Financial advisor Drew Boyer has a term for what sets entertainers and athletes who blow through their money on a fast track to bankruptcy court.
As a counter to "lifestyle inflation,” Boyer's new Sound Returns platform is offering money lessons — from both failures and successes — through music.
The blog and videos spotlight artists like Taylor Swift, Beyoncé, Rihanna, Metallica and Stevie Wonder.
“This is where music meets money,” the CFP, who founded Boyer Financial Group, explains in an interview with ThinkAdvisor.
The story of hip-hop artist MC Hammer is a notable example of lifestyle inflation.
“He bought a gold toilet and statues of himself, jets, race cars and race horses," Boyer says. "Everything you can blow your money on, he went for."
But Swift, the daughter of a longtime Merrill Lynch advisor, was shrewd. She outsmarted a private equity group that bought the master recordings of her first six albums. Boyer talks about that in the interview.
His new book, “Hip Hop x Finance,” discusses a number of artists and how they could have avoided making financial mistakes. In the interview, Boyer talks about seven of these.
Here are highlights of our conversation:
THINKADVISOR: Tell me about your new platform, Sound Returns.
DREW BOYER: It’s where music meets money with financial lessons from music icons. I do a blog/newsletter and a video explaining what happened to artists and the financial lessons that can be learned.
THINKADVISOR: Let’s talk about a few of the financial faux pas by hip-hop stars that you’ve written about. MC Hammer, for example, squandered many millions. What’s the lesson that can be learned?
BOYER: In the early 90s, he was the very first hip-hop artist with a No. 1 album and No. 1 single. He became a global superstar.
He made about $70 million in three years but spent $82 million. He’s the definition of lifestyle inflation: He bought a gold toilet for himself, jets, race cars and race horses.
Also, when you’re blowing $500,000 to $1 million a month on payroll, and the hits dry up, the money goes very quickly.
The lesson is not to surround yourself with yes-people but to have an accountant or advisor that tells you no and helps you plan ahead.
MC Hammer had neither. He went bankrupt.
But in later years, he turned things around and became a tech investor and is living a normal lifestyle.
THINKADVISOR: 50 Cent had a lavish lifestyle like Hammer. He went bankrupt too. Right?
BOYER: Yes. His life was pretty complicated. His mom was murdered when he was 9 years old. He was taken in by his grandparents but, unfortunately, got sucked into the street life of selling drugs. He was shot nine times.
Eventually, he was picked up by Eminem and Dr. Dre, and became a superstar. Also, instead of getting paid an endorsement fee from vitaminwater, he took an equity stake in the company. And when Coca-Cola bought vitaminwater, he reportedly made about $100 million.
THINKADVISOR: What’s the money lesson?
BOYER: Later on he made a bunch of bad investments, but he did a strategic bankruptcy to save the $30 million that he had left when he filed.
So he wasn’t exactly broke, but he used the rules to his advantage.
THINKADVISOR: Lil Wayne owed a huge amount in income taxes. What happened?
BOYER: He wasn’t paying attention. He didn’t have an accountant. He ended up owing tens of millions. Jay-Z came in and bailed him out.
THINKADVISOR: Many of these stars didn’t execute a will, which caused much confusion and major problems when they died. Please explain.
BOYER: Bob Marley was a big gifter during his lifetime. He intentionally didn’t leave a will because money didn’t matter to him. It took over 30 years [to settle his estate].
THINKADVISOR: Prince famously didn’t have a will either. Please discuss.
BOYER: He was so overprotective about his own music; but when it got down to estate planning, he didn’t do anything. It turned into this big fight over his estate, trying to find the next of kin and figure it out.
THINKADVISOR: So what’s the lesson here?
BOYER: When someone dies intestate, things vary state by state. Where I’m located, you’re going to burn 4% to 6% in fees and six to 12 months in court just to settle that stuff when you could have spent like, a thousand or two thousand bucks and a couple of minutes to write down who you want your money to go to.
This is one of the most expensive mistakes that comes as a result of being lazy.
As an advisor, when I’m doing financial planning, I say to clients, “Let’s take a look at your bank accounts. How do you have these titled? Do you need a trust?”
THINKADVISOR: Jimi Hendrix is another star who had no will, and there was a big fight about his estate. Finally, it was settled about 45 years after his death.
BOYER: Right — and that leads to Kurt Cobain of Nirvana. The band exploded onto the scene, but they didn’t blow all their money. The problem was they weren’t prepared for success. [Cobain] had a mental health issue.
THINKADVISOR: And he committed suicide by shooting himself in the head. What’s the backstory?
BOYER: He never wanted to be a capitalist rock star. He was medicating himself and then developed a heroin problem and [used many other drugs, plus alcohol].
After the band got [big], he started pushing for more royalties. He said he needed 75% of the split among [three people].
The main financial lesson is to have the right team in place.
THINKADVISOR: In 2019, Taylor Swift suffered a significant financial shock. What was it?
BOYER: Led by her manager, all the master recordings from her first six albums had been sold to a private equity group. And they wouldn’t sell the masters back to her.
To outsmart them, Swift recorded her own [new] versions and told her enormous fan base to buy the new ones only.
She had known something about finance when she started out because her father is a [financial advisor].
THINKADVISOR: But early on, couldn’t she have prevented the masters rug from being pulled out from under her later when she became a success?
BOYER: Musicians are usually signed up for about six albums. You don’t have any power because you’re unproven. Once she was famous, she tried to buy the masters back, but that was denied because she had signed a contract.
Maybe the lesson should be: Know a contract inside and out.
THINKADVISOR: You’ve also written about your own struggles, that you didn’t have money when you became a financial advisor and were in serious credit card debt. Please talk about that.
BOYER: In 2000, I got an internship at Merrill Lynch. I thought I could build a book from zero. For the first couple of years, I was just surviving. That’s when I ran up all that debt.
THINKADVISOR: But you eventually became a multimillionaire. How?
BOYER: I’ve been working at it for 20-plus years. It was a long road, and I took risks. I made money not only from the value of my business but through my investments and saving, buying a house, then in 2020, buying an investment property/rental.
THINKADVISOR: When you became an advisor, how did you acquire clients?
BOYER: I learned the power of rejection! But it so happened that my office was around the corner from a fire department. A few of those guys gave me a chance, and that’s how I leaned into working with first responders: police and [fire fighters].
I was like, what can I do to help them out?
Credit: Robb McCormick Photography
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