Business Managers Are Luxuries for High-Income Crowd : Finances: But if you’re well-heeled, they can do everything from pay your butler to help you invest.

“Ninety-nine percent of the population could use a business manager since most people don’t have the skills or the time to manage their money,” says William Tanner of Tanner, Mainstain & Hoffer, a Westwood-based business management firm.

But the catch is that you had better make at least $200,000 a year, Tanner says, or have the potential to earn that much, or you probably can’t afford it.

Business managers tend to charge a monthly retainer of $1,500 and up or take a percentage of your income, usually 5%, as payment for their time. That’s why, even though most of us would prefer not to deal with our bills, business managers are usually retained only by the very rich and very busy.

“If someone doesn’t travel much, has a salaried job where the withholding is on target for their upcoming taxes and not hit with huge tax bills or huge refunds at the end of the year, that person doesn’t need a business manager,” says Gail Kamer, a partner at GGK Financial Services, a business management firm in Los Angeles.

Maybe that’s why your average corporate executive isn’t usually part of a business manager’s client base. Instead, doctors, lawyers, entrepreneurs and entertainers make up the greatest source of their business.

The Hollywood crowd hires so many business managers that Tanner warns new recruits that if they don’t like show business, don’t become a business manager.

“Creative people usually have no business background or no interest in it, so they need a professional to handle the details of daily life for them,” Kamer says. Moreover, Los Angeles, not New York, is the reputed capital of business management, Tanner says, even though New York is a global financial center.

“L.A. is the center of savviness in the business management field, where it’s done the best and the most,” he says.

So what do business managers do?

“We handle every aspect of an individual’s financial life,” says Michael A. Gordon, a partner in Brentwood Management.

That includes investment decisions, such as a client’s mix of stocks, bonds and real estate holdings. It also includes paying the butler and electric bill and doing his or her income taxes.

Gordon’s activities include everything from paying his clients’ bills and budgeting their spending habits, to buying them houses, cars, horses and exotic art, to financial planning for their retirement or heirs.

“I don’t think a business manager’s job is to make their clients rich,” he says. “Our goal is to preserve their capital, help them earn a reasonable return and alleviate the day-to-day problems of managing their money.”

At the very least, a business manager offers a form of one-stop shopping. Instead of going separately to a stock broker, a lawyer, an accountant, an insurance broker, a real estate broker and a personal banker, you hire someone to manage all of these people.

Of course, there is comfort in numbers. And just as the investment world has become more complicated, so has the business management field. “The transactions are more complex, and there’s more decisions and choices about investment vehicles,” Gordon says.

As a result, Gordon, who is both a lawyer and a certified public accountant, says anyone looking for a business manager shouldn’t simply call a name from the Yellow Pages. “I’d want a referral from someone with experience with a business manager,” he says. “Much of it is a matter of trust.”

Business managers aren’t licensed or even regulated, but they tend to have backgrounds in accounting and taxes. Many are lawyers. But a business management firm should have CPAs on board, managers agree, to ensure that clients receive objective advice from one licensed source.

Experts stress that all financial advisers, including business managers, should be retained strictly for fees paid by customers and not accept commissions from purveyors of annuities and other investment vehicles.

“Anyone can open up a management firm, but at least with a CPA you know you’re dealing with someone who knows accounting, tax and how to read a financial statement,” says Tanner, a CPA. His 50-member firm includes an assortment of accountants and bookkeepers.

A client should expect at least monthly statements documenting their finances. If they don’t understand what’s in their bill or what their business manager is recommending, they should ask questions--and expect answers.

“Watch out and question any kind of fee, other than a monthly retainer charged to your monthly statements,” Kamer cautions. “A business manager shouldn’t be charging a fee for every investment vehicle they purchase for their clients.”

Some investment pros say business managers are not in tune with the marketplace or their clients.

“There’s a lot of people who think business managers charge too much for what they do,” says Tom Van Dyck, a vice president of Progressive Asset Management, an Oakland-based brokerage that specializes in socially conscious investing. Although a lot of Hollywood stars are progressive politically, they’re tied to a conservative investment strategy through their business managers.

“I think many of them are overly conservative and not open to new ideas,” Van Dyck says. “And some of them are certainly investing in companies that their clients are actively crusading against.”

Gordon maintains that his clients are actively involved in deciding where to put their money.

“I tend to follow a moderately conservative investment strategy for my clients, but if someone wants to invest in horses or environmental stocks, I’ll do it for them as long as it’s prudent. I let them know that in the last resort, they’re responsible for everything that’s going on.”

Moreover, he says, his clients aren’t particularly interested in the cheapest fee. “People are willing to pay a fair fee,” he says. “There’s nothing magical about 5%. And when a client starts making a tremendous amount of money, then we put a cap on it. I don’t think people are getting gouged.”

All the same, business managers do get sued. Bill Cosby and Billy Joel have made headlines by filing big lawsuits against former business managers.

“How do you know if your business manager is ripping you off?” asks Tanner. “You don’t. The key thing here is professional trust. An individual should shop for a business manager like they would a house. It’s a long-term thing.”