Landing A-list clients

Kendra Sivertson of Sora Group Wealth Advisors, Inc. began building a base of movie-related clients through friends in the industry. They now constitute about 40% of her book.

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However, many film professionals don’t make money for weeks, and then get a massive influx of cash. Her highest-earning film clients can make up to $1 million per year—but can see that drop to $350,000 or even zero in subsequent years.

To prepare them for slow work periods, Sivertson takes a basket approach. She creates three separate accounts: the first for immediate needs, such as bills; the second for medium-term wants, like a house; and the final account to fund financial independence.

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If a client’s off for the summer, Sivertson dips into the first basket to fund his lifestyle. That account is primarily invested in fixed-income to shelter it from volatility. The second basket is an even mix between bonds and equity, and the last is more weighted to equities.

Because her clients don’t get regular paycheques and could be out of a job at any time, their portfolios will have a higher weighting to fixed-income. Plus, “we set funds aside that we never include in any long-term planning”—at least a year’s worth of emergency savings.

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But clients shouldn’t put that cash into TFSAs if, like 30% of her film-industry clients, they’re dual citizens or landed immigrants (most hailing from the U.S.).

“The TFSA is not accepted as a registered plan in the U.S., so you have to understand where they’re filing their taxes and whether they’re being paid in Canada or the U.S.,” or both.

As well, several industry unions automatically siphon a portion of paycheques to RRSPs, “but if the person isn’t a Canadian and is just working here, she may not be eligible for an RRSP,” says Sivertson. To help her navigate IRS rules, she works with several accountants who specialize in U.S. tax, as well as lawyers familiar with American trust laws.

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There are other cross-border differences. Her Canadian clients tend to earn less than $1 million per year, while Americans often earn above that threshold. If a client does land a large contract, though, he’ll usually come in telling her about big-ticket items he wants to purchase.

To engender discipline, Sivertson builds in a reward portion to help manage the windfalls—otherwise they’ll never stick to the plan during lean years. Indulgences like trips or a home theatre are capped at 10% of the lump sum. The remaining 90% is split between the three investing baskets.

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