Another course is “Drafting and Managing a Winning Advisory Team,” which teaches players how to perform due diligence on their financial advisors, CPAs, tax attorneys and managers.
“We take them through a fairly extensive list of questions to ask and teach them fee structures and how to select and manage a winning management team,” Hawkins says.
That’s fundamental to pro athletes’ financial well-being, since they can be magnets for con artists and swindlers.
In 2021, former NBA player Chandler Parsons said his financial advisor, a now barred ex-Morgan Stanley broker, had made payments from his account without his approval. That broker was arrested earlier this year for defrauding Parsons and three other players out of millions of dollars. Parsons also filed a $5 million arbitration against Morgan Stanley for the fraud. Drafted in 2011 by the Houston Rockets, Parsons earned a $94 million contract from the Memphis Grizzlies, but was sidelined in January 2020 after he was injured in a car wreck, allegedly by a drunk driver.
Michael Lindo, who works with the NBA’s Detroit Pistons under the title of “director of player and family engagement,” says Edyoucore’s classes, coaching and audits are critical to players’ well-being.
Lindo says that the Pistons believe “in treating players holistically. It’s not just about sports. We don’t want players worried or distracted by unnecessary money issues, so getting them the education they need to help them succeed is a no-brainer for us,” says Lindo, who has been using Edyoucore to teach players financial literacy for two years.
Worrying Expenses
Edyoucore also offers a “FinFit” report, which is designed to uncover concerning expenses or activities in an athlete’s financial life, so he or she has time to correct the issues or overspending in a timely fashion.
“We go through and conduct a forensic audit, looking at 11 different areas of their financial life,” Hawkins says. The firm uses a CFP, a CPA and a certified fraud analyst in each FinFit review.
“The typical report goes back two years and looks transaction by transaction at spending, credit card use, investments, outside earnings and taxes. It’s mind-boggling the things we’ve uncovered,” he says.
In one case, the firm helped an athlete reverse course on aggressive spending that would have bankrupted him. “He was on target to be out of money in three years, despite making $36 million over his lifetime,” says Hawkins.
The audit also discovered the athlete was 46% invested in highly speculative alternatives despite being a conservative investor who wanted capital preservation. He and his financial advisor were able to correct the problem, according to Hawkins.
Edyoucore also assists financial advisors who have pro athlete clients. “We see ourselves as financial coaches, so there are definitely situations where we can be brought in to help educate the athlete about the value of an advisory relationship, financial planning and the investment process, which is our sweet spot,” Hawkins says.
He adds that many pro athletes, 18- to-20-year-olds earning millions of dollars a year, don’t fit advisors’ typical demographic.
“Athletes are unique clients. They’re not used to being told no. It’s tough to tell someone used to being on TV anything, let alone how to spend their money. That’s our specialty.”