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What first-round NBA draft picks should do with all that money

Zion Williamson, Ja Morant, RJ Barrett and 27 other young men were first round draft picks. They will soon sign contracts ranging from approximately $7 million to $33 million.

Then what?

Financial Planning asked prominent wealth managers — and a future NBA Hall of Fame player — what advice they would give to the basketball players who are about to become pros. The insights are also valuable for other professional athletes, as well as planners who specialize in the niche. Indeed, financial advice for the specialty has become increasingly prominent.

Earlier this week, NorthRock Partners in Minneapolis hired Tony Parker, the six-time All-Star who won four NBA titles with the San Antonio Spurs, to head its sports, artists and entertainment division. And Cleveland-based MAI Capital Management strengthened its reach by acquiring another firm working with professional athletes, MTX Wealth Management in Reston, Virginia.

In March, former Notre Dame star and 12-year NBA veteran Troy Murphy opened Sweven Wealth, a firm dedicated to working with young athletes turning professional.

“I’ve seen too many people who were just not prepared to navigate the new financial landscape they find themselves in,” Murphy said.

Here’s some free advice for them:

Tony Parker (One time use - June 2019)
‘You want peace of mind’
Tony Parker (photo right), president, NorthRock Sports, Artists and Entertainment, and former NBA player

As a professional athlete, you want peace of mind. You want to find someone you can trust. There are a lot of people out there who don’t mean well.

It’s important to find somebody with credibility who will help you make good decisions, understand what you need and what you need to know. Then they should work with you on a strategy for what you want to accomplish.
‘You should not be thinking about money now’
Frank Zecca, managing director, OFS Wealth

Understand what your contract means. How much is guaranteed? How much can you save? Then figure out what that savings means as far as income for the rest of your life. Understand you’re dealing with a math problem.

Otherwise, you should not be thinking about money now. Concentrate on basketball. Get better as a player. There’s no better investment you can make than playing out your rookie contract and getting to free agency as a player who is in demand.
‘Assume the first contract is all you’ll ever get’
Rick Buoncore, managing partner at MAI Capital Management

You have to assume the first contract is all you’ll ever get. So save as much money as possible. Save your salary and if you can, live off income you can earn off the court from endorsements and personal appearances.

Remember that if you lose the money from your first contract, you may have little opportunity to replace it. You could get hurt. Look at what happened to Kevin Durant and Klay Thompson.

Don’t look at what the veterans on your team are doing with their money. They’re at a different stage in life. If you get a second contract, you can become more of a traditional investor.
‘I guarantee your point of view will change.’
Rob Nelson, CEO, NorthRock Partners

Ask yourself: Would you trust your 16-year old self to make decisions for you today? Probably not.

Five years from now, when you’re 26, you’re not going to want to live by decisions made by your 21-year old self. So be flexible regarding your financial decisions. I guarantee your point of view will change.
‘Stop thinking about the list of things you want to get.’
Michael Conway, president and CEO, Conway Wealth Group

Everyone has a list of things they would get if they win the lottery. My biggest advice to athletes who are top draft picks is stop thinking about the list. Take a breath and enjoy the moment.

Then surround yourself with people who can help you with an overall plan, like a certified financial planner. And remember that your capacity to earn money playing basketball has a time horizon. It won’t go on forever. So don’t spend more than you make.