Robert Bolden excelled on the football field as a young man, playing quarterback at Penn State and Louisiana State. But his ability to manage money was less well developed.
His initial experience in dealing with finances involved a Pell grant he received while in college.
“I blew it,” said Bolden, who now owns Bolden Investments and brands himself The Money QB.
Earlier this month, the National Collegiate Athletic Association gave college athletes an opportunity to acquire much more money than they would receive in Pell grants.
The organization that governs college athletics voted to allow players to profit off their name image and likenesses, or NILs, without jeopardizing their amateur status. The decision followed similar moves in several states, as well as a Supreme Court ruling in late June that held that athletes could earn more education-related compensation while in school.
Proponents say college athletes now can earn money for themselves through endorsement deals while their schools generate billions of dollars for their athletic departments based on their labor on fields and courts. Critics say a rush to exploit NILs could create unintended consequences for athletes.
The NIL market is a potential opportunity for investment advisers. Whether an athlete is a highly touted point guard in a Power 5 conference or a gymnast with thousands of Instagram followers, an athlete could need help with newfound riches.
Advisers who want to jump into the NIL world shouldn’t look simply to sign up athletes as new clients, Bolden cautions. Rather, they should be a source of financial education for athletes who suddenly acquire much more money than a typical young adult.
Bolden has developed a curriculum on money management that he is rolling out to high schools in his hometown of Detroit, where his practice is located.
“If you’re not prepared for that money, it’s like hitting the lottery,” Bolden said. “I want for [athletes] to understand how to use money as a tool that can provide for the rest of their life. The better you understand that the better you will be able to sustain it and keep it for the long-term so that it helps you and the people around you, like your family.”
Ashton Lawrence was a small forward on the basketball team at Coastal Carolina University. He favors the new rules allowing college athletes to profit off their NILs and says there is a role for financial advisers to play.
“I see this as a new market that will need our services,” said Lawrence, a partner at Goldfinch Wealth Management. “We’ll be highly equipped to satisfy this need. What we can bring to the table is the holistic picture.”
He, too, emphasized that financial education should come first.
“Education should be first and foremost before you try to manage any assets,” Lawrence said. “That would be beneficial for athletes for the rest of their lives.”
John Bovard, owner of Incline Wealth Advisors, foresees advisers making a long-term impact on young athletes with whom they work.
“It’s a great opportunity for financial advisers to help these young men and women athletes to establish sound financial habits -- either before turning pro or before entering the workforce,” Bovard said. “They would see significant returns later in life.”
Financial advisers have plenty to offer young athletes but there are challenges to connecting with them and building relationships.
Advisers could reach out to high school coaches as a way to meet athletes, or they could approach their parents, Bovard said. Another route is to figure out how to network in Amateur Athletic Union basketball and other leagues where athletes develop in their high school years.
The challenge is trying to break in when particularly talented young people probably already have an entourage.
“You’ll be competing against many other advisers that are in that world,” Bovard said.
Jeff Burke, founder of 7th St. Financial, doesn’t want to try to recruit young athletes as clients.
“I don’t feel great about chasing down 16- and 17-year-old kids,” Burke said. “That’s personally not how I want to spend my time. There will be an opportunity for a select few [athletes] to really cash in. I don’t think it’s going to be as big a market as some people think it’s going to be.”
NON-REVENUE SPORTS
It’s not just football and basketball players who could profit on NILs, so could those in non-revenue sports, such as soccer, swimming, volleyball and gymnastics.
But their experience in college and at the professional level could be much different due to the characteristics of their sport, said Kevin Mahoney, founder of Illumint, an advisory firm. That requires advisers to become experts on those sports.
“There’s a lot of thought and research that needs to go into it before people assume they’re a good fit to help these athletes,” said Mahoney, who was a salary-cap specialist for several NFL teams. “The financial issues are particular to the sport itself. It may make sense to concentrate on one sport.”
Statistically speaking, even athletes who excel in college aren’t likely to play at the pro level. That means their athletic earnings potential could peak in college, resulting in account balances that don’t meet advisory firm minimums, said Tom Balcom, founder of 1650 Wealth Management.
Balcom was a member of the rowing team at the University of Miami. If the NIL rule had been in effect during his days on the water, he could have made money on the side coaching rowing, he said.
But he has concerns about the NIL advent.
“It sounds great in theory, but how you police it is going to be a question,” Balcom said. “It’s going to open a Pandora’s box for colleges, the NCAA and athletes.”
Yet for some college athletes, promoting a car dealership, pizza joint or technology company could give them a financial foundation for adulthood, whether they go pro or go to the office.
“This could be a huge stepping stone for their future,” Lawrence said. “Investment advisers could be well-positioned to help them on that journey.”
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