In the second edition of the Ask The Expert Series, hosted in conjunction with SportsAgentBlog, we were privileged to have Stephen Rhodes, Managing Partner of Strategic Partners Wealth Management on the “hot seat.” Stephen is responsible for the visionary leadership and direction of the firm’s sports division. The mission of Strategic Partners is to help each client simplify their financial matters so they can focus on what really matters. The firm’s clients include athletes, executives, entrepreneurs, institutions/companies, municipalities, and other high net worth individuals.
Stephen’s personal mission for each athlete client is to help them do the things most athletes won’t so they have the opportunity to live like most athletes can’t. Specifically, this means customizing a plan to help his clients protect, grow, enjoy, and share their new net worth. Stephen believes that what most athletes are missing is a comprehensive strategy. To use a golf analogy, although his clubs have something to do with it, most people understand that it is Tiger Woods’ swing that is the most important component. Yet, when it comes to helping athletes with financial matters, most advisors spend too much time trying to sell them clubs instead of teaching and improving their swing; their strategy. Thus, Stephen spends time with each athlete to teach them the fundamental strategies to help them achieve financial success. These individualized plans help athletes avoid the most common mistakes in the 8 following areas: Budgeting, Savings, Debt Management, Insurance Management, Investing, Retirement Planning, Tax Planning, and Estate Planning.
A requested speaker, Stephen is a Certified Financial Planner (CFP) and he was honored by St. Louis Magazine as a 5 Star Wealth Manager*. After triple majoring in Finance, Management, and Human Resources, Stephen received his BSBA from the John M. Olin School of Business at Washington University in St. Louis. Always looking to give back to the community, he temporarily postponed his business career as he spent 5 years teaching mathematics to a high-risk population at the Maplewood Richmond Heights Student Success Center. While doing so, he returned to his alma mater to receive a Masters of Arts In Education and shortly thereafter began his career as an advisor. Formerly trained as an educator, Stephen believes that more than anything athletes need financial education and he spends a great deal of time teaching his clients how to be wise with their money.
When not serving his clients or the community, Stephen, enjoys playing golf, attempting to relive his glory days while playing flag football, and relaxing with his wife and children.
* Award is based on a client survey conducted by an independent third party. The opinions of those who responded to the survey may not be representative of the experience of other respondents. The Five Star award is not based on investment performance nor is it an indication of future performance. Respondents were not paid to participate in this survey.
Questions & Answers
1. What is the most common financial mistake you see athletes making?
The most common mistake is not having a strategy for their wealth. Every athlete should consider a written, comprehensive strategy that details where they are now, where they want to go, and what they can do to help them get there. When football players step on the field, they know where the ball is marked, where they are trying to go, and they have a play designed to get there. It would be ridiculous to do otherwise, but financially speaking most athletes do just that. They have no plan and therefore they react instead of being proactive, which often results in a large number of athletes with undesirable situations after leaving the game. The lack of a strategy can be due to many things, including working with an advisor who is not competent in this area. Remember trust is composed of character and competence - whoever you trust must possess both - or there will likely be considerable financial mistakes in your future.
2. Is it a good idea for athletes to seek the opinion of a 3rd party financial advisor to ensure that their existing investments are sound and no improprieties are taking place?
It’s a great idea! We highly recommend it, even if there appears to be nothing wrong on the surface. If there is something unsound or unsuitable, a review can help bring it to surface before it is too late. There are many financial professionals who are influenced by outside factors such as office sales goals and product quotas. Through a 3rd party review, existing investments can be evaluated based on the client’s individual goals and objectives.
3. How do you handle clients who refuse to take your advice? For example, let’s say you advise one of your clients to make a will and they say that they are too young and don’t need to do it at this point in their career. What would you say to that athlete?
As the old saying goes, “You can lead a horse to water but you can’t make him drink”. But also I heard someone say that you can’t make him drink, but you can give them salt to make them thirsty, which is exactly what I try to do. I try to educate and communicate the benefits and drawbacks of the advice to make sure that the client fully understands. At the end, it is their choice to make; my job is to give them advice. If they choose not to follow my advice, I document it (sometimes I have the athlete sign the documentation). If it happens repeatedly, the client may need to find a new advisor.
4. I was wondering if you would recommend for athletes to invest in commercial real estate.
It depends on the athlete and their situation. I do not rule it out as an investment option, but it has to be suitable and fit within the athlete’s overall strategy. There are a host of other areas that I believe an athlete needs to secure first before investing (cash flow, savings, etc). Once these are accomplished, then he or she can begin to consider investment alternatives. At this point, they can determine what percentage should be invested where and if commercial real estate helps them accomplish their goals.
5. I am putting together an investment group of current & former athletes, among other people. I want to include as part of the investment paperwork a “Code of Conduct” of sorts that basically outlines the expectation that their behavior as an investor must be of the highest moral & ethical standards…..failure to comply could result in a penalty of some sort from their investment standpoint. Are there any such documents that exist?
Not that I am aware of. Sounds like a document you will have to create with the assistance of an attorney.
6. What exactly is a “financial strategist?” What makes a financial strategist different than a financial advisor or wealth manager?
Rather than comparing titles as many professionals are often allowed to call themselves a range of titles, the substance lies in whether a financial professional focuses primarily on developing a comprehensive strategy. Here’s the difference; suppose you were playing a round of golf and your score determined how you would spend the rest of your life. Would you rather have Tiger Wood’s clubs or his swing? It is obvious that you would take his swing. Financial strategists as we define it, help you create, implement, and hone your “swing”; your strategy. They are not there just to sell you “clubs” (products) like many financial representatives, nor are they there just to watch over your “clubs” like many advisors. Instead they are there to teach and advise you how to combine your “swing” with your “clubs” to help you accomplish what is most important to you. Financial strategists perform many of the tasks that traditional representatives perform, but their actions and advice are different because they are driven by the overall strategy.
7. Can you give us an example of a “strategy” you have applied to one of your athlete clients in the past, and why that strategy was chosen for that particular client?
One simple strategy is our Fun Money Strategy. When an athlete finally signs the “big contract”, there is always a difference between what they thought they would do and what they actually do. In theory, they shouldn’t make any lavish purchases or have a huge change in lifestyle. In reality, however, this is usually one of the first things they do. To incorporate this reality, we have a strategy where we create a “fun money” account which is automatically funded with a predetermined percentage. Long before the funds arrive, we discuss the percentage and how much money would be allocated to the “fun money” account. The funds in this account are set aside purely for the athlete to use on whatever he wants to do for fun. As a result of this strategy, we accomplish the goal of allowing the athlete to tangibly enjoy the wealth that he has worked so hard for, without disrupting the accomplishment of his long term goals. We have additional unique strategies for each area of service we provide (see next question).
8. What does it mean to be a full service wealth management firm? What is included in that offering?
For our athletes we offer services in the following 8 areas:
- Cash Flow Management
- Debt Management
- Risk Management
- Investment Management
- Retirement Planning
- Tax Planning
- Estate Planning
We partner with other professionals as needed, but our financial strategists are there every step of the way to oversee and coordinate it all.
9. Is risk management the most important service you provide to your athlete clients? How often do they resist doing anything in that area?
Risk management is extremely important. Our goal is to help our athletes protect, grow, enjoy, and share their wealth and this often begins with us helping them protect what they already have. Sometimes there is some resistance to this type of planning, since it is generally not very exciting, but this resistance is generally removed when our athletes see how these strategies can help them accomplish the goals that matter most to them.
10. How does your role as a former educator help you perform your tasks as a financial strategist?
I would say that the skill of teaching is by far is the most important skill I use with my clients. All of my training and testing to become a Certified Financial Planner and all my years of studying finance while in business school are a distant second in comparison to the basic teaching skills I learned by being an educator. Being able to sit with an athlete and teach them ways to manage their finances for success is my most valuable asset. Most athletes hate being told what to do, but they love being taught about opportunities for success. My training as a former educator and experience being a former athlete, have uniquely equipped me to be able to take very complex investment, tax, estate planning etc. concepts and teach them in such a way that athletes understand. When athletes “get it” and they find someone who respects them enough to take the time to teach them, they are appreciative, thankful, and trusting. Although I stopped teaching in the classroom years ago, the truth is I am still teaching. The difference is my students are just a little bit older than before.
Stephen Rhodes offers securities and advisory services through National Planning Corporation (NPC), Member FINRA/SIPC, and a Registered Investment Advisor. NPC and Strategic Partners Wealth Management are separate and unrelated companies.
We would like to thank Stephen Rhodes for participating in the second edition of the Ask The Expert Series. If you have any questions for Stephen, you can email him at email@example.com. If you are a sports professional or professional athlete and would like to participate in the Ask The Expert Series, please contact Matthew Allinson or Darren Heitner for more information.