The Final Four financial tips that college basketball's biggest stars will need

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College basketball’s Final Four is now set, as Auburn, Michigan State, Texas Tech and Virginia get ready to play in Minneapolis this weekend.

And after the NCAA tournament is over, the biggest college stars will need stellar financial advice to help manage their lucrative contracts when they turn professional.

Standout players such as Michigan State junior Cassius Winston and Duke freshmen Zion Williamson and RJ Barrett — both 18 years old — will become multi-millionaires overnight. To help prodigies like them, Troy Murphy, a 12-year NBA veteran and a college basketball All American at Notre Dame, recently launched Sweven Wealth, a new RIA in Las Vegas focused on helping athletes, entertainers and inheritance recipients who come into sudden wealth and are ill-equipped to manage the windfall.

“I’ve seen too many people who were just not prepared to navigate the new financial landscape they find themselves in,” Murphy says. “And I’ve seen too many people get an awful lot of bad advice.”
Sweven Wealth won’t manage clients’ money but will be a fee-only, hourly based advisory that will concentrate on financial education and holistic advice, says Murphy, who retired from the NBA in 2013. All of the firm’s profits will be given to nonprofit programs specializing in financial literacy and consumer awareness programs.

Here are four pieces of advice that Murphy has for young athletes turning professional — and wealth managers who will be working with them:

  • Don’t be shortsighted.

Too many young players impulsively go out and spend a lot of money on a big-ticket item like an expensive new car or house, Murphy says. “They think that kind of money is just going to keep coming,” he adds.

Young players should “act as though your first contract will be you only contract,” Murphy says. “Not everyone gets the second contract. We want to explain to young athletes that their careers may be short and they should try to sustain what they get over as long a time frame as possible.”

  • Know thyself – and your new financial situation.
Basketball players who are aggressive on the court may be over confident as investors, says Troy Murphy.

Anyone who acquires sudden wealth needs to “acclimate themselves to the new kind of financial situation they find themselves in,” says Murphy. “It can really be overwhelming and you have to be able to manage expectations and acquire new skills.”

A good place to start, he says, is to “understand your investing personality.”

Murphy says that he saw many basketball players rush headlong into investments they knew little about, while others, like himself, were quite passive, afraid of making a mistake. In both cases, more education and financial literacy are needed, he says.

Paradoxically, the confidence and aggressiveness that make basketball players stars on the court may not serve them well when investing, Murphy says.

“Players who have an alpha, take-charge personality on the court can be vulnerable to being over-confident when it comes to investments,” he explains. “Being a successful athlete doesn’t translate into being successful in other areas.”

  • Don’t misplace trust
Young athletes getting big contracts should be wary of friends or family members who says they will 'take care of things,' Murphy cautions.

After more than a decade in professional basketball, Murphy saw for himself that athletes who suddenly come into a lot of money are “approached pretty much from every angle” by those who may not have their best interest at heart.

Murphy has seen young basketball players give others access to their funds — about the worst mistake they could make, he says.

“All of a sudden they have a lot of money and they’re surrounded by strangers so it’s natural to friends or family members who say they will ‘take care of things,’” Murphy says, “but their interests may not be aligned.”

Athletes and other sudden wealth recipients have to learn to be their own financial stewards, Murphy says. “No one will care as much about your money as you do.”

  • Do your due diligence.

To avoid giving their money to the wrong people, it’s critical for athletes and others suddenly flush with money to slow down and “take the time to do proper vetting,” Murphy says.

Too many young athletes aren't aware of the fees they're paying to advisors.

Sweven will advise clients to research the professional credentials and experience of a potential financial advisor or business manager and run a background check.

But young players too often take “the path of least resistance,” according to Murphy. They may simply ask another player, who doesn’t have any more financial acumen than they do, for a recommendation. Or they end up hiring the person who pursued them the most ardently.

“Not a winning formula,” Murphy says.

In addition, Murphy says he saw too many players who weren’t aware of fee structures and what they were actually paying.

“They really didn’t know how much people who were managing their money and investments were being paid, or if those people were being incentivized to sell the underlying investment,” Murphy says. “I saw a lot of self-inflicted wounds.”

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