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The road to riches is often paved with potholes. The list of musicians who've had it all, then lost it due to voracious appetites, giant egos, bad management, and clever ex-wives reads like a "Who's Who" of the music industry. From MC Hammer and Mick Fleetwood, to Blondie, Meatloaf, and beyond, the music business is littered with those who thought the hits would never stop coming, that "their public" would always be there with the bucks, that there was literally no tomorrow. Who hasn't heard the tale of the great rocker selling out concerts and copious quantities of his/her album one year, only to be broke and busted when the winds of fashion change (which they always do)?
Whether you are a multi-platinum artist or a struggling musician barely making the rehearsal studio rent, a similar fate awaits you, a time when making music may not mean making a living. But whether you are earning $50 a gig or $50,000, there are ways to ward off the worst-case scenario of what George Bailey called, in "It's A Wonderful Life," "bankruptcy, jail, scandal."
"Musicians these days are acutely aware of the fickleness of the industry and the fact that it can all end tomorrow," says Farnum Brown, Senior Vice President of Franklin Research and Development Corp. "That is the driver that leads musicians today to be keen on the idea of building an investment program as soon as they have excess cash flow."
The nation's largest and oldest money management firm devoted exclusively to socially responsible investing, Boston-based Franklin Research advises more than a dozen multi-platinum acts, investing in common stocks and debt instruments (and those aren't clarinets) to the tune of $550 million in assets.
"When artists come to me they have already created a sizable storehouse of wealth," explains Brown, "but they have very little predictability of their financial future. Their portfolios need to be focused on preserving wealth and increasing the reliability and security of their financial future. So when the music public is not interested in them any more or they decide they're not interested in this career anymore, they have something to fall back on and rely on."
Investing for retirement, or to purchase a home, a studio, or to start your own label, is not beyond your reach. As a self-employed individual without a 401(k) savings plan, which is the case with most musicians, only you can plan for your financial future. Successful musicians such as production gurus the Dust Brothers and rock 'n' roll calorie counter Meatloaf (who went from flat broke to penning articles for financial magazine Forbes) have invested wisely, securing a future when Social Security may not exist, and where greatest hits packages go out of print, forever.
Investing can take many paths. You can "day-trade" Internet or technology stocks for quick returns, as does Scott Steen of Royal Crown Revue, or, you can follow Steen's bandmate, Daniel Glass, and buy into safer money market mutual funds or the popular IRA (Individual Retirement Account). Techno-rocker Moby buys stocks that he knows and likes, while legendary hard bop pianist/composer Horace Silver avoids anything that doesn't give him a guaranteed return. Drummer Steve Smith, meanwhile, entrusts his Journey loot to a financial advisor who helps him invest wisely.