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Game on: why wealth firms are targeting esports clients

Game on: why wealth firms are targeting esports clients

Huge cash prizes and multimillion dollar sponsorship deals mean playing video games for a living is more than just fun and games, it is big business.

According to a recent report by Morgan Stanley, esports are on track to become a $1.5 billion (£1.1 billion) industry by 2020. This industry emulates the business models of major league sports. Its top 10 stars are already earning well above $1 million a year in income apiece, and competition over who advises these clients is heating up.

Adrian Summers, an associate director at Coutts, which last year held an esports event, explained: ‘People have this old idea that Coutts is simply a bank for the landed gentry and, while this is partly true, we are actually much more than that. We have had a sports and entertainment practice for the past 30 years and esports is just the latest iteration of that.

‘We don’t profess to be experts in esports itself, but what we are trying to do is learn more about the industry; we are supportive of it and are actively trying to help it generate more revenue.’

He added: ‘We introduced some esports people to businesses that, from our internal network, we know have gone through similar types of development and also had specific services they could offer to help drive revenue within the industry.’

Helping the gaming community also helps generate goodwill and brand awareness, Summers says.

It is not just the Queen’s bank that is looking to attract esports clients.

High octane

Adam Osper, a partner and director of Tilney’s sports and entertainment practice, said the company started actively working in this nascent field around 18 months ago.

‘My specialism is in sports and entertainment, and there are similarities across all of these professions. They are often young people, predominantly men, who are learning and working in a particular area, with a short career, in the same way as a lot of sports professionals.’

They can also often resemble existing sports and entertainment clients when it comes to the challenges they face, he said. ‘Some of them are employed, some are self-employed and some are contracted. It can sometimes be very difficult to get a clear understanding of what their income will be.’

Given the nature of the profession, these clients’ income can vary considerably, depending on how successful they are, with those working for teams able to earn bonuses. Some ‘influencers’ receive payments from social media platforms, such as YouTube or receive sponsorship revenue.

‘Some of these guys are suddenly earning £20,000 a month. They realise that this income may not last a long time, and they need to make the most of it and figure out what they are going to do when they finish with this industry is important,’ Osper (pictured) said.

‘They also often require more financial education than your average client. Like we do for a lot of sports clients, we run an education programme to help them become familiar with their wealth, tax and how to manage it.’

Blake Street, founding partner of California-based Warren Street Wealth Advisors, which specialises in advising esport clients, agrees, saying: ‘While there are exceptions to the rule, a lot of esports athletes are very young, in my experience generally between ages 17-25.

‘They are making hundreds of thousands of dollars a year, if not millions, and spend an inordinate amount of time locked into their craft, which can result in little attention being paid to things like financial wellness, taxes and a longer term perspective on their career and skills.’

With millions up for grabs, the industry is increasingly becoming professionalised. The average gamer puts in dozens of hours in front of the screen, leaving them little time to focus on their finances.

Street likened esports clients to a blend of traditional sports athletes and stereotypical millennials. ‘They are high octane human capital with most of their peak earning years packed into a short period of time.

‘They have high expectations on how their advisers should serve their needs. A transparent, digital and client-first approach is necessary to serve their unique and evolving needs,’ he said.

‘As the scene matures, so do the players. Just like any young demographic, a lot of them first need a basic introduction to things like credit, budgeting, tax filings, and how to save efficiently. More advanced clients are investing, incorporating their personal brands, and finding ways to tax shelter their earnings. Most seem to enjoy a high touch relationship in which you’re available to them via Skype, Discord, Twitter or text.’ 

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