For many professional athletes, acquiring immense wealth immediately seems like the ultimate jackpot, but sometimes it’s a recipe for disaster — especially for younger athletes, who are seeing the fruits of their labor pay off monetarily for the first time.
“There’s not too many professions in the world where when you get a job your salary is published and broadcasted,” observes Alicia Jessop, an associate professor at Pepperdine University and founder of Ruling Sports, a consulting platform that exists at the intersection of sport, business and law. “Because of the visibility of the income that athletes generate, they’re a prime target for bad actors to come in and take advantage.”
Whether it’s scammers chasing after wealth, or athletes themselves spending excessive amounts on depreciable assets, money problems usually come back to a lack of financial literacy. But this ominous narrative doesn’t have to be a reality for every rookie.
“The best thing all of us who work in this space can do is demand transparency,” Jessop adds.
The biggest win for these high-profile athletes is investing in their own lives and ensuring their hard work pays off well beyond the court or field. Making sure they’re empowered with the correct information and education is essential. That’s why City National Bank has been a teammate to athletes since 1954, not only offering top advisers and financial services, but also personalized and hands-on coaching to help them understand the complexities of the sports world.
Mark Doman, a top financial adviser to dozens of professional athletes, also believes that his clients gain better understanding through a hands-on approach. As the CEO of The Doman Group, he requires all his clients to come to his New York City office during their respective offseasons to work as interns. “They’re not pouring coffee and sending packages for me,” Doman says. “They’re coming in and studying their equity portfolios, stocks, income portfolios and bonds. Once you start to show people these things, it just becomes much less scary.”
Even with increased knowledge of the financial world, a sense of invincibility can cause athletes to wander off the path of growth and stability. Receiving an overwhelming amount of praise, money and attention can lead to feeling untouchable—and this can become a friction point for Doman. Purchases like luxury, six-figure vehicles and lavish jewelry are based off athletes’ common assumption that they’ll be competing for decades.
“The average career is three-and-a-half years,” Doman says. “So, I have to convince [my clients], you’re not invincible. It’s possible you will be out of football in three years or out of basketball in six.” Although life after sports might be hazy to the athlete in the present, the financial manager makes it clear this will be a reality sooner rather than later, and reiterates that planning is a crucial component of achieving financial literacy. Money management conversations are tough but talking to a recently drafted 22-year-old athlete about what they’ll do when it’s all over is even harder.
Having personal conversations about finances and the future on a consistent basis really makes an impact. Doman believes it’s also what makes City National Bank’s sports program so special. “Their strength is consistency. They’re highly customizable when it comes to the needs of young [talents], because let’s face it, their financial statements look a little different than the typical 25-year-old’s. They’ve been extraordinary at customizing strategies for athletes and entertainers to make sure they get the desired results.”
Communication is the root of understanding, and advisers have a responsibility to meet clients’ needs and concerns. Former college football player-turned-financial adviser Kevion Latham has been in many locker rooms, which has given him the ability to offer financial wisdom and know when it’s time to sit back and listen. “Hearing them out, being a sounding board for life issues that come up. Being somebody that will listen and not judge them,” he says. “You have to talk with them and hold their hand and not make them feel insecure about them not knowing what to do with wealth.”
Latham’s athletic experiences give him a glimpse into the impoverished backgrounds many of his former teammates and clients come from. Creating a space for vulnerability through his ability to relate has allowed him to set clients on a much brighter path. “A lot of these guys are dealing with stuff,” he says. “They have parents begging them for money and living off them, which shouldn’t be the case. We just try to be there for them through all that, try to be transparent and hold them accountable. Because it’s going to end one day. Making sure that when it does end, they have something to show for it.” Focusing not just on financial health, but the client’s overall well-being as a human, is vital for winning off the court or field.
Founder and CEO of sports agency SEQUEL Sports & Entertainment Christina Milano echoes this narrative: The welfare of her clients is her top priority—which is why she enjoys working alongside City National Bank.
“They’re very much focused on how to develop the full client, not just their financial health,” Milano says. “I think that’s a big difference compared to a lot of banks. A lot of banks just want to make sure that you’re managing your money and able to diversify your portfolio. All those things are important. But they forget—or maybe just don’t have the energy or philosophy—to invest in the other aspects of the athlete, who [is] human.”
This document is for discussion and informational purposes only and is not meant to provide specific tax guidance. City National Bank, as a matter of policy, does not give tax, accounting, regulatory or legal advice. Rules in the areas of law, tax and accounting are subject to change and open to varying interpretations. Any strategies discussed in this document were not intended to be used and cannot be used for the purpose of avoiding any tax penalties that may be imposed. The strategies were not written to support the promotion or marketing to another person of any transaction or matter addressed. You should consult with your other advisers on the tax, accounting and legal implications of actions you may take based on any strategies or information presented taking into account your own particular circumstances.
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