Advising Pro Athletes

What’s your investment approach with [pro athlete] clients?

We take a three-bucket approach: an operating account, a reserve account and a long-term account. We allocate one year of spending needs in their operating account and two to three years of spending needs in the reserve account. Anything beyond that, we think about as long-term, investable funds with a more aggressive profile. 

The operating account is holding cash— money markets, something with no risk profile and interest rate earnings. The reserve bucket is more stable, short-term investments, typically bond investing. The long-term investment is heavily, if not entirely, a stock-based portfolio with an eye on the long term. 

The underlying investment philosophy is a passive-mutual-fund and exchange-traded-funds strategy that is much more fact- and evidence-based than discretionary. We are not using stock picking or market timing.

The risk of their careers ending abruptly is significant. We want to ensure they’ve got access to capital that is not highly volatile, that they can use to bridge the gap between professional sports and the next phase.”

Read more insight from Adam Lipton in Crain Currency here.