Many rookies have spent the last few months doing their best to get their affairs in order.
Grant Williams, who was drafted No. 22 overall by the Boston Celtics out of the University of Tennessee, says one of the biggest concerns he has faced since being drafted is determining how to manage his finances.
“Just being a young guy in the league and neither you nor your family having made this amount of money, you have no idea what to do with it,” Williams said. “I am understanding that you don’t have to compare yourself to everyone else, but you can be honest with yourself and learn what you want to live off of and then create generational wealth or grow money for the future.”
For Williams, who he would turn to for financial management advice was not clear.
“At first I was hesitant to hire a financial advisor, because I wanted to go through one year of knowing where all of my money goes,” he said. “I took a step back, though, and realized it is more money than my family or I have ever lived with, so I hired one. I don’t necessarily need to invest right away, but I could be a guy who learns about the financial side of the business, but also taxes, accounting and bill pay before investing and deciding what I want to do the rest of my life.”
Williams’ thinking about his finances and slowly analyzing how best to invest them are good strategies, according to Todd Burach, a vice president at City National Bank, which works with many professional athletes, including five of the top 20 picks in the NBA Draft.
“The biggest mistake we see rookie NBA players make is trying to do too much too soon,” Burach said. “Even for a first-round pick, the first two years are the only guarantee. They don’t know where they’ll be based or, frankly, whether they’ll even have a career after that. Buying a house for themselves or their mom, or making venture capital investments are great things to be able to do, but we strongly recommend players wait until they have more stability before taking those kinds of steps.”
Financial management underscores what Jefferson identifies as a transcendent issue all NBA players face, regardless of nationality, ethnicity or socioeconomic background. Believing that cautionary tales from other players are the best lessons for rookies, Jefferson shares his own.
“I donated a bunch of money to my college,” he said. “I had no kids before my marriage. I wasn’t paying baby mamas. I didn’t have 12 cars. I didn’t buy a ton of jewelry. I didn’t have four homes. I wasn’t living over the top. There was none of that. But when I looked at my money, the math wasn’t adding up.”
During the 2011 NBA lockout, Jefferson reached out to a Nets season ticket holder, Richard Murnick, who is a financial advisor. Jefferson had gotten to know Murnick casually over the years and knew he was helping a friend look into the friend’s finances. Sensing something was wrong with his finances, he scheduled a meeting with Murnick, who agreed to help audit his accounts.
Jefferson claims that he and Murnick uncovered fraudulent transactions in his accounts. “We started seeing my business manager was cooking the books and lying to my agent, tax person and financial advisor,” he alleged.
In 2017, Jefferson’s former business manager, Theodore Kritza, was indicted in federal court on 22 counts of bank fraud, wire fraud and aggravated identity theft and accused of defrauding Jefferson of nearly $7 million. The case is still pending.
“You should have two financial advisors,” Jefferson recommended. “Never one. If all of your money is with one person and he’s a crook, you’re ****ed. You have to have two financial advisors who are completely separate and not one who your agent introduces you to. If you have two who can double-check each other’s work, one can see if something doesn’t add up. It’s not that everyone is a crook, but part of it is assuming everyone’s a crook.”
City National Bank’s Burach echoes Jefferson’s sentiment.
“Players need to prioritize putting the right advisory team in place, and being coachable off of the court,” Burach said. “It’s so important to follow a formalized process and construct a team with the right incentives to do right by them, and to listen and ask questions every step of the way. It’s also important to have mentors who are not on a player’s payroll, like a business professor from their university, someone who can act as an informal advisor.”
Talking about the money he lost is another lesson Jefferson believes rookies and other NBA players should learn.
“Athletes, because there is so much machismo, don’t want to talk about things that go wrong,” Jefferson said. “The lessons I have learned can help other people, though. I found out about my money at 28, but played until I was 38. I made a ton of mistakes when I was younger, but I lasted long enough in the league that I was able to overcome them.”