitor income and expenses to make sure the financial plan stays on track.

Health Insurance & Benefits

Some entertainment professionals are members of unions. For these entertainment professionals, if they work enough hours, they qualify for health insurance and other benefits. However, what if they don’t work enough hours? Well, then they don’t receive health insurance. Entertainment professionals need a plan in place to ensure they are able to have health insurance if they don’t qualify for their union’s benefits. And what if they aren’t in a union and must find health insurance on their own? Escient Financial can help with the evaluation and selection of the right insurance to meet needs and budget restrictions.

Team of Professionals to Manage a Complex Life

Many professionals working in media and entertainment need to hire a team to help them manage their lives. This can include a day-to-day manager, a business manager, an attorney, agents, and an accountant.

It’s important to find a financial advisor who is comfortable working with an entertainment professional’s attorney and business manager, as well as other members of the team. An attorney will often develop different trusts or entities. It’s important that the financial advisor understands what has been done and created by the attorney as it relates to entertainment professionals. They should have a good working relationship to make sure that the different entities or trusts are properly funded and managed.

Business managers provide record-keeping services, account reconciliation, and tax management, among other services. A financial advisor works closely with a business manager to ensure the financial soundness of the entertainment professional’s business and personal life, as well as in different types of philanthropic giving and gifting options that could affect different short- and long-term goals.

It’s smart to hire a financial planner and advisor early in the team-building process. A financial specialist who focuses primarily on your unique income and tax situation will be able to work with your team more cohesively than an advisor who isn’t familiar with the life of an entertainment professional.

The Reality of Your Life is Unique

Those are just some of the scenarios that entertainment professionals can find themselves in. As an entertainment professional the reality of your life is unique, so there are surely other issues that you have to deal with. Escient Financial is used to unique situations and able to adapt to your needs.

It’s Never Too Early or Too Late

Even if you’re not yet earning substantial income from working as an entertainment professional, it’s important to have an advisor who is willing to help educate and empower you to begin your savings journey, who understands your short- and log-term goals, and is there from the beginning to help you build your future as you continue to accrue income.

The Process

The process begins with helping clients understand how to budget and manage their money, including income and expenses. Together, we explore the possibilities and establish short- and long-term goals. Then, a plan is developed and implemented to properly manage income, expenses, and investments for the purpose of achieving those goals.

Escient Financial Can Service Your Needs

Whether you’re an awarded industry legend or a soon to be recognized up and comer, Escient Financial can support your needs as we build your future… together. If you want to know more or if you’re ready to begin the journey...