One Morgan Stanley exec is changing the way athletes think about their money

Drew Hawkins
Drew Hawkins. Wall Street Week

We’ve all heard the story — A star college athlete gets drafted, gets a big check, buys a bunch of stuff, takes on a lot of debt, has a career ending injury, and files for bankruptcy.
It happens time-and-time again.

Stats show that one-in-six NFL football players will file for bankruptcy after they retire.

But one Morgan Stanley executive has been leading the way in helping athletes and entertainers change the way they think about their money.

Drew Hawkins is the global head of the bank’s Global Sports & Entertainment division — a new division within Morgan Stanley’s wealth management arm that launched in 2014, and currently manages around $32 billion in client assets.

The division has approximately 80 financial advisors, known as sports and entertainment directors, located across 21 cities.

“As we look at the athletes and entertainers, it’s dramatically different as it relates to their needs,” Hawkins told Business Insider. “They have uncertainty around their income as it relates to how much they will make and there’s big disconnects in the longevity of their careers.”>

The average career of a pro football player is around three-and-a-half years. A pro basketball player is four-and-a-half. And a pro baseball career tends to last for about six years.

A major uncertainty is the very real possibility that an athlete could get hurt and end their career.

There are also other challenges that come with being a pro athlete. For example, there’s often pressure from family members asking athletes asking for money. The players also don’t have consistent pay schedules. Football players, for instance, get 17 weeks of paychecks per year, so they have to plan for the off-season when money isn’t coming in.

Then, there are taxes and the amount a player sees on the contract looks dramatically different after paying taxes.

Because of these factors, these individuals have to think about their money in a different way. More importantly, they have to plan early on for a future after pro sports.

“There’s a host of things we do differently for these individuals,” Hawkins said. “We are very aggressive as it relates to the amount of money they should be saving. We’re far more conservative assembling their portfolios to get through that next contract.”

Starting early

Morgan Stanley’s GSE group has recognised that they need to start educating athletes earlier in their careers. To do this, Hawkins’ division started a financial education initiative in conjunction with PwC.

The program brings former pro players, working as consultants to GSE, to college campuses and speak with the athletes about financial literacy.

One of those consultants is Bart Scott, a former NFL star and another is Antoine Walker, a former pro basketball star.

Antoine Walker Wolves
Antoine Walker. Jonathan Daniel/Getty

They both have different stories that resonate with the young athletes.

Scott, for example, received $500 when he signed and made over $60 million during his career. Walker, on the other hand, has more of a cautionary tale.

He left the University of Kentucky after his sophomore year for the NBA. He had a successful career and made almost $110 million in earnings.

He ended up declaring bankruptcy shortly after he retired.

The point of the campus visits is to get people comfortable having this conversation about money. There aren’t any financial advisors in the room. It’s not a suit-and-tie affair. Instead, it’s about having a real, interactive dialogue between the rookies and the veteran players.

“Money is one of these things people are intimidated to talk about. They don’t want other people to know about what they’re doing,” Hawkins said.

He added: “Athletes are very smart, very intelligent. We wanted to get them a lot more comfortable in being able to talk about money, investments, and alternatives.”

Last year, the program was put on in front of 2,800 student athletes. They’re also bringing the program to NFL teams.

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