Scott Patterson, the actor who plays Lorelai Gilmore's boyfriend, Luke Danes, on the WB series "Gilmore Girls, has had to struggle with the sudden financial windfall that acting fame brings it recipients. Patterson isn't the exception as he has become a multimillionaire on his own journey.
"He drives a $90,000 Mercedes and a $60,000 BMW and lives in a spacious home in Hollywood Hills, purchased in 2003 for $1.27 million."
Only a little over ten years ago, Patterson was broke and living out of his car. Remembering his past and watching other celebrities burn through their money, Patterson has retained the services of Jeffrey Fishman, a Los Angeles-based financial planner with a big Hollywood clientele.
Fishman says "Actors suddenly come into money and there is a temptation to spend. Then suddenly the show is off the air and frequently people aren't prepared, we want to capitalize on his years of highest earnings to ensure his long term financial security."
In wise fashion, Patterson isn't the usual celeb that dumps their money on a financial planner and walks away. He is an avid reader of financial magazines and newspapers and has Warren Buffett as one of his biggest heroes.
Here are Fishman's strategy he suggested to Patterson:
"...the financial planner urged Patterson to create an emergency fund with about 12 months worth of living expenses. Then they set up a defined benefits pension plan. "We put in the maximum allowable by the IRS," Fishman said. "Very often actors do not have this."
"A low-risk investment portfolio, a mix of stocks, bonds and mutual funds came next. Patterson got in and out of Google in two days and reaped a profit of $30,000. He wanted to buy Microsoft but Fishman "kept me away. Thank God he did," Patterson said. The portfolio has grown between 8% to 10% annually."
It is refreshing to see this type of service being offered and partnership forged in the entertainment industry, as I have worked with entertainers in the past with their financial planning and it was hard to get a lot of them to see the benefits of doing it as a lot of them didn't look at the reality that their star would only shine for so long.
Now you know why you see some old bands touring the world in their fifties and sixties. Sure, they'll tell you they love to perform and love the music, yada, yada. But the truth is that they ran out of money and have to perform as you can check when you see their CDs sitting on the shelves collecting dust.
They didn't have the foresight to plan for their later years.
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