“Show me the money.” Famous words echoed by Tom Cruise in the 1996 comedy-drama Jerry Maguire. This is a sentiment many young athletes feel as they enter into the professional realms of their respective leagues. While starting their professional career may be the only thing on their mind, they also need to figure out who is going to be entrusted with the responsibility of managing their money, paying their bills, and ensuring they can provide for their family long after their athletic career is over.One story recently published on ESPN.com shows how having a smart, caring, and accessible CPA was helpful for Darrius Heyward-Bey, a wide receiver for the Pittsburg Steelers, in maintaining the majority of his earnings.
Many might think that athletes who score large contracts and have lengthy careers have teams of investment advisors, CPAs, and lawyers to help protect their earnings. While this is often the case, many of these advisors are not successful in maintaining the wealth of their clients. In fact, according to Sports Illustrated, “By the time they have been retired for two years 78 percent of former NFL players have gone bankrupt or are under financial distress; within five years of retirement 60 percent of former NBA players are broke.” These misfortunes however, cannot be put solely on the shoulders of the advisors. As the ESPN 30 for 30 documentary, Broke, highlights; these athletes live a life full of extravagant spending, but aside from the extravagant spending, there are other pitfalls that affect these individuals. These pitfalls include gambling, being traded to new cities, high tax rates, pressures to support family and friends, bad investments, and improper budgeting for the off-season (2). Many of these issues are not exclusive to athletes and tend to affect the lives of many in the United States.
So what is the difference between 78% of former NFL players in financial distress and Darrius Hayward –Bey? His advisor is his mother, and as such, she has earned the status of trusted advisor.
Since I have come into the realm of public accounting one motto continues to be mentioned, “Become the trusted advisor.” But what does that actually mean? Merriam-Webster defines trust as “assured reliance on the character, ability, strength, or truth of someone or something.” However, the term is broader than a simple definition.
In their book, The Trusted Advisor, David H. Maister, Charles H. Green, and Robert M. Galford discuss four different [stages] of client relationships:
Stage 1. At the beginning of a relationship, some clients may view you as a product vendor or as someone who performs one-off tasks requiring a certain technical skill. This is the stage at which most advisors begin their careers, and it’s the easiest type of relationship to master. More important, however, it’s where you can introduce and then build upon your expertise.
Stage 2. At this level, your clients realize that you possess capabilities beyond the technical skills related to the original task you were hired to perform. You can focus on solving more general financial problems using few products and services. In turn, your clients can start to view you as a reliable resource and problem solver for more in-depth financial issues.
Stage 3. Here, you’re looked upon in terms of your ability to put issues into context and to provide perspective. You offer advice and identify client issues as part of an organizational process. At this stage, you can more easily transition to the highest level within the relationship—that of a trusted advisor.
Stage 4. Once you’ve reached the level of trusted advisor, virtually all issues—emotional or rational, personal or professional—are on the table for discussion and exploration. You will be the person the client turns to when issues first arise—times of great accomplishments, triumphs, defeats, and crises. This level is often the most time consuming but also the most rewarding (1).”
Many of us will not serve the ranks of the NFL, NBA, MLS, or MLB elite; but this story can be translated to the clients we do serve and the advisors we should strive to become. Achieving the level of trusted advisor should be a goal for all CPAs. It is here that we will produce the best results for our clients, continue to keep the human connection, grow our businesses organically, and find the most rewarding parts of our careers.
For more details about Darius Heyward-Bey, becoming a trusted advisor, or how not having a sound trusted advisor can go wrong, please read the following links/titles.
The Trusted Advisor, By David H. Maister, Charles H. Green, and Robert M. Galford.
- Commonwealth Independent Advisor, Becoming the Trusted Advisor by Patrick Noonan, CFP
- National Public Radio, ESPN’s ‘Broke’ Looks at the Many Ways Athletes Lose Their Money by Linda Holmes.
Thomas Howell Ferguson, PA