Also posted in the Sports Forum as well...

Financial Advisers Help Pro Athletes Stay Inbounds

Renee McGaw
Denver Business Journal
Friday, November 30, 2007



Left to right: Michael Boston, Ian Barclay and Craig Jones are principals of Jones Barclay Boston, a wealth management firm that has carved out a successful niche serving professional athletes.

They earn hundreds of thousands, even millions, right out of college. They rarely have any experience managing wealth, and their vast salaries likely will end by the time they're 30.

Wealth management firm Jones Barclay Boston & Co. has carved out a successful niche serving professional athletes, a type of client that turns the traditional client profile upside down.

"Probably the key difference between athletes and all the other clients we manage is how long the cash flow is going to have to last," said Craig Jones, a principal in the 13-year-old Denver firm. "If you're dealing with someone who's 60 or 65 years old, he may be looking at 35 or 40 years, and his lifestyle might even slow down. But when you're dealing with someone who is retired at an average age of 27 or 28, you still have years and years left."

Professional athletes make up about a third of the 110 to 120 clients currently handled by Jones and partners Ian Barclay and Mike Boston. The firm's total assets under management are roughly $200 million; its average client size is about $2 million. Besides athletes, the firm also serves retired executives, entrepreneurs, doctors, divorcees and others.

Athletes are "a great niche for us, but it's not all we do," Jones said.

Athlete clients include Ty Law, a cornerback for the Kansas City Chiefs; Michael Redd, who plays basketball for the Milwaukee Bucks and is expected to play on the U.S. team at the 2008 Olympics in Beijing; and Marc Crawford, the former Colorado Avalanche coach who led the team to its 1996 Stanley Cup, then coached the Vancouver Canucks and now coaches the Los Angeles Kings.

Other athlete clients include Olympic gold medalists, Stanley Cup winners, Super Bowl champions and All-Star participants in hockey, basketball and football, Jones said. Of the firm's athletic clients, about 60 percent play football, 30 percent hockey and 10 percent basketball.

Jones, a lawyer with an MBA, met Barclay and Boston when all three worked in the international tax practice at then-Price Waterhouse in Denver. Jones later went on to other jobs, including senior analyst at Pepsi and director of planning at the Rocky Mountain News.

"But I stayed in touch with Mike and Ian, and we still had our dream," Jones said. They raised private startup capital, became registered investment advisers and started the business in 1994.

They didn't intend to handle athletes. A referral brought them their first: a recent college graduate who had just signed with the NBA.

"We felt confident going in, because really with athletes as well as any executives that we represent, or retirees, or divorcees, it's still the same concept," Jones said. "What we didn't have experience in was managing money for someone who came into sudden wealth at a very young age, and in some cases without a lot of background in money management or wealth management."

Boston said, "I remember sitting down the hall from Craig, listening to him give [that client] some hard advice, and I thought, 'well, there goes our entry into the athletic field.' I didn't think the advice would be welcome. But it was."

The client ended up playing four or five seasons with the NBA, then played in Europe for a while before retiring from basketball. He made fairly good money during those years, but not enough to live on for the rest of his life, Jones said. Because sports careers are unpredictable, the goal with many clients is to preserve capital to use as a supplement to a second career.

"No client ever takes 100 percent of anybody's advice. But he took enough of it to keep him going, and he's been a great client," Jones said. "He's working now; he has a great job. He was able to buy a nice home, he has a nice wife, and he's living a normal life."

Their first client, Jones said, had one valuable asset from the start: a college degree.

"There is a correlation between education and success with this stuff," Jones said. "It's like the rest of the general public. I could go down my client list right now: The ones that either got the degree or pretty close, there's a success correlation."

The firm relies entirely on referrals for new business, and makes its money by charging a percentage of assets under management.

Jones said the firm never would want to represent only athletes. "That business, because of the education component of it, takes a lot more time. When you look at your profit margin per client ... you have to be willing to do that."

The educational component can extend to the client's family.

"A while back, they had a high school graduate who had signed an NBA contract, not for a lot of money," said Ed Turner, regional vice president at Charles Schwab Institutional in Englewood, which performs custody services for the firm. "A couple of years in, the ball team was anteing up and signing him to a giant contract. The mom and stepdad wanted to make sure everything was real. I'll never forget Craig calling me and saying, 'Can we come to Schwab? They just want to make sure you're real.'"

Professional football players' incomes can vary widely, ranging from six to as much as eight figures, for a 17-week season. Also, some receive additional signing bonuses worth millions. Basketball and hockey players are paid over a roughly six-month period, "unless that player opts to have a 12-month payout, and in some cases we've advised a client to do that, depending on the client," Jones said.

Professional football players' incomes can vary widely, ranging from six to as much as eight figures, for a 17-week season. Also, some receive additional signing bonuses worth millions. Basketball and hockey players are paid over a roughly six-month period, "unless that player opts to have a 12-month payout, and in some cases we've advised a client to do that, depending on the client," Jones said.

Jones said he often advises pro athletes to choose a 12-month payout.

All athlete clients are advised to have their paychecks deposited directly into their investment accounts, and are then automatically wired back a lifestyle allowance. Jones, Barclay and Boston retain limited power of attorney to invest clients' money in publicly traded stock. "We can't take the money and invest it in a real estate deal or a private equity deal; to do that, the client has to sign separate paperwork," Jones said.

They're cautious about alternative investments, generally steering clients away from angel investing or restaurant deals.

"We hate restaurants," Jones said. "And I distinguish restaurants from fast-food chains. To me, fast food chains are franchisors distributing food. A restaurant is a standalone situation where you're trying to make a buck 24-7. You're in there worrying about your liquor license and whether employees are stealing from you."

Jones Barclay Boston & Co. started out with offices in Cherry Creek, then spent a few years downtown. Earlier this year, the firm bought its own building, a 1903 Dutch Colonial house near City Park. After months of renovation, they moved in several weeks ago.

But don't expect to see any sports memorabilia displayed there.

"We don't keep it in the office, purposely," Jones said. "We're not star-struck, and I think our clients respect that."

Just wished the pro athletes took advantage of them EONs ago.