Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

Industry Perception, Optical Delusion

January 14, 2013
/   Insights

In Washington, they talk a lot about ‘optics.’ This has nothing to do with regulatory scrutiny, or government mandates on eyeglasses. It has to do with perception—how something looks, the way a particular story...

Social Banking: Blessing or Curse?

August 1, 2012
/   Insights

While the topic of Facebook and banking has generated plenty of heat (though not necessarily a lot of light), the debate seems mostly focused on two broad issues: The much-maligned IPO, and the notion...

Mobile Banking Engagement: Data from Digital Insight

June 24, 2013
/   Spotlight

Intuit Financial Services has been conducting a comprehensive and ongoing study of financial institution customers. From these studies, the company has been able to provide a deeper view of banking customer behavior across several...

Celebrities are just like us, only richer, right? There’s the glitz and glamor, of course, but there’s also the messiness of real life, only played out on a larger scale and out in the open. That’s always been the conventional wisdom, parroted endlessly by everyone from gossipmongers and publicists to sober-minded accountants.

Now, in the middle of awards season, it may be a good time to go a level deeper—how does being ‘richer’ make things different?

In a recent issue, New York Magazine plumbs the depths of the celebrity economy, and there’s literally a wealth of information of how much they’re not like us. For one thing, it’s astonishing how many things high-profile individuals don’t have to pay for—everything from clothes and accessories worn at media-friendly events to vacations and parties. Then there’s the endless revenue stream from things we all do every day, like send out Twitter messages. And of course, having a lavish (and very expensive) lifestyle is very much part of that brand.

But for us, it’s not always about how much they make, or even spend; it’s about how much they lose. There’s something weirdly satisfying hearing about celebrities accumulating enormous wealth, then losing it all, or at least going the Chapter 11 route just to get things back on track.

One recent addition to this sorry parade is former NBA star Allen Iverson, who used his peerless athletic abilities to rack up more than $154 million from his playing time alone, and quite a bit more through shoe deals and other endorsements, not to mention personal investments and other business dealings. How has that fortune apparently disappeared?

He has plenty of company: Even a partial list of celebrities with severe financial difficulties would have to include A-list actor Nicolas Cage, boxer Mike Tyson, musician Michael Jackson, Brit royal Sarah Ferguson, real estate mogul Donald Trump, TV personality Larry King, tennis ace Bjorn Borg, presidential candidate George McGovern and hip-hop star MC Hammer. And again, there are many, many more names that can be added to that roll call.

In almost all these cases, the woes stem from living considerably beyond considerable means. They make a lot, but they spend more. Their lifestyles are incredibly lavish, and they sometimes make very bad investments. Even if they don’t lose everything, their liabilities so far exceed assets that filing for bankruptcy is the only option available, the one stable way to make a fresh start.

Any thoughts of mean glee aside, here’s the real question: How did they end up like this?

Hubris surely plays a role—when the money is coming in by the truckload, it’s easy to lose sight of the big picture and go for everything that couldn’t be gone for before. And again, livin’ large is essential to the image. And yet. . .

These are presumably not stupid people—look how far they got before the fall. More to the point, their sizeable entourages include teams of accountants, business managers, lawyers, agents, and so on. These are skilled professionals, as good at what they do as the celebrities are in their chosen field. They are paid to give advice, and common sense suggests that there are plenty of warning signs before the real trouble hits. And there’s plenty of evidence that these advisers do exactly what they’re supposed to do—tell clients to pull back. Whether that advice is heeded is another question altogether.

There are lessons in these immorality tales for all of us, consumers and financial services professionals alike. Having money is good, having more money is better. We all believe that if we were in these circumstances—blessed by unbelievable material success—then we’d know how to handle it. We’d listen to our better selves, and to our advisors. We wouldn’t make these kinds of mistakes.

Would we?

 

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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Brad Strothkamp

http://www.forrester.com/rb/analyst/brad_strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.