Last Thursday we spoke to Sally and Tracy Velazquez from Empower Business Management for our weekly “Insider Sources” series on Clubhouse. Sally is a tax attorney with over twelve years’ experience in tax, accounting, and business management, providing concierge services while overseeing investments, insurance, and bookkeeping for high-net-worth clients and made partner in 2020. She is joined by her sister Tracy, who has been a business manager at Empower Business Management for over three years.
At the start of the talk, Sally and Tracy shared the necessary steps they take to educate clients, ensuring they make smart business dealings while keeping communication with them open and honest. Later on, they were joined by LaPolt Law attorney Tom Dean, manager of 21 Savage Justin “Meezy” Williams, and CPA Alex Roytenberg, where they discussed novel ways musicians and entertainment clients are generating revenue, attempting to understand the best way to guide clients through investing in this sudden gold rush of NFTs and cryptocurrency.
Educating Clients Through Honesty
When it comes to managing clients, Sally always asks herself: Am I okay with this client calling me on a Saturday night? Because while Sally does establish clear boundaries between herself and clients, she says that it is important that the business manager is able to make themselves available. She found that when a client was disagreeable, unpredictable, and hard to work with, it can be draining, especially when a business manager has to be so involved in their business decisions.
However, despite this, Sally advocates for openness with clients. She emphasizes that clients should not be talked down to, and that business managers should approach the ramifications of each investment with honesty and directness.
“You can’t be afraid to say no to your client. If you can’t say no to your client or actually tell them something, honest, you’re doing a disservice to them, and you probably shouldn’t work with them,” Sally said.
“There are clients that I’ve onboarded that I really thought were amazing, but maybe, bad decisions were being made for them or by them previously,” Sally said. “You have to pick up the pieces and try to start fresh with these clients, and educate them.”
Sally aims to manage cash flow in order to ensure the client has sufficient savings after a big cash inflow, she will put away around 20 or 30 percent in different accounts. That way the client has a safety net for any situation.
“As you know, everybody receives information differently. You have to be capable of communicating with everyone on their own level,” Tracy said. “It doesn’t matter if you are the smartest person in the world if you can’t explain what you are doing for them.“
By showing trust in them, Sally hopes she will get trust back. One of the areas Sally encourages clients to put their money in is technology. She hopes to see potential growth in the investments her clients have put into the market and private companies.
NFTs: Where Business Managers are Starting with Clients
With the discussion of technology investments, came the question that has been badgering entertainment for the past two months: NFTs.
The trickiest part of taxing NFTs, according to the discussion Sally and CPA Alex Roytenberg had, is the distinction between the product, the project, and the data collected. Sometimes cryptocurrency is taxed like a stock or as a security, or in other cases (like NFTs), they’re being taxed like a collectible. However, Roytenberg, who has worked with clients who have bought some of the top NFTs on NBA Top Shot — NBA’s site official digital collectibles — states that the taxation of NFTs depend on the source of the collectible.
“There are actually business structures that make it possible for NFTs to be treated as capital gains instead of ordinary income for the person who is creating the product,” Roytenberg said.
NFTs: How to Ensure the Artist Controls the Product
On the subject of NFTs, Sally invited Tom Dean from LaPolt Law, as well as 21 Savage manager Meezy to discuss how they are guiding clients through creating their own crypto art.
According to Tracy, the hardest part is managing the distribution of royalties, and that NFTs have the potential for changing how labels approach creating contracts with different artists.
“I don’t think labels were ready for this type of distinction on a recording, being able to piece it up and make it into a piece of artwork is technically not a master,” Tracy said. “But the most important part of NFTs is the data collection, because I can send a GIF and no one knows who I’m sending it to and where it’s going, but with NFTs, all that information is collected. So wherever you’re passing this, the most valuable thing is our data.”
And many musicians are trying to capitalize on NFTs. Kings of Leon released an entire album of NFT-backed tracks. Grimes came out with NFT exclusive artwork accompanying her new album just last month. However, 21 Savage manager Meezy is exercising caution however to really understand what his clients are getting into.
“You want to really be active and use something that you share, because when you put your money in you technically own it. With 21 Savage I want to get them in that space but I don’t want to just jump into it because it is making money right now,” Meezy said. “A lot of people right now are just running to it and not doing their due diligence. For me I’m just listening, watching, seeing the key players and then putting our own twist onto it to kind of stand out when it is time for us to jump in that market.”
Tom, who has worked with Meezy and Sally before, said that it is important, in the creation of NFTs, to ensure that the artist has control over the product. Especially when NFTs become profitable, labels will try to argue that as their recording they should be the ones to collect the money, while only paying royalties to the artist.
“I think in this space, it’s even more important that the artists be the one dictating what happens,” Tom said. “Owning the recordings and being in control of your artist career is so important right now.”
Most people agreed that NFTs are a highly creative way for artists, who have been considerably impacted by the pandemic, to make money.
“It’s just amazing,” Sally said. “When COVID hit, and [artists] were no longer able to tour, they found new ways for their music to reach their audience. They began doing virtual tours and virtual festivals. Now, out of nowhere, this NFT thing came up. It’s incredible how they are finding new ways to make money. It’s important that they have good advisors helping them capitalize on it.”