How an Advisor Invests NFL Players' Wealth

NFL players sure know their stuff on the gridiron. In the world of investing? Not so much. That’s why they, and other professional athletes, need a financial advisor such as Lee Rawiszer.

He impresses upon his football-playing clients that, with their short careers, the money they invest now for the long term is expressly for their retirement, to be left intact to grow.

“This is irreplaceable capital. How many people have a 23-year career like Tom Brady? The average NFL player could be done in three to five years or less,” he tells ThinkAdvisor in an interview.

As chief financial officer and managing principal of Paradigm Financial Partners, a firm with about $800 million in assets under management, Rawiszer specializes in helping entertainers, pro athletes and other high-net-worth professionals.

The football teams he works with include the Chicago Bears, Minnesota Vikings and the New York Giants.

His mantra is: “Don’t invade the principal!” something he endeavors to impress upon the less-than-investing-savvy athletes.

One big issue in serving pro athletes is that they’re easily taken advantage of by unscrupulous people or otherwise induced to invest in high-risk entities they don’t understand.

In the interview, Rawiszer discusses this problem: Though he and players’ business managers offer athletes sound advice about an investment they’ve been urged to make by someone on the outside, “they don’t always listen” to the experts whom they pay.

Helming Paradigm since 2003, Rawiszer was previously with Capital Management and the New York Life Insurance Co.

He developed the pro athlete niche after he was referred to an NFL player by the business manager of one of his pop music star clients.

Then he was “referred to another and another” athlete. “It was a ripple effect,” he says.

ThinkAdvisor interviewed Rawiszer by phone on February 6. He was speaking from Westport, Connecticut, where his firm is based.

What do you imagine highlights his agenda for this Sunday?

“I’m going to a big Super Bowl party in Westport and having a good time. A lot of NFL fans are out here, and there’s always an annual party, usually in someone’s home.

“I love watching the Super Bowl,” he enthuses, “and we make a big event of it.”

Here are highlights of our interview.

THINKADVISOR: What insight does a financial advisor need to work with NFL players?

LEE RAWISZER: An understanding of the potential short duration of their career. Very few people have Tom Brady 23-year careers.

You also have to understand that these athletes are approached all the time by so many different people. If they’re at a party, for instance, another player will say, “You should meet with my guy. He has this amazing deal that’s paying 15%.”

Then they come back to me. I look under the hood and find that the investment was very risky. Most of these players aren’t investing-savvy or educated; so they can get taken advantage of.

Over the years, a number of pro athletes were blowing through all their money and going bankrupt. Is that still prevalent?

Yes. A lot of professional athletes do get taken advantage of, and that’s where they have to be careful. They can blow their money and get into unscrupulous investments with people that rip them off or high risk-investments they thought they understood.

There are a lot of bad actors out there involved in Ponzi schemes and other things that aren’t legit. It’s the player’s business manager’s job to protect them from unscrupulous people.

We’ve avoided those kinds of situations for the most part with our clients, both professional athletes and people in the music and entertainment business.

So the athletes fail to listen to their business managers and you, go off and put their money into something they shouldn’t?

You hit the nail on the head! That’s actually a problem. They don’t always listen. Sometimes they think they know better.

They may ignore my advice and their business manager’s advice. We take detailed notes and document those conversations after every meeting — what we advised and what the athlete’s reaction was.

Sometimes, when our advice wasn’t taken, it didn’t turn out well. You can recommend 10 things, and they’ll listen to you for nine of them but won’t listen to one — and that could be the thing that goes sour.

I suppose you always have to keep in mind the brevity of a football player’s career. Right?

Yes. They have to depend on their earnings during their career and invest smartly. [When they leave football], not everybody gets an Adidas endorsement or a job on Fox Sports, like Tom Brady. He signed a contract to be the lead analyst for the next 10 years that’s paying him about [reportedly] $375 million when his playing career is over.

But NFL guys do make big money. Don’t they have an appetite to spend it lavishly?

Some of them come into very large amounts of money at one time and are tempted to start buying houses for their relatives, luxury cars and expensive jewelry.

What do you do to try to prevent them from doing that?

It’s the goal of the business manager and me as the financial advisor to give them prudent advice. You don’t want them going crazy and then waking up one day and finding out that they’ve spent their assets — and then their career is over.

How do you communicate this to the players?

You need them to understand that this is money they’re investing for the long term and they shouldn’t try to invade their investments or touch them during their careers. You want that money to grow.

There’s always the risk that they could be out of the game in a short period of time, but this money has to last them their lifetime.

There’s a lot of unpredictability in any professional athlete’s career; there’s always the risk of injury or of not performing or being cut or not having their contract renewed.

What specifically do you say to the players?

Not to blow the money. Not to put it into the portfolio, then literally make us unwind the portfolio or sell positions and realize taxes because they’ve spent the money on something that usually isn’t necessary, like a fancy car or other luxury.