The trouble with athletes retiring

Phil Reynolds of TBH Advisors

Athletes face two retirements, advisor says, and that can entail additional career plans and expenses.

April showers bring May flowers, but April also brings the start of baseball season, and summer sports. As the opening week of MLB wraps up, several advisors are thinking about their athlete clients.

Phil Reynolds is one of those advisors.

Reynolds, a financial advisor at Brentwood, Tennessee-based TBH Advisors, is a big believer that if you work with people with a high level of integrity and do what’s right by them, the business will grow as those clients recommend you to others.

“Over 14 years ago, I was building my practice, and was referred a player in the NFL, who was undrafted, but wanted some help,” he explains. “At that time, I was willing to really talk to anybody while trying to figure out potential niches that I could focus on, and I just kind of fell in love with working with young folks that were needing help.”

That’s when he took his passion for sports and dedicated his practice to serving professional athletes, as well as working with clients who face Alzheimer’s.

Reynolds’ practice is built around the main pillars of financial planning, everything from investment management, insurance planning, tax and estate planning, and even retirement planning, which he says is “kind of odd,” especially for athletes. However, he says it’s an area that isn’t well focused on among advisors and clients.

After all, in an athlete’s career, there are usually two instances of retirement.

“There’s this window of time that they’re playing, and then eventually, whether it’s on their terms or the league, they’re no longer playing professionally and so they begin that transition back to the private sector,” Reynold says.

“[Meanwhile], figuring out a plan, while they’re playing, of what could they see themselves doing next? What are their passions? And what’s the starting point to develop that second career … knowing that as they transition away from their professional careers, you also have to moderate that lifestyle for this next iteration of life, where it may take a little while to establish their next career or what they want to do,” he said.

While all of this is typical for advisors, Reynolds says he and his colleagues at TBH believe strongly in educating their clients early on, while developing their relationships.

“We don’t want to just tell clients what to do,” he says. “We want them to understand what we’re discussing and recommending, but also have them collaborate in the decision-making process … It’s walking down the decision path together, laying out different options to evaluate, and then helping them come to a decision that they think is best for themselves and their family.”

Reynolds’ clients are predominately in the NFL, with some who play in the NBA as well. There’s also a PGA golfer on his roster of clients, as well as coaches and agents.

“I’ve branched out over the years to work with different folks in the industry in a variety of roles. A lot of it by just the evolution. The coaches I work with were former players that are now coaching, so it’s just maintaining those relationships,” he says.

Not surprisingly, most of his clients are men between the ages of 21 and 40. He noted their ages depend on what year they’re coming out of their draft and how early they decide to get out and retire.

Serving clients in the sports industry comes with a few hurdles, Reynolds says, the first of which is knowing how much or how little young professional athletes should be spending while they’re playing, especially as athletes make the big bucks.

“It’s understanding that spending in excess when you have the money has a significant impact long term,” he says. “[We’re] really working hard on budgeting, on having savings goals and accountability around that, being able to show them what saving and investing on a long-term basis does with compounded growth.”

In the same vein as how they play their respective games, Reynolds says professional athletes should have a team approach and not just a siloed individual advisor working on their behalf.

In addition, with athletes likely to retire earlier, Reynolds points out that advisors’ athlete clients should understand the window of time that’s available to them, and the ways in which they can take full advantage of that for their long-term benefit.

“It’s critical, because you just don’t know how long someone’s going to be able to play in the given sport,” he said.

Reynolds noted that advisors who may want to start working with athletes should know that while the niche may appear exciting and glamorous, it’s not all it seems.

“There’s a high level of competition to be aware of,” he says. “It’s making sure that you are just doing what you can to work intimately with your client and do right by them.

“It’s going to bring more business and don’t try to oversell yourself,” he warns.

“I think fandom is always interesting, where players are kind of held to this standard. But when you pull the veil back and you get to know the real person, it’s a much different experience,” Reynolds added. “They’re normal people, just like the rest of us, with normal challenges, that you’re going to try to help with the same ups and downs of life that come for anyone.”

Name: Phil Reynolds
Position: Financial advisor and managing member
Company: TBH Advisors
Founded: 2007
Firm AUM: Over $1 billion