A version of this article was originally featured in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly publication for high net worth investors and consumers. To receive upcoming editions directly in your inbox, sign up.
The escalating salaries of top athletes and lucrative contracts for college players have sparked a new rush for wealth management firms. Juan Soto’s $765 million deal with Major League Baseball’s New York Mets showcases the unprecedented wealth generated by professional athletes and the opportunities for wealth management firms handling their investments. The increasing earnings of college players for their name, image, and likeness, along with the growth of women’s sports, have made sports a significant driver of growth in wealth management.
Molly Cloud, a financial advisor and director of sports and entertainment at Morgan Stanley, noted the substantial increase in numbers in recent years. The influx of money has made the job more complex and exciting for wealth managers. Firms like Morgan Stanley, Bernstein, UBS, Goldman Sachs, Rockefeller Capital Management, and private equity firms are expanding their sports and entertainment divisions, hiring former athletes to attract more clients.
James Beale, a former hockey player and now the development director for Rockefeller Capital Management’s Sports and Entertainment group, emphasized the importance of understanding athletes’ financial needs. Athletes, like other high net worth clients, often prioritize their careers over financial matters. Beale highlighted the role of wealth managers as trusted partners who help athletes manage their finances, allowing them to focus on their profession.
Wealth advisors face unique challenges when working with wealthy athletes, who often earn significant wealth at a young age. Stacie Jacobsen, national director for client engagement at Bernstein Private Wealth Management, highlighted the distinctive financial behaviors of athletes compared to other clients. Education plays a crucial role in advising athletes, who may be vulnerable to scams and bad investments due to their age and career focus.
Taxes present another challenge for pro athletes, with complex calculations required for the jock tax and income earned in various states. Advisors assist athletes in maintaining detailed records and planning tax strategies. Advisors also play a crucial role in helping athletes make sound financial decisions, guiding them on investments, purchases, and long-term financial planning.
Wealth advisors aim to prepare pro athletes for life after their sports careers, emphasizing the importance of building a second career, negotiating brand deals, and investing in income-generating assets. The focus is on creating significant wealth during their playing years and planning for a secure financial future beyond sports.
