You once considered a pro hockey career, Rob?
Rob: Coming out of high school in Canada, I earned a scholarship to a U.S. college with a Division 1 hockey program. After my four years there, the NHL was on strike but I had offers to go to camps with lower-tier pro teams. But I was also doing well in my economics class, and my roommate in college had just missed the entire season with a concussion. So, I chose to change gears completely, and joined a finance start-up in Singapore. I stayed close to the game, including coaching Singapore’s national team, which was a rewarding and enjoyable way to stay involved. I later moved back to Toronto and joined KJ Harrison to bring together my two passions: hockey and the business of finance.
We’ve all heard stories of athletes being taken advantage of financially. Is that ancient history?
Mike: Unfortunately, no, at least in certain corners of the professional sports world. The minute many players show promise, they become targets, in some cases for investment advisors, player agents and even friends and family who may see dollars signs. A prime example is former Toronto Maple Leaf, Bryan Berard, who lost millions to a fraudulent investment advisor. At the age of 17, agents started courting the up and coming star, all eager to help manage his money. He and his family chose a financial advisor they thought was looking out for his best interests – alongside many other players – and eventually that advisor was charged with fraud and his clients lost millions.
Rob: And that’s just one of the most recent visible examples. There are so many other circumstances where there’s nothing illegal going on, yet players are talked into investments and products that are not in their best interests.
Mike: The risk isn’t just that they might be taken advantage of, but they might be tempted to make decisions that won’t help them in the long-run. The minute some players sign an $800,000 entry-level contract, they buy their first sports car and a house and a cottage, and then their personal balance sheet is already tenuous because they’re leveraging future earnings. That’s a big red light.
That speaks to some of the unique risks players face when they come into money. What else should athletes be aware of?
Rob: These athletes have an inverted income pyramid. Most people learn how to handle money, conduct business, invest and protect themselves while they have small sums, and then as their career grows, so does their income. In contrast, athletes make the majority of their money very early in their lives. That presents a whole host of challenges and opportunities, so we work with them to develop the skillsets to capitalize on this unique set of circumstances – not just for the short term, but for their entire lives. After all, they’re only one hit away from losing their future earnings so we give them the skills they need to have the lifestyle they want and maintain it for their entire life. Not just their athletic career.