How the NFL Players Association brought financial advisors to Florida to better marry them to its members

The night before the conference put on by the National Football League Player’s Association’s Financial Advisor Program, roughly 60 of the 400-plus advisors expected for the two-day event are gathered in the lobby bar of the Westin Diplomat Resort in Hollywood, Fla.

A few active and retired players mill about, and Pittsburgh Steelers quarterback Charlie Batch allows a few people to try on his Super Bowl ring. But oddly, nobody is watching the televisions showing a baseball game, an NBA playoff and a special report on NFL players.

The advisors at the May 6-7 event may have signed up for the Advisor Program, which helps connect them with players, in part because they were sports fans. But over time, the seriousness of the work tends to sink in.

NFL players’ youth, sudden wealth, and the fact that the teams don’t guarantee contracts all pose challenges for advisors working with the players.

“Seeing how much of a rough business sports is, I became even more dedicated to making certain the players are financially taken care of,” said Jason Cole, managing director of the Philadelphia-based Abacus Wealth Partners, and a member of the NFL Player’s Association’s Financial Advisor Program. “I have become less of a traditional fan.”

Seedy underbelly

Cole is not alone in finding himself shocked at the seedy underbelly of the business side of professional sports.

The Financial Advisor Program, now with roughly 500 members, grew out of another serious fact about NFL players: they tend to be the target of fraud.

Eight years ago, after William “Tank” Black, was convicted and sentenced to six years in prison for defrauding seven players of more than $14 million, the union decided to start the Program, which is a listing of union-approved advisors given to players and their agents. Advisors who want to enter the plan apply though the NFLPA, then pay a $1,000 nonrefundable application fee and a $500 yearly membership fee.

The Advisors Program screens advisors, making sure they have clean U4s (it won’t register anyone who has pending customer complaints or any arbitration settlements in the last 10 years), a minimum of five years of industry experience, adequate liability and errors and omissions insurance, and the proper licensure (recognized by the SEC and NASD and/or a CPA).

Weak vetting process?

A lawsuit filed by ex-players Steve Atwater and Blaine Bishop against the NFLPA contends that the FA program’s vetting process is not strong enough and should have prevented Kirk Wright, an advisor who was in the program, from committing fraud. Wright took his own life while in jail in 2008.

Like Glenngarry Glennross, it’s about those leads. Approved advisors get lists of players and their agents. The Players’ Association “highly recommends” to players that they avoid letting anyone who is not NFLPA-certified handle their finances.

Some attendees at the conference expressed frustration at agents for not making use of the registered FA’s and some suggested the FA program needed to make certain that agents to the 1696 NFL players do, in fact connect registered advisors to potential clients.

Advisors new to the program are required to attend the conference during their “rookie” season and at least every other year therafter. During the 2010 conference, the first day was set aside for speakers, panels, and breakout sessions, all geared towards newcomers to this world. All sessions were held in spacious ballrooms found within the hotel grounds.

Veteran knowledge

“I think the biggest help for me is to spend time around advisors who have been handling this niche for 25 years, while I have worked with these guys for only three,” said John McAulay, CFP who was attending his second conference. “Since I left Smith-Barney and went independent last year, it is also nice to reignite my interest and focus on something other than my sprint towards freedom!”

The main ballroom was packed on Friday when ex-Detroit Lion Luther Ellis spoke openly about his own financial woes. He filed for bankruptcy this year when he discovered that his spending habits as a player left nothing for post football life.

Ellis spoke of how little most players trust advisors.

“Look, you guys (advisors) are really looked at by us as the ‘anti-Christ, and are viewed as simply trying to get in our wallets.” Ellis also said players need to learn to know what they do not know — as do advisors.

For advisors, in Ellis’ s view, this means connecting the player with experienced tax professionals, lawyers and other members of a stable “team.”

Going for broke

Ellis’s talk, which humanized the results of disastrous financial planning, was the takeaway moment for McAulay. “That was a first — hearing from a recent top-shelf player who had gone all the way to bankruptcy,” he said.

Other topics at the conference included information for new members of the FA program, the transition after football life, worst-case scenarios for players and their families and how to prepare players for a potential lockout in the 2011 season.

Panels included a frank conversation with ex-Buffalo Bill Cornelius Bennett and his wife, Kimberly, who spoke of the need to think long term while playing and to show tough love to immediate family members.

A recurring theme was the difficulty of the job. Advisors to NFL players work as armchair shrinks and gatekeepers, and are often the person called upon to say “No” to family members and friends of the player.

League of no guaranteed contracts

The advisor is the “quarterback” responsible for putting together a network of tax specialists and attorneys to deal with the complexities of mostly non-guaranteed NFL contracts. This is the only professional sports league made up of teams who do not guarantee contracts.

If a player is injured or does not perform up to expectations, he can be cut and the team is not required to pay his salary. NFL teams pay signing bonuses that function like guarantees, but these are usually extended only to first round draft picks or free agent signings of top players.

Of course, many veteran players stick with their advisors. That means the upcoming mandatory Rookie Symposium, which brings all incoming rookies to a hotel, “locks them in” and informs them of the pressures and temptations they will face in the NFL, is the next opportunity for advisors interested in signing on NFL players as clients. This year’s weekend gathering takes place June 27-30 in San Diego.