Financial planning for the rich and famous

In a nutshell, the average person’s financial life involves earning active income over the course of a multi-decade professional career. That income is saved and invested to build up wealth, which is then used to support various milestones and goals such as marriage, parenthood, homeownership, and retirement.

Of course, not everyone lives that average life, because not everyone has an average career. For example, athletes and entertainers who achieve a certain level of success can quickly ascend from modest means to income and wealth beyond their imagination. Navigating that change in financial altitude can be difficult, which is what motivated the creation of the Sports & Entertainment Accredited Wealth Management Advisor, or SE-AWMA program in the U.S.

“Typically when we create a course, that’s in response to outside demand,” Dirk Pantone, president of the College for Financial Planning, a Kaplan company. “In this case, Bank of America Merrill Lynch approached us a couple of years ago because a growing group within the company was finding success within the niche. They wanted to formalize the expertise needed to address that clientele’s unique needs.”

Founded in 1972 by a group of 12 individuals, the College for Financial Planning has established itself as a global standard-setter in holistic, professional financial planning. Realizing that financial advice goes beyond selling financial products or recommending investments, its founders established the world-renowned CFP program. Today, it offers a variety of programs, including a Master’s in Financial Planning and Master’s in Finance, as well as designations to address a variety of needs.

“The college's mission is really to provide a lifetime of learning,” Pantone said. “We’ve designed our courses and designations to be stackable, meaning that they all support our core CFP program.”

Pitfalls and philanthropic pursuits

Over months of conversations with Merrill Lynch, the college developed a clear picture of the financial challenges that high-net-worth individuals working in the sports or entertainment space typically encounter.

Many cautionary tales, for example, involve a talented artist or player who goes from humble beginnings to fabulous riches, only end up blowing through their fortune just a few years after retiring. There’s also the probability of family and friends preying on them as soon as they join the ranks of the rich and famous.

“As an advisor to these clients, you should be able to watch out for signals of possible financial exploitation,” Pantone said. “You also have to help them understand that their money has to last a lifetime.”

Some clients, especially those who wish to make a broader impact, may have to make their money last even longer. He gave the example of Warrick Dunn, a former National Football League player who spent his entire eight-year professional career in the state of Florida. A first-round draft pick who played for the Tampa Bay Buccaneers, he collected numerous accolades, including Rookie of the Year in 1997 and a nomination to receive the Heisman Trophy.

“Today he has a foundation, Warrick Dunn Charities, which engages in activities like building houses for lower-income families in the Florida area,” Pantone said. “But instead of just giving them away, the foundation helps with furnishings and down payment assistance. That way, they can learn to take financial responsibility for their situation as well.”

Based on those conversations, the college determined that its program for wealth management advisors, the AWMA program, covered most of the skills and knowledge that professional planners need to work with clients in the sports and entertainment space. The AWMA program, Pantone explained, takes some key elements from the core CFP program like investments, estate planning, and tax planning, and builds upon those with competencies needed by professionals catering to the affluent.

“From there, we built up the SE-AWMA designation by adding pieces that would be critical for the sports and entertainment advisor,” Pantone said.

From personal coaches to team players

A substantial part of the SE-AWMA course, he said, covers behavioural aspects. That includes knowing how to talk to clients, how to communicate advice that’s in their best interests, and how to work with other professionals and agents in a team.

“Many of these athletes and entertainers come with managers, agents, and other people representing them, so you have to be able to talk to all of them,” Pantone said.

Advisors to affluent entertainers and athletes must also be ready and able to wade into the arena of family dynamics. As Pantone explained, some clients need a financial professional to mediate and turn down relatives who, for example, might want a $100,000 loan. To fulfill their fiduciary duty, having the behavioural and social tools to gracefully play the part of the “bad guy” can be crucial.

Another unique element of the SE-AWMA relative to other programs is its coverage of unions. Properly advising athletes, he explained, requires an awareness of nuances like collective bargaining within professional sports, for example. While the program is designed to be as applicable across a wide range of sports and entertainment clients as possible, its development in the U.S. means it specifically discusses unions within the NFL, Major League Baseball, and other professional organizations within the country.

“The course also draws on case studies of the well-documented financial affairs of some legendary artists and sports stars,” he said.

With the rise of technology, some personalities have been able to carve out a path to success as influencers and entertainers on social media. Because it’s an emerging niche, Pantone said, the SE-AWMA course doesn’t have case studies specifically focused on influencers yet, though he argued that its curriculum is substantially transferrable and applicable to them.

The designation was officially unveiled in May, and has since attracted inquiries from very interested parties – not just advisors, but also other professionals like lawyers and accountants who feel they would benefit from the knowledge. But in recognition of Merrill Lynch’s substantial investment and contributions to the development of the course, the college is offering the SE-AWMA designations exclusively to their advisors until May 2022, from which point it will be rolled out to a broader audience of learners.

“Merrill understands fully that to truly validate this as a credential, it has to be made public,” Pantone said. “The base course for the SE-AWMA, which is the AWMA, is already open to all. So those who haven’t already may consider getting the heavy lifting out of the way by taking the AWMA today.”

Some may look at the SE-AWMA as just another addition to the already-confusing alphabet soup of titles and designations across the financial services industry today. But from Pantone’s point of view, such criticisms don’t appreciate the sheer variety of financial knowledge across the industry and around the world.

“You can’t reasonably expect someone to absorb the entirety of financial knowledge,” he said. “That’s why we have the CFP as a core program, and have built a stackable curriculum based on the demands of clients. Our designations are designed to align with the evolving needs of professional financial advisors and planners, both at the career and industry level.”