A few days ago, I had the chance to spend some leisure time with a group of artists and learned a lot.
One of the things I heard was: “My banker doesn’t want me to do anything! Of course, it isn’t in his interest that I do something else with my money”
He had two in between jobs childhood friends who had this idea of a beautiful and fashionable clothing line. The designs were great, he had seen them, and And they were just a 100k dollars short of being able to start this company.
I can understand why any entrepreneur would want him as an investor. First, it makes free advertising if the star and his friends start wearing the clothes. And, they are not as demanding as other investors as they rarely totally understand business and economics.
What artists must not forget is that they have to manage their wealth as if they were retirees (the same goes for sportsmen, actors, or anyone that has a risky business), and they cannot afford to take this much risk just because the clothing are appealing to them.
I’m not saying it is necessarily a bad investment, but he should at least have it reviewed by someone (maybe not only your current banker, as he will of course say it is a bad idea).
Now let’s not go too far with this, our job is to help him manage his wealth and warn him, but at the end of the day it is his money and his decision.
My doctor keeps telling me that smoking is bad for my health, but he doesn’t force me to stop. He doesn’t think “sh*t, this bloke is about to die and if I don’t do anything I will have to find another patient to replace him in my agenda”. He deals with my profile and does his best to help me reaching my goals. We should be doing the exact same thing.
So if you feel like it, go ahead and become a Private equity investor/fashion mogul. And send me a free t-shirt while you are at it, so I can compensate my decrease in AUM with some Swagger.
So the last banker standing should educate his client and warn him about the bad decisions he is about to make, but most importantly let his client do what the hell wants.