Financial advisor and former NCAA football star Pat Brown uses the concept of assistant coaches to help student-athletes understand the link between credit scores and credit cards.
As the founder of an organization called
Brown,
"I try to really tailor it to a specific team," he said in an interview. "I was trying to allude everything to what they specifically do because I wish someone did that for me."
In the
While
The quest to inform student-athletes has also run into challenges from
The "life-changing money" correcting the prior "farce" in which the athletes earned fortunes for their schools and the NCAA without compensation beyond their scholarships is nevertheless falling into the general pattern of
"The first thing I tell these young people is that the only thing I knew about money in college was that I didn't have any," Doman said. "It's not their fault they don't know what they don't know."
New source of income
With its March Madness tipping off this week, the NCAA expects to generate
Some student-athletes' NIL deals are starting to reflect those eye-popping numbers, with a decent number of high schoolers making lists of the highest paid athletes endorsing products, selling merchandise with their names on them, filming video greetings, making sponsored posts on social media or doing other activities that now may give them healthy paychecks.
Bronny James, a high school basketball star who's the son of LeBron James, ranks No. 1 on college sports news and data
With at least 22 student-athletes garnering $1 million or more and players on the top-earning teams getting
Not surprisingly, the pay for student-athletes in high school has
The NCAA's approval of NIL pay following
"Anyone can say they're an NIL agent," the agent said. "I think that most legitimate agencies and agents are actually helping these kids and doing their best to help them make money and take care of them. The problem is you're seeing a lot of unqualified people that are out there taking advantage of these young men."
Financial Planning reached out to the NCAA and five NIL collectives representing prominent sports programs. The NCAA and three of the collectives didn't respond to requests for an interview, while one collective declined to comment and another said no one was available.
Updated NIL
"The board noted that schools generally can and should provide education to current student-athletes, including on topics like financial literacy, taxes, social media practices and entrepreneurship," according to the guidance. "Schools also can provide NIL education to collectives, boosters and prospects. The board also noted that — when permitted by applicable state laws — schools can and should require student-athletes to report NIL activities to the athletics department."
New ideas to help
Some of the biggest programs have started ramping up the educational component allowed by the new guidance. The Clemson University Tigers became the first athletics program t
At the University of Oklahoma, every player on the Sooners football team and the men's and women's basketball teams have inked NIL deals, according to Toby Baldwin, the school's executive associate director of athletics for NIL and operational advancement. The program is starting an NIL class this summer, with financial topics as one of the four main themes. A money coach from regional bank MidFirst Bank meets regularly with the student-athletes, who can access tax preparation services and have also attended sessions with local advisors.
The "obligation that we feel to educate our athletes" is prompting the Sooners to create such programming, said Baldwin, who noted in an interview that many of them are "people that haven't had money, or they've relied on other people's money." The Sooners would welcome input and assistance from more advisors seeking to boost the players' financial literacy.
"People in my role may not feel that wealth management professionals or financial advisors are interested in a student-athlete earning $5,000 to $10,000 in NIL deals," Baldwin said. "But there's still that opportunity. We have students now who are asking about investing — 'How do I make my money grow? How do I earn money?' — they're learning how to ask those questions."
Advisors acknowledge that, to reach athletes, the industry needs to alter its traditional tactic of approaching clients with only the highest potential assets under management.
Registered investment advisory firm
Bockhorst "would absolutely say that any concerns are founded" about NIL, he said in an interview, adding that the ethical gray areas include NFL agents "miraculously rebranding themselves as marketing agents" to student-athletes.
"A lot of guys and gals get into unfortunate situations where they are putting their trust into somebody who should not have it," Bockhorst said. "It is rooted a lot of times in the simple fact of the matter that many, many student athletes have not had basic financial education."
Bockhorst, Doman of Creative Planning and Brown of Financial Literacy for Student Athletes each reported that there is a widespread misunderstanding among many players that they'll need to pay taxes on any money that they received as independent contractors.
Doman was speaking with one athlete the other day who fit that description, he said, declining to state the names of any clients.
"What do you expect? They gave an 18-year-old $150,000 in their checking account," Doman said. "Not one person told him he was a 1099 contractor and what that means."
Industry demographics must shift over time, as well, if wealth management firms expect to gain a foothold among the players, according to Brown. Fewer than 2% of certified financial planners are Black or African American, the
"Their attention span is so spread among so many different things," he said. "There's more that's pulling on their attention versus when I was sitting in that same seat."
Hope for the future?
Other financial firms and NIL outlets are beginning their own programs aimed at supporting money literacy among student-athletes. Minneapolis-based
"We know that student athletes are having this opportunity and seeking help," Kaori Yamada, U.S. Bank's senior vice president of financial education strategy, said in an interview.
"There's such a huge need for financial education, and we did some research," she added. "We know that financial confidence and knowledge increases significantly with even just a small amount of education. That does translate into financially healthy behaviors."
Opendorse connects athletes with sports marketers, agents and fans who pay the firm a fee of varying size for the operational components of deals to film a video, sign an autograph or make an appearance, among other kinds of NIL agreements.
The company has seen "very strong" adoption, with tens of thousands of the athletes from schools across the country watching the U.S. Bank videos or speaking with the financial coaches, according to Julian Valentin, Opendorse's head of customer success.
"After a year or so of being in this NIL world, we collectively recognized that there was a need for financial education resources," Valentin said in an interview. "It's a great starting point and a way that student athletes can learn some of the basics."
Advisors like Bockhorst, Brown and Doman worry that some student-athletes might need services that go beyond a baseline of education.
"These student-athletes are much more vulnerable than perhaps they realize, but certainly more than the general public realizes," Bockhorst said. "That great thing is being diminished so much by the greedy outsiders who want to take advantage."
Some more of the exploitation may have to come to light before there is significant action by the NCAA and at the current patchwork of programs across the country, Brown said.
"There are going to be casualties, unfortunately, in the different areas of this whole NIL thing," he said. "Bad things happen, and then people start to act."
Every school should require students to take financial literacy classes, and the NCAA should create a similar registration process for financial advisors like that of the NFL players union, Doman said. The governing body or the schools themselves ought to provide free background checks for the student-athletes to see any records on potential agents or advisors, too, he said.
He recalled speaking recently with an 18-year-old athlete expected to earn about $4 million to $5 million over his college career. Doman explained the benefit of depositing money at one bank that doesn't charge any ATM fees for using another institution's machine.
"He was silent," Doman said. "I told him, 'You won't have to pay those annoying fees of $4 or $5.' He responded, 'Mark, I've never had a debit card.'"
