Providing Financial Advice to Professional Athletes

AdvisorTV of Financial-Planning.com interviews Michael W. Conway of the Conway Wealth Group on practice management issues of working with professional athletes.

Transcript

Matt Ackerman: Welcome to Advisor TV. I'm Matt Ackerman. Working with professional athletes and C-Suite executives can be a daunting task. We sat down today with Michael Conway, the President and Chief Executive Officer of Conway Wealth Group, to explain how to work with both of these kind of clients. Michael, welcome to the show.Michael Conway: Thanks for having me.Matt Ackerman: So, working with pro athletes, C-Suite executives, difficult. But explain the difference between working with these kind of clients.Michael Conway: Matt, I think the biggest difference when you think about a C-Suite client and working with an athlete, those executive clients might have anywhere from 20 years, 30 years, even 40 years of business experience. They're used to dealing with tax issues, they're used to dealing with the stock market, all kinds of financial issues. The young athlete who gets a large check isn't. A 20 year old who gets a $5 million check just, you know, it's all new.Matt Ackerman: Now, for those athletes, it's a very different career path towards wealth. The professional athlete has a much shorter career span, correct?Michael Conway: Yeah. I think the average NFL player has a working career of somewhere in the neighborhood of 3.4 years. It's a very short ... It's unusual when an athlete gets a 10 or even a 15 year career.Matt Ackerman: Sure. So they have these short career spans. How do you help them plan so they can stretch those earnings of 3.5 years into earnings for a lifetime?Michael Conway: Yeah. We really have to focus on retirement modeling. And it's kind of a weird thing to say when you're talking about a 25 or 30 year old, but they're going to get all of that capital in a short period, and they'll need to make it last for maybe even a half a century, so we focus on retirement modeling and budgeting. A lot of work goes into the budgeting.Matt Ackerman: Now budgeting is also a matter of sticking to that budgeting, which can be another daunting task, especially when you start to look at these athletes, like you said, that have received this $10 million paycheck and all of the sudden they've got every cousin, brother, and friend from grammar school calling them about the next big investment opportunity.Michael Conway: That's right. We've seen all kinds of opportunities, all kinds of business ideas come across our desk. It's the rare business opportunity that we'll have a client get into. But sticking to the budget, I really work with clients that will work with me as a teammate and making sure we stick to the budget.If I work with someone that won't work with me on sticking to the budget, we may not have a good match, because it's that important.Matt Ackerman: That's really interesting, because I think everybody thinks they want a professional athlete as a client, but it sounds like what you're saying is you have to vett those clients in order to find the ones who are the right match for you. Is that correct?Michael Conway: It is. You really do. You really do. Because, if you have a client, whether it's an athlete or an executive or an entrepreneur, if they're not going to listen to your advice, you really don't have a match. The same thing would hold true with the athlete. You really need to find someone that is willing to enter a relationship to work together.Matt Ackerman: So from your experiences, have you had situations where you've not taken on a professional athlete because they haven't listened to you, or you've let them go as a client because they haven't listened?Michael Conway: I haven't had a situation where I have not started a relationship, because it's very difficult to gauge up front, but I have definitely had a couple of instances where I've had to part ways with young players that, you know, maybe buy too many cars or homes or things that really don't stick to the plan. So yeah, it has happened a couple of times.Matt Ackerman: So with professional athletes, it sounds like it's all about sticking to a plan, and really not venturing from that plan, because they have to bring it sounds like even more discipline than maybe the C-Suite executives do.Michael Conway: It does. It takes a lot. Listen, I say to the young kids, you want to be able to enjoy the fruits of your labor. You want to have a nice home, maybe a vacation home. You want to enjoy it, but you do want to stick to the plan. So the long term plan with retirement modeling, having the right investment allocation all makes sense.Matt Ackerman: Mm-hmm (affirmative). And now, as compared to a C-Suite executive, they can kind of look at their career a little more long term, but it sounds like for the athlete, it has to be a much more focused strategy for them to make the earnings last your lifetime.Michael Conway: Absolutely, yeah. Absolutely. Those careers, again, are so short. It's very rare that you're going to have an athlete that's going to work for a decade and earn that high income. So setting the plan up is a big part of it.Matt Ackerman: Set the plan and stick to it. That seems to be the key.Michael Conway: That is it. Absolutely.Matt Ackerman: Thanks so much for joining us today. For Advisor TV, I'm Matt Ackerman.