For top athletes, “the stakes are very high,” said Kent Pearce, private wealth manager with The Pearce Group at Merrill Lynch. “For the first time in history, an NIL deal can equal or exceed the amount of a first professional contract.”

“It’s a tough business”
But college athletes are very unusual, if not unlikely, prospects for advisors: they’re young, inexperienced financially, often from low-income families and receiving substantial income for the first time in their lives.

“It’s a tough business to get into,” said Ron Patberg, senior investment advisor at Donaldson Capital Management in Columbus, Indiana. “You’re talking to young people who have a lot of voices in their ears. And they don’t necessarily want to talk to you.”

Building trust with a young athlete coming into money can be challenging, agreed Mitzie Wilson, an advisor and vice president at Farther, an Atlanta-based RIA. “A lot of people are talking to them, and if they were screwed by the last person, they don’t know if they can trust you.”

What’s more, finding a young athlete who is receiving NIL or revenue sharing payments can be “a shot in the dark,” Wilson added. “There’s no organization to go to. You find out after the fact.”

Advisors pursuing college athletes face a “barrier to entry” of compatibility and knowledge, according to Pearce.

“You have to have a connection in the space, someone on your team who is experienced in sports and has lived it, who understands the psychology of the young athlete or their family and who can speak the same language,” he said. 

New rules
Advisors also need to keep up with the rapidly changing rules and regulations of college athletics, Pierce added. “It’s like tech or AI; it changes so quickly.”

For example, following the House v. NCAA settlement last year, a College Sports Commission was established to oversee enforcement of revenue-sharing caps and NIL deals. The CSC set up NIL Go, an online portal developed in partnership with Deloitte as the clearing house for mandatory reporting and review of third-party NIL deals valued at $600 or more. These deals are evaluated for areas including compliance and whether they offer a reasonable range of compensation, or “fair market value.”

Additional tweaks to NIL regulation are likely in the coming years, according to Heitner, who publishes a “Newsletter, Image, Likeness” blog tracking the latest legal developments in college athletics.

Eligibility for college athletes is another shifting legal battleground. Eligibility to play in college “remains highly fact-specific and often contested,” according to Heitner. Guidelines hinge on maintaining amateur status, including never signing an NBA or two-way contract and competing within a five-year window from high school graduation.

The NCAA has recently granted former G League players and even those who signed NBA contracts but didn't play in NBA games college eligibility. But Heitner expects more lawsuits, potential NCAA clarifications, and even possible congressional pressure over the eligibility issue.

Generating leads
For all the challenges and head spinning twists and turns in college athletics, advisors say they enjoy working with young athletes.

“You have an opportunity to set them up for life, which is very unusual,” said Patberg. Young athletes can start what McDonald calls an “opportunity  account” enabling them “to set up a fully funded 401 at age 19 through an LLC that can earn compound interest for 40 years.” Advisors also have what Pearce says is a rare opportunity to help clients turn unexpected early income into “lasting financial confidence.”

To prospect and generate leads, referrals, word-of-mouth and contacts with centers of influence, in this case coaches, agents, business managers, attorneys and accountants are key.

To get the ball rolling – so to speak – McDonald, who has a Sports & Education designation, focuses on in-person networking at a local gym in Birmingham. Patberg is a high school basketball coach, who conducts educational workshops at local colleges around Indiana and tries, when possible, to get to know agents working with athletes.

Pearce also focuses on education. He leverages his Florida and Maryland-based team’s size and experience working with both professional and college athletes to form partnerships with advisors who don’t have as many resources. Other advisors go to local high school and amateur games and identify the best players. 

“Schools are not doing a good job”
Once advisors do start working with young athletes, they usually “burst their bubble,” as McDonald put it, by informing them that their NIL and revenue share earnings are taxable. “It’s quite a shock for them,” Patberg said.

Consequently, advisors stress the importance of financial literacy and education for these clients. “Schools are not doing a good job,” said Wilson, who also has a sports designation from the College for Financial Planning. “It’s up to us.” 

The next hurdle is often dealing with third parties such as parents, relatives and friends who may be well intentioned but meddlesome – or worse. “When family dynamics are fragile, there’s friction,” said Pearce. “And when there’s money involved, a lot of people show up at the table.”

Once advisors have the confidence of the athlete, they stress the need for taking care of tax liabilities, budgeting, limiting spending and maximizing saving and investing for the long-term. Wison starts by building what she calls a “board of directors” for the clients’ future, a team including an accountant, lawyer, banker and financial advisor who can coordinate best practices. 

In addition to financial planning basics, Heitner recommends “thoroughly understanding the evolving NCAA bylaws, state NIL laws, and the requirements under the House v. NCAA settlement framework, including mandatory reporting of deals over $600. Prioritize education on taxes and build trust through transparency.”