12 tips for financial advisors on working with athletes, actors and entertainers

October 4, 2022 5:41 PM

Quad-A conference panel — From left to right, Chris Cooper of Execute Your Passion, actor and singer Renelle Nicole and Morgan Stanley Director of Global Sports and Entertainment Sonia Balfour-Fears spoke at last month's Association of African American Financial Advisors Vision conference in Atlanta.

Gary Charles, the CEO of the nonprofit racial equity organization Advancement of Blacks in Sports, offered an audience of financial advisors some parting advice about working with athlete clients.

"I would say, 'Get close to the momma,'" said Charles. Drawing laughter that later gave way to applause, he explained how college coaches on the basketball recruiting trail often fail to sign players because they didn't make friends with the athlete's mother and the rest of the family. "I have coached over 400 players," he said. "And I would tell you, 95% of the time, it's mommas."

In sessions at last month's Association of African American Financial Advisors (Quad-A) Vision conference in Atlanta, Charles along with two planners, two former NFL players, a WNBA coach, an actor and a motivational coach – all quoted in the slideshow below — shared tips for advisors on serving athletes, musicians, entertainers and other clients in an often-coveted niche. Panelists explained why it's essential that advisors seeking to work with that niche understand the challenges of overnight wealth and the pivotal role of families and friends.

Loved ones and social circles affect referrals, legacy planning and, in some cases, whether a prospect even becomes a customer. Charles coached future NBA stars Lamar Odom, Joakim Noah and Lance Stephenson through his youth basketball program and helped connect the late Kobe Bryant with sneaker executive Sonny Vaccaro for the future legend's first shoe deal in 1996. Charles' nonprofit, ABIS, is now collaborating with J.P. Morgan Chase, Quad-A and a dozen colleges and universities on a financial coaching class for athletes.

"You don't know what you don't know," Charles said of many young athletes breaking into professional sports. "You're 21 years old. We have this issue thinking that a 19-year-old or 20-year-old knows exactly what to do with their money. They don't. So that's part of the reason why they fall behind. They just don't know any better."

Scroll down the slideshow for details on the financial coaching program at Charles' nonprofit as well as nearly a dozen other tips for advisors about working with clients who are professional athletes, musicians, actors, entertainers or in other creative fields where it's possible to get instant riches but also lose it all.

Other sessions at the Vision conference in September included discussions of Quad-A's mission, the racial wealth gap, ESG investing and diversity and inclusion. For a look at additional coverage about advising famous clients on their retirement decisions, click here.

Disappearing paydays

Actors, musicians and other entertainers often find it difficult to feel a sense of financial security because they go through so many disappointments in their careers, said Renelle Nicole, a musician and actor who has appeared on TV series "Chicago Med," "Chicago Fire" and "Empire." One of Nicole's friends got chosen for a role and flown to a shooting location, only to be told that the show had cut the character.

"As you thought that you had a check coming and you thought that that was your breathable moment, it got taken away," Nicole said. "Oftentimes, in our head, we're already mentally just prepared to not have. So we operate off of that."

Managing highs and lows

Chris Cooper, the CEO of leadership and motivational coaching company Execute Your Passion, agreed that entertainers of all kinds would benefit from advisors to guide them through the challenges of sporadic income.

"All creators — whether you're an actress, whether you're a coach, trainer, or speaker or any type of person getting paid for your expertise in some area — there's the underpinning of uncertainty," Cooper said. "The income train may go up and down and around, and a lot of times even thinking about committing to a secure plan is scary for creatives because they don't have the check that comes every two weeks."

A question of trust

Advisors eager to gain valuable longtime clients who are athletes or entertainers need first to earn their trust, according to Morgan Stanley Director of Global Sports and Entertainment Sonia Balfour-Fears.

"I've found that my most loyal client is an entertainer or in the entertainment space," Balfour-Fears said. "Building that loyalty, that trust, it goes both ways. We want our clients to trust us. Give us your money, let us help you maintain your wealth, build your legacy. But how do we reciprocate that trust to you?"

Overnight fortunes

For athletes who get drafted into a professional league, the first paychecks change their lives in an instant, according to Araya Mesfin, a UBS advisor who's Atlanta-based practice is called Mesfin, Johnson & Grace Wealth Management. Mesfin shared the story of one player he said had $181 in his checking account when he received a wire transfer for $9 million after getting drafted and signing with a pro team.

"Think about the psychology of a 21-year-old who gets drafted in the first or second round in the NBA, WNBA or NFL, and the extent of their knowledge in financial services is having a checking account," Mesfin said. "That just almost seems unfair and unjust. I was a double major in biology and physics in college, and I don't know that, at age 21, I had the nuance developed enough to handle that."

Setting an example

Nolan Carroll is a retired NFL player who co-founded the Jacksonville Athletic Academy. He runs a nonprofit foundation and a liquor company, too, now that his playing days with the Miami Dolphins, Philadelphia Eagles and Dallas Cowboys are over. The players who overcome the temptation to buy a Lamborghini or a yacht after receiving their first pro check are doing themselves a favor that they can then pay forward to the next generation, Carroll said.

"That's the mentality that we have to help them change," he said. "And then that helps other guys change too, because now one young guy goes to another rookie and says, 'Look, man, don't spend your money on that. Save your money. Let's go ahead and wait until a year or two to do this.' That just causes a chain reaction."

Starting with the basics

Advisors should lead with their ability to help young athletes find their financial footing, according to Tanisha Wright, the head coach of the WNBA's Atlanta Dream.

"We're coming from these backgrounds where we have not been educated on these things," Wright said. "And right now we're in a time of information. You know the saying, 'cash is king.' Information is king right now. Knowledge is king right now. Understanding that is what's king right now."

Barriers to knowledge

Planners should also prepare for athletes to push back a little on the notion that they don't know what to do with their money, said Donovan Darius, a retired former safety with the Jacksonville Jaguars and the Dolphins. He attributed some of the resistance to pride and ignorance, given that those who make it to the NFL are in the rarefied air of less than 1% of all football players.

"You have accomplished something at a very high level and you've done it successfully, and you don't always want to show your vulnerability," Darius said. "A lot of people are now looking up to you. Now, they may be looking up to you because of your athletic prowess and what you've been able to accomplish. But there's a lot of things you really don't know."

Financial coaching for college athletes

Charles' organization, Quad-A and J.P. Morgan are trying to give more young athletes a base of financial acumen during their college years through the "ABIS Financial Coaching Program." Now in its second year after teaching financial literacy to more than 50 athletes at two schools, the program is expanding to a dozen including six Historically Black Colleges and Universities, as well as the University of California, Los Angeles; University of California, Berkeley; Oklahoma State University; St. John's University and Rutgers University. The onslaught of name, image and likeness (NIL) pay for athletes had injected immediate importance into the sessions, Charles said.

"Shout out to J.P. Morgan who gave us half a million dollars to make this happen," Charles said, informing the crowd that organizers insisted that at least six of the 12 schools be HBCUs like Howard University, Morehouse College and Spelman College. "We meet with them every month to teach them about their NIL, what's the credit rate, what's the interest rate. They don't know. Think about it. Parents didn't tell you these things. Why should I open a checking account? Why is my credit so important? Those are the things you have to do."

Referral sources

Athletes and entertainers who invite advisors into their inner sanctum often point them in the direction of other potential customers who could use their services, according to Balfour-Fears of Morgan Stanley. She said her niche base of athletes and entertainers appeared soon after she began working with one NFL player.

"Find a way to get in the room to get amongst your peers, the ones who are successful, and they will refer you to their friends," Balfour-Fears said. "I got into that space because he then referred me to someone. It's not a space that I sought. It grew organically."

A willing audience

Actors constantly share information with each other, but it's rarely about financial matters, Nicole said.

"If you can get into those spaces and have those conversations with us, we talk," she said. "We have conversations about everything else, but I really can't tell you how many times I've had a conversation about, 'when do I need to get financial advice?' And that also might be a big thing for us, too. We don't even think we're worthy of one until we get to those higher levels."

Caring for clients

Athletes get turned off of potential advisors who seem more interested in taking pictures with them and getting their business than helping them, Carroll said. The ones who win their trust by putting their prospective clients first will stand out from the competition.

"One thing I want to say about anybody that wants to get into that field as far as being a financial advisor for an athlete is, just don't confuse your title with your purpose," he said. "You're a financial advisor, yes. But at the end of the day, you have to care about the player more."

Asking the right questions

Advisors who delve into the reasons why prospective clients have the goals that they do will be the ones most likely to establish a relationship with them, said Cooper of Execute Your Passion. Cooper brought up his two sons, aged 12 and 16.

"Everything that I do is for them," Cooper said. "So if you want to tap into getting my money, you need to ask me about what's important to me and allow me to share that with you and how the plan that we work on together is going to support their development, make sure they're taken care of, make sure that their legacy is sustained."