The finances of pro athletes too frequently follow a riches-to-rags trajectory. Not the least of their challenges involves finding a good financial adviser.
"The problem isn't athletes," says Ed Butowsky, a Dallas money manager. "It's the people who advise them." In February, he says he was in south Florida meeting with seven NFL players who say they've been ripped off to the tune of $45 million. "There are a lot of lawsuits that are about to start flying around the state."
Money manager Ed Butowsky likes to see 75% to 80% of an athlete's investments in public securities. Once an athlete has $3 million saved, a private equity investment of no more than 5%, with safeguards, can be tolerated. [Photo: LM Otero/AP]
In his search for good advice, Biggers followed the counsel of his cousin, Miami Heat forward Udonis Haslem, to a group led by financial advisers Aaron Parthemer and Sylvester King Jr. at Morgan Stanley Smith Barney in Fort Lauderdale.
Haslem "told me he lost a lot of money doing different things with other financial advisers," Biggers says. "The No. 1 thing (Parthemer) told me, in my first year he wasn't going to let me invest my money in anything."
Parthemer wants rookies to be in money-market equivalents that they can't tap on a daily basis as they learn about risk and budgeting. He structures the investments so the players can avoid market meltdowns at a career stage when they may need liquidity. Football, unlike the NBA and MLB, has no guarantees. Case in point: Biggers. He's not disclosed what his four-year contract is worth. But even at the league minimum, he has to have signed for north of $1.2 million. However, he was injured in the preseason his first year and his contract wasn't guaranteed. The second year went according to contract but now the lockout looms over his third year.
Starting 11 years ago with a single player who found himself in a financial mess and came to them for advice, Parthemer's and King's athlete practice has grown to 44 — mostly NFL players, but including a half-dozen pros from the NBA and baseball. Their group consists largely of midround picks they hope will grow into long-term players with the salary and assets to be profitable clients.
Their roster includes six Pro Bowl players, including Eagles Pro Bowl cornerback Asante Samuel, who came to them after he became dissatisfied with previous advisers. Athletes represent about $50 million of their assets under management, with another $200 million from corporate executives, professionals, retirees and lottery winners.
"I'm more the numbers guy," Parthemer says. "Slyvester is the father figure." When an athlete wants to buy a new car, Parthemer will say, "That's a beautiful car. I'm going to crunch some numbers. Why don't you talk to Sylvester?"
King provides his likely response to the athlete: "Absolutely not."
Parthemer's downtown office has wall-to-wall autographed balls and bobble-head figures of clients. "At the end of the day, they're real people with real problems" and can be high maintenance, he says. He acknowledges that there is sizzle. "Can I say it was nice to stand next to Gisele (quarterback Tom Brady's wife, who is a model) waiting for the Patriots to come out?"
In contrast, up the road in Boca Raton, the office of Edward Ventrice, a CPA and financial adviser who has mostly baseball players for clients, is devoid of sports references except for a UF Gator poster from his alma mater. He says he takes in just one baseball game a year. He isn't in awe of athletes, referring to one client as "supposed to be the next great whatever."
Michael Bober (left) and Edward Ventrice, who work out of Boca Raton, represent some 45 baseball players, including a dozen All-Stars. Their roster also includes hockey players.
"It's a combination of the adviser and the
athlete's fault. They don't listen to the adviser, and they get bad advice."
— CPA/financial adviser Edward Ventrice
Ventrice and Bober owe their success to being CPAs. Their technical background allowed them to click in a 1994 audition with the accountant-run management organization owned by a baseball super agent. They're one of the small number of financial adviser groups allowed to pitch the agent's clients and have landed, among some 45 baseball players, the last two No. 1 picks in the baseball draft, along with a dozen All-Stars, and two future Hall-of-Famers. Their roster also includes hockey players.
Ventrice says the firm's selling point to prospects is that it now — at 17 years — can show how it has seen players through from the draft to retirement. Ventrice says veterans like seeing a spreadsheet showing how much they'll have to live on annually for the rest of their lives based on their current savings. He is blunt: Give to charity but don't start a foundation — "a waste of time and energy." Concentrate on your sport and send everyone with a business deal to him. With rare exceptions for income-producing property, he rejects them.
Ventrice and Bober liken a pro's earnings window to that of an entrepreneur who sells a business built over a lifetime. Another one won't come along, so invest conservatively: 60% in ultra-safe investments, 25% in aggressive stocks and the rest in commodities, precious metals and other alternatives.