Arnie Herrmann was 22 years into his career as a business manager when he came face-to-face with a crisis that led him to a crossroads.
At the time, Herrmann worked for the prominent New York-based firm of Starr and Company. The company was well known for representing stars and prominent figures in business. Herrmann had built a successful practice as he climbed the ranks starting in 1988.
Around 2005, the situation at Starr and Co. started to deteriorate. Founder and owner Kenneth I. Starr (not to be confused with the late federal prosecutor of the same name) began to behave erratically in his personal life. Over time, Starr’s behavior as he embarked on his fourth marriage began to have repercussions for his namesake firm. The global economic crisis of 2008-2009 and the eruption of the Bernie Madoff scandal only made the situation more urgent.
Starr was destined for federal prison. In 2011, he was convicted of fraud and sentenced to seven and a half years for stealing $33 million from his clients in a Ponzi scheme. Like many employees at Starr and Co., Herrmann didn’t know the specifics of what was going on at the time. But he could clearly see that something was wrong, and he knew the firm’s long-established reputation was not going to be enough to weather the storm.
Herrmann resigned from Starr & Co. in January 2010 to join rival Citrin Cooperman. Starr was arrested six months later, and the firm wound up imploding.
“I left because we were bleeding clients just because of his behavior,” Herrmann says. “New York City can be a very small place. And while he was raving around New York City, people were getting worried about their money.”
Watching a once-great firm fall apart was a profound experience for the New Jersey native. Watching Starr’s self-destruction was not so much a lesson for Herrmann but a vivid example that reinforced the principles that have long guided his work. Herrmann’s success and sterling reputation led him to be selected as Variety’s Business Manager of the Year.
“To distill it down to two words I’ve used my whole life: Trust and service,” Herrmann says. “I’ve always said I’m not the smartest person in the room, perhaps, but no one’s going to outwork me. And I understood that a business manager needed to service clients to the nth degree. Once you do that, once you communicate well and once you explain things the way the clients want to hear them, that service leads to trust, I believe.”
Herrmann will receive the award on Nov. 12 as part of Variety’s annual Business Managers Breakfast. Candice Bergen, a longtime client of Herrmann, will be on hand on Nov. 12 to present him the kudo. Herrmann was hand-picked by Bergen’s previous business manager to take over the account more than 25 years ago. His long professional relationship with Bergen is emblematic of the close connection that business managers need to have with clients to most effectively manage their money, Herrmann says.
“If a client sees that things are moving smoothly, they see their assets going up, as they should, when they work, then trust comes along with that,” he says. “Once that trust is earned, you have a friend for life because most of these people don’t really want to shop for new [business managers]. They like the feeling of having one person who handles their financial world.”
The business manager sometimes handles a client’s portfolio for short-term needs, working with investment advisers and tax experts to help the person build a big portfolio. Herrmann lights up as he discusses the kind of long-term planning that allows people to make the most of their high-earning years.
“What we love to do is take a client who’s 50 years old and say, ‘Here’s how much you spend per year. Here’s how much you have invested.’ You tell us what you’re going to earn over the next few years, and we’ll say, ‘Here’s how much you can spend. And this is what it will look like 30 years out or 40 years out,’” Herrmann says. “You tell us if you want to buy a second home in year five, and if you want to buy a yacht in year three, or you want to give a large gift to your children. All of that is built in, and it really gives a client some comfort as to where their life is headed.”
The role of a business manager is particularly important for high-earning creative talent, who often get paid in lumpy fashion. It’s the job of a business manager to make sure that large upfront payments at the start of a project and tailing streams of residual and royalty payments are managed to allow the client to maintain steady cash flow in their own lives. That means a business manager needs to understand a client’s lifestyle and what most matters to them.
“We become extensions of the client’s family in the right circumstances,” Herrmann says. “We really become close with our clients, much closer than the average CPA. We really understand the clients’ lives because, frankly, we have access to everything through the lens of being their intimate financial adviser. We see where they’ve written checks to, where maybe they don’t want the rest of the world to know.”
There is, of course, a tough-love aspect to the job. Sometimes, the business manager has to warn a client that they are spending more than they are bringing in. Sometimes the business manager has to advise against making a big purchase. In Herrmann’s experience, there’s one area where even the most sophisticated players lose perspective on their ability to write a giant check.
“I’ve seen more clients make mistakes with real estate than most other decisions. I find that real estate becomes emotional,” Herrmann says. The business manager has to be the voice of reason.
“When someone is making a poor financial decision, we have to tell them ‘You’re overpaying for this. I understand you want this today but the market’s not really supporting that price,’” Herrmann says.
But those conversations are all about giving clients information and options. The final decision, of course, remains with the clients. “We try to educate. We say ‘You may be overpaying for this asset by 30% to 40%’ and the client may say ‘I’m OK with that as long as I can afford it,’” he says. “Real estate becomes very emotional at times and it leads to some mistakes.”
Herrmann emphasizes that he’s also seen high-net-worth clients make enormously generous gestures, often to people who work for them.
“I’ve seen clients dramatically improve the lives of their long-term employees, and they’re not looking for public recognition,” he says. “They write a check for $1 million to pay off a mortgage for one of their folks, or something. There are so many examples of that. You start to really understand that, yes, they’re public figures. But they are human beings and they see other people as human beings that they want to help. And that’s one of the things that makes it a very special relationship” with a business manager.
Another aspect of the job that Herrmann enjoys is that it sometimes calls for taking a chance on young talent. Business managers don’t only serve the ultra-rich. Many times, promising talent will be referred by lawyers or talent agents to Citrin Cooperman because they need help establishing some order (aka making sure the rent gets paid) while they’re on a tour or filming in Australia for four months or holed up finishing a script in a cabin in Maine. For the business manager, the fees aren’t as lucrative but it’s about building a pipeline for the future.
“We make decisions with young actors and young entertainers who are not making too much at a time,” Herrmann says. A lot of it comes down to vibes. “We look for someone who has a center of gravity, who projects a positive tone and someone who really, really wants to work hard to make it in [the entertainment] industry.”
“I have zero talent in understanding whether a young actor or actress is going to be a success or not. We all think we can do that, but we really can’t,” Herrmann says. “But working with young people is very rewarding to see the trajectory of their growth. When they come to you with really nothing and they get their first big TV show or film and then the portfolio grows and grows and grows.”
Herrmann feels fortunate to have landed in such a dynamic and growing sector of financial services as business management services geared toward clients in the entertainment industry. Although Citrin Cooperman is known for its specialty in handling top-tier music clients (the firm’s initial investors in 1979 included members of the Who and Yes), Herrmann’s practice has focused on clients active in film and TV. Outside of his professional pursuits, Herrmann serves on the board of The Irving Penn Foundation, which champions the work of the renowned photographer.
It’s all been quite a ride for a kid who grew up in Bergen County, N.J. (he still lives nearby) and earned his accounting degree from the State University of New York at Albany in 1985. In 2021, Herrmann segued from his role as leader of Citrin Cooperman’s entertainment, music and sports practice to his current role as senior partner in the department.
Even with more than 15 years’ distance, Herrmann still feels the urgency of the period around the Starr and Co. collapse and the damage that it might have done to Herrmann’s most prized asset: his relationship with clients. “Those were the worst five months of my career,” Herrmann says of the period in 2010 when he had to submit reams of documentation on his clients’ records for federal investigation into Starr. Herrmann knew his books were squeaky clean (as confirmed during the probe), but “there was concern about guilt by association,” he says.
In the end, Herrmann’s guiding principles of fostering trust and delivering exceptional service to clients (there was the time he had to bail one out of jail at 6 a.m. in downtown L.A.) have always served him well. Perhaps influenced by the Starr scandal, he makes a point to be transparent in his decision-making with the clients who entrust him with their greenbacks.
“I love talking to clients to show them why something’s working or why something may not be working, or ‘We made this decision for this reason. It hasn’t played out that way, but we can pivot and here’s why,’” Herrmann says. “It’s fun. It’s educational. It’s therapeutic for the clients.”
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