Get Schooled or Get Fooled: Why Influencers Need Mad Money Skills
BY Bryan Schimmel
When I say I know Social Media Influencers, it’s not a humblebrag. I married one! As a financial advisor, I realized early on in our relationship how crucial it is for these rising media personalities to manage their finances – both in the present and future. Wrap your head around this number: $10 billion. That’s how much influencer adspend will swell to by 2020. That means some of these lucky folks are going to be swimming in cash. The time is now for some professional financial advice!
Even for the more workaday personalities looking to build their careers, getting a handle on the ebbs and flows of their income is critical. Influencers often must cope with wild fluctuations in their income stream(s). That why it’s very important for them to have a stash of liquid investments for tougher, more cyclical times. On the other end of the spectrum, concentrations of income can produce total tax headaches. For influencers who haven’t seen that level of money inflow before, it can lead to a real case of “more money, more problems.” No one wants a letter from the IRS asking for a cash clawback.
Setting up a corporation with the help of a tax professional is an important first step for influencers who would like to limit both their legal and tax liabilities. With money coming in big chunks, it is wise (and legal) for media professionals to take substantial deductions for expenses related to their business. The good news is influencers can pretty much deduct for all the fun stuff in their feeds as long as these expenses are linked to their brand: travel, food, entertainment, etc. And with all the recent corporate tax law changes, they can potentially pass through their income at a lower percentage than their actual income. I often pair my clients with an excellent tax professional to ensure they do not overcompensate the biggest influencer of all: Uncle Sam! Making tweaks and adjustments like these can significantly reduce most influencers’ tax bills.
Another important decision for any influencer is to choose a sponsor who can help catapult their brand to the next level. Due diligence on this subject is of utmost importance and can be the difference between break out success and having to get a day job. Given my personal experience living day in and day out with an influencer, I’m a great resource for sponsor research for my clients.
No influencer can work forever so it should also be a high priority for them to set up tax-advantaged retirement plans. Retirement accounts come in many different flavors, so which one to pick? To figure this out, I take a comprehensive view of my clients’ unique financial situation and set them up with appropriate accounts embedded in a rock-solid financial plan. Whether their careers are hot (or not), I can at least make sure their future is taken care of.
Bryan Schimmel is a Financial Advisor of Santa Monica, Calif-based Gerber Kawasaki Inc., an SEC-registered investment firm with approximately $859 million in assets under management as of 4/30/19. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures the success or protects against loss. Readers shouldn’t buy any investment without doing their own research to determine if the investments are suitable for their situation. “All investments involve risk and one should consult a financial advisor before making any investments. Past performance is not indicative of future results.”