Guiding student-athletes through the NIL gold rush

The financial landscape has changed drastically for college athletes, and Arch Manning is the poster boy for that change.

Manning, 21, who plays quarterback for the Texas Longhorns, has an unparalleled football pedigree. His uncles Eli and Peyton Manning were both gold-star National Football League quarterbacks. He's named for his grandfather, Archie Manning, the gritty quarterback for the New Orleans Saints from 1971 to 1982.

Arch Manning's talent is comparable to that of his famous relatives, but he has something they didn't have — a whopping $6.8 million name, image and likeness contract that makes him a wealthy man well before he ever sets foot on a professional football field.

READ MORE: 6 tips for advisors to help rich young athlete clients with NIL

Things weren't always like that. For many years, the National Collegiate Athletic Association prohibited college athletes from taking money other than scholarships or some limited stipends. They could not profit from endorsements, sponsorships or anything else tied to their status as amateur athletes. That began to change in 2019 when California passed a law allowing athletes to sign endorsement deals. Then, in 2021, a U.S. Supreme Court and other lower court decisions led the NCAA to suspend its amateur endorsement rules.

I've spent my career working with professional athletes, and now, more recently, helping college players navigate the NIL landscape. I find that their problems are the same as my NFL, NBA and MLB clients', but their youth makes them even less prepared to cope. For an 18-year-old freshman suddenly earning $500,000 a year or more, the temptation for them and their families is to spend it on cars, homes or helping relatives. Predatory investment pitches and scams are never far away.

These newly — or nearly — wealthy young people are just one bad deal or tax blunder away from losing their money. The problem isn't making money, it's not knowing how to protect it or make it grow. Helping these young clients requires an emphasis on education, transparency and team building.

READ MORE: Student-athletes need an assist with NIL taxes

Education

Many of these young athletes lack even basic financial literacy, and advisors should assume they have never filed a tax return or managed credit. Explaining the difference between being paid on a 1099 versus a W-2, or how a $500,000 endorsement net can dwindle to $250,000 after taxes, can be eye-opening. 

Walking clients through the true costs of ownership, illustrating downside risks in real estate deals or highlighting the importance of insurance for public figures are musts. The goal is to help them recognize a bad idea before it takes root.

Transparency

Athletes often get burned because they don't understand what they're signing. Advisors should make sure clients understand every recommendation that comes their way: what the product is, how it works, what the risks are and what assumptions drive returns. 

Over time, athletes who understand what they're invested in become more discerning and confident decision-makers, which only deepens the advisory relationship.

Team building

Perhaps the most critical role advisors play is helping athletes build a qualified, credible team.

Too often, a player's "financial circle" consists of friends, relatives or agents with little or no financial training. Advisors should guide clients toward trusted CPAs, experienced legal counsel and fiduciary professionals who can manage wealth responsibly. Vetting prospective team members is key: Ask how many athletes they've worked with, for references and track records. 

Equally important is cultural fit. An advisor who understands the pressures of being "the wealthy one" in the family or community will connect more effectively than one who only speaks in technical jargon. Empathy and relatability are what keep good plans on track.

For financial advisors, the NIL era represents both a business opportunity and a professional responsibility. A generation of athletes is entering wealth earlier than ever, with little preparation and high exposure to risk. Those who educate, insist on transparency and build strong advisory teams can help clients turn sudden money into lasting security.