Why Your “Nice Guy” Broker Isn’t Enough | Zach Miller & Erik Averill | NFL Players’ Podcast #3
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Episode Summary
As an NFL player, you're in the top earning bracket in the world. How should you be handling your net worth? How did you determine who currently manages your net worth? The problem with many NFL players is that they end up with a “nice guy” broker who manages their assets, but not much else.
As an NFL player, are you only getting “JV Team” advice?
In our last episode, we began to discuss how the wealthiest people – Zuckerberg, Oprah, the Vanderbilts handle their financial situation differently than the rest of the world. Ultimately, what we said was that NFL players need to think like Jerry Jones, John Mara, Dan Rooney and understand they should demand the same level of service as these NFL billionaire owners.
We pick up that conversation this week with Zach and Erik discussing the specific strategies when it comes to optimizing your net worth as an athlete and why you should view your net worth just like the wealthiest in the world do and demand the same level of expertise with your finances that you would from your trainers, doctors, and nutritionists.
Episode Highlights
The difference between how pros vs amateurs approach their money (0:07)
Why athletes deserve the family office model instead of an asset management firm (1:06)
“So first of all if you heard that they had their money at UBS Morgan or Merrill, you'd laugh, just knowing everything I know about the industry now. And that's not what the wealthy do. They have a family office and that's why I wanted to come work at AWM is because I know that the family office model is what the players deserve and it will help them treat their wealth the right way.” Zach Miller
“Athletes have worked their whole life to become the best at their craft. They should demand the best from their advisors.” Zach Miller
The family office and multi-family office models explained (2:15)
One of the biggest financial mistakes a pro athlete can make (4:52)
“You don't need a friend. What you need is someone that really gives you the tough news sometimes or helps correct you when you need a sounding board of a financial decision.” Zach Miller
Accessing the appropriate expertise to address your unique financial situation (7:10)
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+ Read the Transcript
Erik Averill (00:00):
Hey, everyone. Welcome back to another episode of the NFL players podcast. We are Zach and Erik and we ended last week talking about what do the wealthiest people in the world do when it comes to their net worth. We talked a lot about if you're an owner of a team you're constructing a front office, you're constructing the best players in the world that you are going to help lead to W's on the board and hopefully a Super Bowl championship.
And so we want to talk about what are those strategies when it comes to optimizing your net worth as an athlete. And so Zach, I would love to dig into this conversation. When you think of names today of Mark Zuckerberg, Jeff Bezos, Oprah, or maybe it's the iconic historical names. Everybody knows about the Rockefellers, the Vanderbilts, how did they, and how do they approach their money as a professional versus the way that a lot of amateurs do?
Zach Miller (01:58):
So first of all if you heard that they had their money at UBS Morgan or Merrill, you'd laugh, just knowing everything I know about the industry now. And that's not what the wealthy do. They have a family office and that's why I wanted to come work at AWM is because I know that the family office model is what the players deserve and it will help them treat their wealth the right way.
Because it's so involved in the whole financial life of the person that it's why Bezos, it's why Zuckerberg, it's why they use family offices, because they're not going to put their money at these asset management firms because it's comical to even think that they might think that.
Knowing that it's what athletes deserve. And I want to them to understand what kind of service they should be demanding and that they should want that and seek that out as the standard, because it is what they deserve as an athlete. They've worked their whole life to become the best at their craft. They should demand the best from their advisors.
Erik Averill (03:19):
Yeah. And what I think would be helpful is just breaking down what a family office is. Really why we talk about the ultra-wealthy of the way they approach it is because we know this, what is the best that money can buy is if you have no limitations, what would you do to optimize your family's net worth?
And this is what they do instead of going and hiring a Wall Street firm that has a bunch of different products and a limited platform that they're trying to sell things to, and also serve hundreds of thousands of clients, the family goes, I'm not interested in what Morgan Stanley is trying to optimize. I care about the Zuckerberg family.
So what I'm going to do is I'm going to go hire specifically my own CPA, my own CFP, my own CFA, my own team to pay all my bills to literally every aspect of my life.
I want to know two things. Number one, that it's coordinated and the definition of success is everybody's true north. What they're optimizing for is what's in the best interest of Mark Zuckerberg. And so as a family office the best that advises how do I know that everybody's in alignment to do what's in my best interest and that I have open architecture, I have access to the best of what's available in the world.
Now we would all though love to have our own family office. It's estimated that it takes about a $100,000,000 of liquid net worth to be able to acquire all of that talent. Because it's very expensive. If you're trying to hire AWM to work only for you better have a 100,000,000.
The good news is this model has been scaled and what's happened is Zuckerberg talks to his neighbor and goes hey, we're in the same boat. We both own technology companies. We have the same needs. Let's just share the cost of the services that are going on. I'm still holding true that now everything's still in my best interest. It's still an open architecture, meaning that they have no proprietary products they're going out and sourcing the best of what's available for my family. And so that's the structure of a multi-family office saying is it's independent. It is in the best interest of the clients. And it's completely coordinated touching every aspect of your life, that money touches.
Can you talk a little bit about, you made a comment in episode one, I made a mistake of having a client or a in a my advisor was at Merrill. Like what's the breakdown with the wall street firms.
Zach Miller (05:57):
The biggest mistake you can make is just hiring a single financial advisor at one of these firms because they all are really competing with each other at the same firm offering the same products that you could get anywhere else. You could one at go on a discount brokerage online and get the same access to the same products that they wrap up as proprietary. And there's nothing special that they can get access to in the public markets that doesn't exist elsewhere.
So the biggest mistake is thinking like, oh, I just need that one guy, that one trusted person, when it's... Of course you want a trusted person and you want to like them but you should demand more. And I wish I demanded more of my team and it needs to be a team.
You need to have a tax specialist, you need to have an investment specialist. You need to have a certified financial planner. These are no brainers that the wealthy put on their teams and the more wealth you have the bigger your team can get. And the more save... Whether it's tax savings, whether it's just concierge services, the more money you have, the more value you can get.
And so with athletes they need this model. And so to be able to do the multi-family office is something that I wish I would've known more about when I was a younger player and I think it can really benefit so many guys, as far as doing what's in the best interest. Being independent. Really trying to care about growing their net worth and helping them to reach the goals that they... They all have goals. Whether it's professional family, that helping them reach those outcomes they desire and, actually doing what's in their best interest.
And not just being their friend. You don't need a friend. What you need is someone that really gives you the tough news sometimes or helps correct you when you need a sounding board of a financial decision.
Those are the quality advice that family office provides. That if you just have an uncoordinated strategy, you're just not doing it right.
Erik Averill (08:14):
Yeah. And I love the analogy. It seems like we'll use this a lot, but around your strength and conditioning about optimizing your career is when you hit the off season, you don't just roll over to LA fitness for a few reasons. They have equipment there. They actually have trainers there. Some of them hold the same designations that the specialized trainer does. But what we fundamentally understand is that's for the massive fluent.
It is the retail shop that shows up where you pay whatever 20 bucks a month and you get access to some weights, but you don't get access to the best nutritionist. You don't get access to the best speed coach. You don't have a customized plan that's uniquely built for you.
Those place exists in very small amounts. It's a premium price to attend those, and it's not open to the public. And it's the same thing when it comes to your money is the Merrills the Morgans, the UBSs the Wells Fargos those shops have about 18,000 financial advisors working for that one company.
In 2019, they brought on 44,000 new accounts at Merrill Lynch. They referred internally 56,000 referrals inside their own company. What that means is hey, I kick you over to sell you a mortgage, which I kick you over to sell a piece of insurances. They're figuring out how do I get the maximum wallet share out of my client? How do I extract money from my clients, my customers, as opposed to no, the same way you optimize off the field. You figure out who are the best in the world that going to help me perform on the field.
The good news, the family office exists in the real world for professional athletes. And I think you asked the question of why haven't I heard this before? It's because the traditional family office, you have to have $50 million to even gain interest from them.
And that's what we set off over a decade ago is to build AWM to say, let's take the family office model and let's make an investment. Let's take it to the professional athlete world that you know what, you may not have $50 million today. You don't have $25 million yet, but you have the complexity and you have the needs. So let's provide the solution because we're former athletes, we know what we need and we have the expertise to do it.
And so in the next episode we're going to break down what are your unique needs as a professional athlete that demands the necessary services of a family office, and why confusing an investment manager for a wealth strategist is one of the biggest mistakes that we see. And so until next time, stay humble, stay hungry and always be a pro.