Numerous media outlets report that Justin Bieber is considering suing his financial managers for squandering away his estimated $300 million fortune. The famous singer, who made most of his wealth when he sold the rights to his music catalog for a reported $200 million in January 2023, has apparently lost a large sum of money due to decisions made by his managers and has been contemplating legal action for some time.
The news comes after a change in his management earlier this year. Justin replaced his business manager, Lou Taylor, less than two years after he hired her. Instead, he hired Johnny Depp’s financial advisor, Edward White. Around the same time, Justin also parted ways with his longtime talent manager, Scooter Braun.
A Daily Mail story sheds some more light on the situation. For starters, insiders believe that Justin’s team is split on the idea of a potential lawsuit, with some blaming Justin for the reckless spending. Sources close to Justin and his wife, Hailey Bieber, allege that the young couple’s spending habits are out of control, spending millions on private jets and other lavish lifestyle choices.
Additionally, while the sale of his catalog of songs is considered “one of the biggest deals” for an artist under age 70, a source also revealed to the Daily Mail that Justin was advised against making the deal—part of the deal was that Justin would no longer receive royalties on any of the tracks he’s released or had an interest in before 2022. While the singer isn’t suffering financially, some potential sources of revenue have dried up for the famous crooner, who hasn’t released an album since 2021 and canceled his world tour in 2022, citing prioritizing his health.
Exactly how much of Justin’s fortune has been wasted or which financial managers might be accused of wrongdoing is unclear. Unfortunately, Justin is hardly the first high-net-worth individual to accuse a financial manager of mismanaging funds. Earlier this year, Hermes heir Nicolas Puech accused his longtime wealth manager and friend of making his $13 billion fortune vanish without a trace.
Checks and Balances
While financial advisors can’t typically be held responsible for losses in investments, there can be a potential case if there’s some sort of breach of fiduciary duty. Young, high-net-worth individuals can especially be susceptible to certain types of breaches of fiduciary duty by unscrupulous advisors, including fraud, embezzlement, self-dealing and misappropriation of assets.
Wrongdoing by financial advisors can certainly happen, but clients can’t be completely clueless about their money. It’s important to do your due diligence before hiring someone.
“With wealth, much like health, you can delegate duties, but the responsibility remains yours. The Internal Revenue Service underscores this principle: even if a professional prepares your taxes, you are still legally accountable for their accuracy,” said Rick Nott, managing director at Angeles Wealth Management. When wealth increases, so does complexity, explained Nott. 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 address it effectively, Nott recommends clients:
- Engage in Open Discussion
- Advisors should explain financial decisions in terms that clients fully understand, but the clients also must speak up when something isn’t clear. Clients often hesitate to ask questions, fearing they’ll look uninformed—but there’s no such thing as a “stupid question” about your money.
- A good advisor never judges. If an advisor makes a client feel uncomfortable or uninformed about asking questions, they may not be the right fit.
- Demand Transparency
- Experts should readily explain their approach in clear, straightforward terms. For example, a tax advisor should disclose the level of conservatism or aggressiveness of a position and why.
- Access is key. You should have direct access to all of 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 should build an independent, collaborative team of advisors who are fiduciaries, meaning they act solely in the client’s best interest. While it might seem easier to have all services under one roof, a team of independent professionals offers much needed checks and balances.
- When each advisor is independently motivated and free from revenue-sharing arrangements, they’re more likely to catch mistakes or potential misconduct. If a client is unsure about one advisor’s guidance, they have a knowledgeable second opinion on hand.
