What you can learn from Johnny Depp and his money managers
There's a lot you can learn from Johnny Depp's legal spat with the firm that managed his money.
The actor is making headlines this week after his former business managers countersued him on Tuesday, alleging that his extravagant spending led to his recent financial woes, according to published reports.
Depp's business management firm, The Management Group, filed its countersuit in Los Angeles Superior Court, claiming Depp snapped up 14 homes, a 150-foot yacht and other costly toys.
Meanwhile, Depp sued the firm in January, claiming his advisors mismanaged his money and failed to file his taxes on time.
Though the dispute is now a matter for the courts, there is plenty you can learn from the feud.
Perhaps the biggest lesson of all is how to ensure that your financial advisor is working in your best interest.
Ask questions
You may have heard of the fiduciary rule, a regulation from the Labor Department that is supposed to take effect on April 10.
It will require financial advisors and broker-dealers to give you advice that puts your interests first when offering guidance on retirement accounts, including IRAs. It does not apply to taxable brokerage accounts and other kinds of investment advice, such as financial planning.
The rule is already on thin ice now that Donald Trump is president, as one of his key advisors has said he would likely repeal it. Other industry observers predict a delay in its rollout.
"If the Trump administration delays the rule, consumers will have to protect themselves and insist on a fiduciary at all times," said Ron A. Rhoades, an attorney and assistant professor of finance at the Gordon Ford College of Business at Western Kentucky University.
Do a background check
When you're shopping for an advisor, you can look him or her up on Broker Check, maintained by the Financial Industry Regulatory Authority, as well as the advisor page of the Securities and Exchange Commission.
Both offer details on where your advisor is licensed to do business and whether there are any past or present complaints against him.
Come prepared with the following questions.
● Are you a fiduciary? Find out immediately if your advisor is acting in your best interest. Get the point across with this fiduciary oath from the Committee for the Fiduciary Standard.
● How are you paid for your services? Ask whether you're paying a fee for your advisor's help, be it hourly, as part of a subscription or based on assets he or she manages for you. Find out whether your advisor receives a commission for the sale of mutual funds, insurance and annuities.
● Where do you keep your assets? Some large broker-dealer firms will hold your assets in custody because you have a brokerage account with them. If you're using an independent fee-only advisor, he or she will likely hold your assets at a custodian, such as TD Ameritrade, Charles Schwab or Fidelity.
"Don't let your advisor take your money and move it to their account," said David J. O'Brien, principal at Evolution Advisers in Midlothian, Virginia. Be sure to match the statements you get from your custodian and the statements your advisor provides you.
● What are your qualifications? There's an alphabet soup of different designations for financial advisors, but keep an eye out for the best-known credentials: Certified Financial Planner, Chartered Financial Analyst and Certified Public Accountant. All of those require study and practical experience to achieve them.
"They are all very rigorous in terms of the education required before advisors sit for the exam," said Rhoades. "All three have their points of emphasis, but they're quality certifications."
Johnny Depp's money worries blamed on $2m-a-month lifestyle
Johnny Depp's financial troubles are caused by a lavish $2m-a-month lifestyle, say the business managers he is suing for mismanaging his earnings.
They claim he spent more than $75m (£59.6m) on 14 homes and $3m (£2.4m) blasting author Hunter S Thompson's ashes out of a cannon.
The Management Group are countersuing Depp after the Pirates of the Caribbean actor sued them for $25m (£20m).
Depp, they claim, is "fully responsible for any financial turmoil" he faces.
"He has refused to live within his means, despite... repeated warnings about his financial condition," their countersuit claims.
Their legal action, obtained by the Deadline website, also accuses the actor of spending:
He also needed 12 storage facilities to house his collection of Hollywood memorabilia, they allege.
Last month, Depp claimed The Management Group owed him more than $25m.
His lawsuit also alleges the company failed to file his taxes on time, costing him $5.7m (£4.5m) in penalties.
Depp's latest legal tussle comes in the wake of his divorce to Amber Heard, which was finalised in January after months of wrangling.
The 53-year-old will be seen later this year as Captain Jack Sparrow in Pirates of the Caribbean: Salazar's Revenge.
Johnny Depp's purported $2M monthly spending to blame for money woes, say former managers
Johnny Depp's former business managers countersued the actor on Tuesday claiming his lavish lifestyle that cost more than $2 million US a month to maintain caused his recent financial troubles and that the star ignored their repeated warnings.
The countersuit filed in Los Angeles Superior Court by The Management Group comes about two weeks after Depp sued the company alleging it grossly mismanaged his earnings.
The lawsuit said Depp paid more than $75 million (all figures US) to buy and maintain 14 homes, including a French chateau and a chain of islands in the Bahamas.
Depp also spent heavily to buy a 150-foot yacht, fly on private jets and cultivate collections of fine art and Hollywood memorabilia requiring 12 storage facilities to maintain, the lawsuit said.
Depp was repeatedly warned by the company that his spending was out of control but ignored his former advisors' advice to control his spending, the lawsuit said.
"Depp, and Depp alone, is fully responsible for any financial turmoil he finds himself in today," the lawsuit stated.
Depp sued The Management Group on Jan. 13 seeking more than $25 million he contends was mismanaged. His lawsuit also alleged the company failed to file Depp's taxes on time, costing him $5.7 million in penalties.
Tuesday's countersuit said Depp's tax returns were always filed on time, and taxes were paid when the star had money available to pay them.
The company handled his finances from 1999 until early 2016, an especially lucrative period in the actor's career.
During that time, Depp launched the blockbuster Pirates of the Caribbean franchise and other big-budget releases, including Alice in Wonderland and the 2005 film Charlie and the Chocolate Factory.
He also met, married and divorced actress-model Amber Heard during that period and participated in the rock supergroup Hollywood Vampires with Alice Cooper and Joe Perry.
Depp's attorneys did not immediately respond to email and phone messages seeking comment.
The countersuit seeks a judge's ruling that Depp is to blame for his financial troubles, and $560,000 in fees The Management Group said it is owed.
The money being sought comes on top of $4.2 million the firm announced on Jan. 13 that it was seeking from Depp for repayment of a loan it said it made to the actor.
Depp is not the first blockbuster star to take his former managers to court alleging mismanagement.
Nicolas Cage sued his former business manager seeking $20 million for alleged mismanagement in 2009 and the manager in a countersuit cited the actor's spending for his financial troubles. The case was resolved before trial.
The actor is making headlines this week after his former business managers countersued him on Tuesday, alleging that his extravagant spending led to his recent financial woes, according to published reports.
Depp's business management firm, The Management Group, filed its countersuit in Los Angeles Superior Court, claiming Depp snapped up 14 homes, a 150-foot yacht and other costly toys.
Meanwhile, Depp sued the firm in January, claiming his advisors mismanaged his money and failed to file his taxes on time.
Though the dispute is now a matter for the courts, there is plenty you can learn from the feud.
Perhaps the biggest lesson of all is how to ensure that your financial advisor is working in your best interest.
Ask questions
You may have heard of the fiduciary rule, a regulation from the Labor Department that is supposed to take effect on April 10.
It will require financial advisors and broker-dealers to give you advice that puts your interests first when offering guidance on retirement accounts, including IRAs. It does not apply to taxable brokerage accounts and other kinds of investment advice, such as financial planning.
The rule is already on thin ice now that Donald Trump is president, as one of his key advisors has said he would likely repeal it. Other industry observers predict a delay in its rollout.
"If the Trump administration delays the rule, consumers will have to protect themselves and insist on a fiduciary at all times," said Ron A. Rhoades, an attorney and assistant professor of finance at the Gordon Ford College of Business at Western Kentucky University.
Do a background check
When you're shopping for an advisor, you can look him or her up on Broker Check, maintained by the Financial Industry Regulatory Authority, as well as the advisor page of the Securities and Exchange Commission.
Both offer details on where your advisor is licensed to do business and whether there are any past or present complaints against him.
Come prepared with the following questions.
● Are you a fiduciary? Find out immediately if your advisor is acting in your best interest. Get the point across with this fiduciary oath from the Committee for the Fiduciary Standard.
● How are you paid for your services? Ask whether you're paying a fee for your advisor's help, be it hourly, as part of a subscription or based on assets he or she manages for you. Find out whether your advisor receives a commission for the sale of mutual funds, insurance and annuities.
● Where do you keep your assets? Some large broker-dealer firms will hold your assets in custody because you have a brokerage account with them. If you're using an independent fee-only advisor, he or she will likely hold your assets at a custodian, such as TD Ameritrade, Charles Schwab or Fidelity.
"Don't let your advisor take your money and move it to their account," said David J. O'Brien, principal at Evolution Advisers in Midlothian, Virginia. Be sure to match the statements you get from your custodian and the statements your advisor provides you.
● What are your qualifications? There's an alphabet soup of different designations for financial advisors, but keep an eye out for the best-known credentials: Certified Financial Planner, Chartered Financial Analyst and Certified Public Accountant. All of those require study and practical experience to achieve them.
"They are all very rigorous in terms of the education required before advisors sit for the exam," said Rhoades. "All three have their points of emphasis, but they're quality certifications."
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| The star is accused of spending $18m on a luxury yacht and $30,000 a month on wine. Getty Images |
Johnny Depp's money worries blamed on $2m-a-month lifestyle
Johnny Depp's financial troubles are caused by a lavish $2m-a-month lifestyle, say the business managers he is suing for mismanaging his earnings.
They claim he spent more than $75m (£59.6m) on 14 homes and $3m (£2.4m) blasting author Hunter S Thompson's ashes out of a cannon.
The Management Group are countersuing Depp after the Pirates of the Caribbean actor sued them for $25m (£20m).
Depp, they claim, is "fully responsible for any financial turmoil" he faces.
"He has refused to live within his means, despite... repeated warnings about his financial condition," their countersuit claims.
Their legal action, obtained by the Deadline website, also accuses the actor of spending:
- $18m (£14.3m) on an 150 foot (45 metre) yacht
- $4m (£3.2m) on a failed record label
- $3m (£2.4m) to blast Hunter S Thompson's ashes out of a cannon
- $300,000 (£238,600) a month to maintain a staff of 40 people
- $200,000 (£159,000) a month on private planes
- $150,000 (£119,330) a month on round-the-clock security
- $30,000 (£23,800) a month on buying and importing wine
He also needed 12 storage facilities to house his collection of Hollywood memorabilia, they allege.
Last month, Depp claimed The Management Group owed him more than $25m.
His lawsuit also alleges the company failed to file his taxes on time, costing him $5.7m (£4.5m) in penalties.
Depp's latest legal tussle comes in the wake of his divorce to Amber Heard, which was finalised in January after months of wrangling.
The 53-year-old will be seen later this year as Captain Jack Sparrow in Pirates of the Caribbean: Salazar's Revenge.
Johnny Depp's purported $2M monthly spending to blame for money woes, say former managers
Johnny Depp's former business managers countersued the actor on Tuesday claiming his lavish lifestyle that cost more than $2 million US a month to maintain caused his recent financial troubles and that the star ignored their repeated warnings.
The countersuit filed in Los Angeles Superior Court by The Management Group comes about two weeks after Depp sued the company alleging it grossly mismanaged his earnings.
The lawsuit said Depp paid more than $75 million (all figures US) to buy and maintain 14 homes, including a French chateau and a chain of islands in the Bahamas.
Depp also spent heavily to buy a 150-foot yacht, fly on private jets and cultivate collections of fine art and Hollywood memorabilia requiring 12 storage facilities to maintain, the lawsuit said.
Depp was repeatedly warned by the company that his spending was out of control but ignored his former advisors' advice to control his spending, the lawsuit said.
"Depp, and Depp alone, is fully responsible for any financial turmoil he finds himself in today," the lawsuit stated.
Depp sued The Management Group on Jan. 13 seeking more than $25 million he contends was mismanaged. His lawsuit also alleged the company failed to file Depp's taxes on time, costing him $5.7 million in penalties.
Tuesday's countersuit said Depp's tax returns were always filed on time, and taxes were paid when the star had money available to pay them.
The company handled his finances from 1999 until early 2016, an especially lucrative period in the actor's career.
During that time, Depp launched the blockbuster Pirates of the Caribbean franchise and other big-budget releases, including Alice in Wonderland and the 2005 film Charlie and the Chocolate Factory.
He also met, married and divorced actress-model Amber Heard during that period and participated in the rock supergroup Hollywood Vampires with Alice Cooper and Joe Perry.
Depp's attorneys did not immediately respond to email and phone messages seeking comment.
The countersuit seeks a judge's ruling that Depp is to blame for his financial troubles, and $560,000 in fees The Management Group said it is owed.
The money being sought comes on top of $4.2 million the firm announced on Jan. 13 that it was seeking from Depp for repayment of a loan it said it made to the actor.
Depp is not the first blockbuster star to take his former managers to court alleging mismanagement.
Nicolas Cage sued his former business manager seeking $20 million for alleged mismanagement in 2009 and the manager in a countersuit cited the actor's spending for his financial troubles. The case was resolved before trial.
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