This publication interviewed the chief executive of Vanguard Sports Group, after it unveiled a partnership with a financial monitoring firm to fight financial fraud against pro athletes.

A firm which recently announced moves to protect young sportsmen and women from being preyed upon by unscrupulous financial advisors argues that such clients are particularly vulnerable, creating a need for guidance that also sheds light on how sports professionals are a growing wealth segment.

Vanguard Sports Group, a sports and consultancy agency, recently agreed a partnership with BrightLights, a company that monitors and reviews the finances of professional athletes.

“Sadly, the athletes are easy to identify, due to their public profile, and are by definition not experienced in the world of finance,” Joby Branion told FWR. “That makes them easy marks for the unscrupulous and exploitative in the financial advising community. Bernie Madoff deceived nearly $65 billion from thousands of people - many of whom were financially sophisticated. Twenty-two year old millionaires are easy prey.”

Financial advisors of young sports stars can be “unscrupulous and exploitative” due to the athletes' lack of experience in the financial world, he said. 

With sportsmen and women – often earning big sums in relatively short periods – seen as an attractive wealth segment by wealth managers, there is a need to ensure that people who might be unused to handling large sums in their early adulthood are not misled. And this is where the services of Vanguard and BrightLights come in, Branion said.

North Carolina-based Vanguard represents stars of the biggest sports in the US including the NFL, and Major League Baseball. 

“Not a single year has gone by during my career where at least some professional athletes are revealed to have been victims to the intentional wrongdoings of financial advisors to the tune of millions of dollars. Within my very first year in the business, I saw clients get involved with at least three notorious financial criminals (John Gillette, Don Lukens and Fairron Newton) all of whom went on to become convicted felons. I was able to steer two clients away from Gillette and Newton."

Big money
Sports wealth planning, along with areas such as media and entertainment, is starting to become a significant segment within the wealth management industry, with money flowing into NFL football (despite some recent woes in that sport), soccer, tennis, Formula 1 and rugby. US basketball star LeBron James reportedly was the second highest paid athlete in 2017, earning around $86.2 million, according to the New York Post. James earned $31.2 million in salary and bonuses, and $55 million in endorsements. Golfers, such as Jack Nicklaus, Phil Mickelson and Rory McIIroy, are some of the wealthiest individual sportsmen. Tennis produces millioniares such as Switzerland's Roger Federer; motor racing has seen the rise of millionaires such as F1 motor racing champion Lewis Hamilton. (Hamilton has been criticized over his offshore tax planning practices.) Wealth managers are also taking notice, looking to manage wealth of stars and use them for branding purposes, as Federer does as a brand ambassador for Credit Suisse. The development of such offerings is also a sign of how banks and other organizations are trying to develop value-added propositions in a war for high net worth clients' business, moving beyond simple segmentation based on assets, for example. 

As wealth continues to grow in the sports arena, athletes need help arranging their finances, and Vanguard CEO discussed what his firm does for its clients financially, and the educational needs of sports stars.

“As far as I can tell, Vanguard Sports Group is the first to create the type of strategic alliance that we now have with BrightLights,” said Branion. “Throughout my career, I have been committed to keeping a "checks and balances" philosophy with respect to the representation work that I do for my clients and the financial servicing that my clients get from independent financial professionals.  I have a healthy arm's-length relationship with my clients' financial advisors.  That way, we can protect our clients' interests independently of one another.  This also allows me - or my firm - to protect our clients from outsiders which, in some cases, may include their financial advisors.”

“Anyone who suddenly comes into significant wealth just as suddenly is in need of financial education, regardless of age or profession. Reportedly, 70 per cent of lottery winners go broke within seven years. I suspect the reason is because they had no idea how to manage their newfound wealth. Athletes (and entertainers) are even more susceptible because they are usually young, more likely to be trusting and are very easy to find. I always tell my clients that it is just as important to find an advisor who will take the time to teach you basic financial concepts as it is to hire an experienced & qualified one.”

Vanguard’s new partnership with BrightLights will ensure the advisors managing its client’s investments and banking put its clients' best interests first. Potential rogue advisors will be deterred by periodic checks on clients' finances, the firms say.

“This new strategic alliance with BrightLights will allow us - Vanguard Sports - to provide any and all of our clients with a completely objective and unbiased oversight of the clients' chosen financial advisors by a firm with experience investigating the activities of financial advisors,” said Branion.

“And there is no concern that the oversight being provided has some ulterior motive (like trying to take the advisory business away from the existing advisors).  Ironically, the best financial advisors who I know that work with professional athletes applaud our move because they love the idea of a disinterested 3rd party validating their good work,” he said. 

“For all of them (clients), it is the first time in their lives that they will be responsible for earning, managing and investing often millions of dollars literally overnight. BrightLights is the only firm I know whose principal cut his teeth working at FINRA and whose primary purpose is to protect unsophisticated clients from financial professionals looking to separate them from their wealth,” Branion said.

“I expect them to help us educate our clients, to assist our clients with the hiring process of their financial team and to oversee the work product of the financial professionals our clients engage. I decided that this service was important enough to provide to our clients that it is provided at zero additional cost to our clients - Vanguard Sports is covering the cost. And truth be told, if our clients can sleep better knowing that someone is providing oversight, our clients will be less stressed, more focused and will be able to perform much better, which will result in them being more valuable to their clubs,” he said.