Many media bodies report that Justin Bieber is considering suing his financial managers for misappropriating his estimated $300 million fortune. The famous singer, who made most of his fortune when he sold the rights to his music catalog for a reported $200 million in January 2023, has apparently lost a large amount of money due to the decisions of taken by his managers and has been considering legal action for some time.
The news follows a change in its management earlier this year. Justin replaced his business manager, Lou Taylor, less than two years after hiring him. Instead, he hired Johnny Depp's financial advisor, Edward White. At the same time, Justin also parted ways with his longtime talent manager, Scooter Braun.
or Daily Mail history sheds more light on the situation. For starters, insiders believe Justin's team is split on the idea of a possible lawsuit, with some blaming Justin for the reckless spending. Sources close to Justin and his wife, Hailey Bieber, claim that the young couple's spending habits are out of control, spending millions on private jets and other luxury lifestyle choices.
What's more, while the sale of his catalog of songs is considered “one of the biggest deals” for an artist under the age of 70, a source also revealed to the Daily Mail that Justin was advised not to do the deal – part of the deal was that Justin would no longer receive royalties on any of the songs he has released or had interest in before 2022. While the singer is not suffering financially, some potential sources of income have dried up for the famous singer, who has not released an album since 2021 and canceled his 2022 world tour, citing his health as a priority.
It is unclear exactly how much of Justin's fortune was misappropriated or which financial managers may be accused of wrongdoing. Unfortunately, Justin is not the first high-net-worth individual to accuse a financial manager of mismanaging funds. Earlier this year, Hermes heir Nicolas Puech accused his longtime property manager and his friend to make his $13 billion fortune disappear without a trace.
Checks and balances
While financial advisors typically cannot be held liable for investment losses, there may be a potential case if there is some type of breach of fiduciary duty. Young high net worth individuals may be particularly susceptible to certain types of breaches of fiduciary duty by unscrupulous advisers, including fraud, embezzlement, self-dealing and misappropriation of assets.
Mistakes by financial advisors can certainly happen, but clients cannot be completely ignorant of their money. It is important to do your due diligence before hiring someone.
“With wealth, like health, you can delegate tasks, but the responsibility remains yours. The Internal Revenue Service underscores this principle: even if a professional prepares your taxes, you're still legally responsible for their accuracy,” said Rick Nott, managing director at Angeles Wealth Management. As wealth grows, so does complexity, Nott explained. And with complexity comes new risks.
According to Nott, “When someone stands between you and your assets, potential conflicts of interest arise. Economists call this the “principal-agent problem.” To treat it effectively, Nott recommends clients:
- Engage in Open Discussion
- Advisors should explain financial decisions in terms that clients fully understand, but clients should also speak up when something is not clear. Customers are often reluctant to ask questions, for fear of appearing uninformed – but there is no such thing as a “stupid question” about your money.
- A good counselor never judges. If a counselor makes a client feel uncomfortable or uninformed about asking questions, they may not be appropriate.
- Demand transparency
- Experts should easily explain their approach in clear and straightforward terms. For example, a tax advisor should find out the level of conservatism or aggressiveness of a position and why.
- Access is key. You should have direct access to all your accounts and know who else has access, and ideally, have a personal relationship with them as well.
- Treat wealth management as a team sport
- This may be the most critical component: A client must build an independent and collaborative team of advisors who are fiduciaries, meaning they act only in the client's best interest. While it may seem easier to have all services under one roof, a team of independent professionals provides much-needed checks and balances.
- When each advisor is independently motivated and free of revenue-sharing arrangements, they are more likely to catch mistakes or potential misconduct. If a client is unsure of an advisor's guidance, they have a knowledgeable second opinion.