They have formed their own association.
As a CFP licensee specializing in serving the needs
of professional athletes, Femi Shote has often felt like one of the odd
ducks of the financial advisory business.
Shote, after all, has a unique clientele with a
unique set of needs. In addition to the usual list of financial
concerns, he has to be familiar with collective bargaining agreements,
arbitration proceedings, contracts, international tax laws and other
logistical issues that vary from sport to sport.
His clientele is a special breed. They are typically
millionaires barely out of college, in high-paying jobs that will last
only five to ten years and wary of dealing with anyone outside of their
inner circles of relatives, friends and sports agents.
It's not a field you learn about in your typical
college financial planning course, Shote says. To be a sports advisor,
he says, is to be self-taught-with very little help. "We're always
going to other people's meetings," he says. "I sometimes feel like sort
of a parasite trying to get business."
That's a trait of the profession, however, that
Shote and a few other advisors are hoping to change. In December, Shote
and three other sports advisors founded the Sports Financial Advisors
Association, which they hope will be both a resource and advocate for
people in their specialized field. It's still unclear how many
potential members are out there, since there's no official count of
financial advisors specializing in professional athletes.
The organization, however, has received 50 inquiries
since it announced its founding in December, Shote says. Based on that
response, Shote and the other founding board members have set a goal of
recruiting between 100 and 125 members by June. The association has an
online application at its Web site, www.sportsfinancial.org.
They feel the goal is realistic, noting that the
National Football League Players Association (NFLPA) has registered and
listed for its members the names of about 500 accredited financial
advisors. As for the direction the association will take, Shote says he
expects it will hold its first general membership meeting around June
to discuss the matter.
He feels, however, that just the mere act of
creating an umbrella group for sports advisors will advance the
profession. "For us to have a place at the table and be able to
contribute to the business we say we are interested in, we need to be
able to get together, have conversations, learn what each other is
doing," he says.
The association's board members say they have every
reason to expect that the sports financial advisory specialty is
growing. Andre Mirkine, a CFP licensee in Greenwich, Conn., and one of
the association's founders, says the sports market-while a difficult
place for newcomer financial advisors to establish themselves-is among
the more lucrative market niches.
Mirkine looked at a one-year period covering the
2001-2002 sports seasons and found that total salaries and prize
winnings in the four major sports, plus tennis and golf, totaled about
$10 billion. The one-year snapshot did not include money made through
endorsements.
Although sports owners are attempting to restrain
salaries-the National Hockey League canceled its season this year
because of an impasse over salary limits-sports revenues as a whole
continue to grow. "Salaries have gone up and players are playing
longer," says Jonathan Miller, a CPA with American Express Tax and
Business Services in Phoenix, who specializes in sports and
entertainment professionals.
It could be argued that athletes are among the
affluent clients most in need of professional financial advice, Miller
says. The NFLPA, for example, started its advisor registration program
two years ago after a study concluded 78 NFL players had been defrauded
of $42 million by their financial advisors over a three-year period.
In the typical scenario, Mirkine says, professional
prospects are drafted out of college and signed to contracts that make
them instant millionaires. Somewhere during the process, he says, they
will establish themselves in the professional ranks by forming a
relationship with a sports agent. It is often the agent who introduces
the athlete to a financial advisor, he says. Or, he says, athletes may
rely on a pre-existing relationship to choose an advisor. "That advisor
may not necessarily be accredited, educated or ethical," Mirkine says.
One of the goals of the association is to be a
resource for young athletes looking for accredited advisors, he says.
"I think the playing field for a financial advisor who wants to do
business in this arena is not level," Mirkine says. "We need to, as a
group, create something like a masthead that would have all of us on a
list promoting ourselves so that athletes do get referred to educated,
quality advisors, not just a brother or a cousin."
There are cases where athletes are diligent in
picking an advisor. He cited the case of Kellen Winslow, an NFL player
who, with his family, interviewed prospective advisors in the time
leading up to last year's football draft. "We want to get onto the list
of people who are called into these interviews," he says.
One of the requirements for membership in the
association is a nationally recognized certification. That, Miller
says, essentially means a CFP or CPA, or an equivalent accreditation.
Football players are among those most in need of
advice, Mirkine says, because pro prospects typically make an immediate
jump from college to the pros. "They're making a lot of money at a very
young age, and the sports culture basically handles a lot of things for
athletes," he says. "They are far less prepared."
In addition to acting as a resource for both
advisors and potential clients, the association is also meant to act as
an advocate for sports financial advisors, Shote says. They already
have at least one item on their agenda: the provision of advisory
services to NCAA athletes by one company, something the association
opposes.
Shote says the NCAA Division 1A Athletic Directors'
Association decided last year to team up with AXA Advisors to set up
financial education programs for student athletes. AXA employees will
act as instructors under the program, according to the athletic
directors' association.
The association is lobbying against the program,
Shote says. "We don't feel that one company should have exclusive
access to college athletes," he says.
Another issue is the "jock tax," which enables
states to tax visiting athletes. The tax essentially extends state
income taxes to other states, and specifically targets athletes, Miller
says. The use of the tax is growing, he adds. It has been enacted in 25
states thus far, and municipal jurisdictions are also considering
implementing taxes of their own, he says. "Athletes are being singled
out for discriminatory tax treatment," he says.
The association, which hopes to open up dialogues
this year with the players' unions, the major sports leagues and the
NCAA, hopes to have its first conference in either late summer or early
fall, Shote says.
By then, he hopes, the association will be able to
reach out to athletes without depending on other people's meetings.
"The ultimate beneficiary is not only us, but also our clients," he
says.