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Kristopher Martin at Element Pointe Family Office

Retirement Planning > Spending in Retirement > Lifestyle Planning

Helping Pro Athletes Plan for ‘Retirement’ by 40

By John Manganaro

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Broadly speaking, financial advisors are used to helping their clients plan for a retirement that will commence in one’s 60s or 70s and last well into their 80s or early 90s.

For Kristopher Martin, a vice president and wealth advisor at Element Point Family Office in Miami, these “normal” retirement numbers don’t reflect what his typical client will experience. That’s because Martin focuses on highly successful professional athletes.

As Martin recently told ThinkAdvisor, Element Pointe recently increased its client minimum from $10 million to $15 million, and the firm serves many clients with a net worth far north of the minimum. Given the size of their fortunes, Martin explains, clients in this range have a unique perspective on wealth, and they tend to have a set of goals that varies substantially even from the mass affluent.

This is true for successful entrepreneurs and inheritors of big family fortunes, Martin says, and even more so for people who achieve this amount of wealth at a young age through professional sports. Given the nature of the game, many of Martin’s clients have lifetime earning patterns that are heavily front-loaded, and it is typical for “retirement” to arrive as soon as one’s early 30s.

As Martin explains, serving highly successful professional athletes means balancing today’s lifestyle expectations with the potential for a 50- or even 60-year retirement. It also means serving as equal parts life coach and financial guru.

As explored in the Q&A dialog below, Martin’s clients may sit in a unique niche, but the lessons about planning and client service that he has learned along the way can help any advisor better prepare their clients for both the financial and behavior sides of retirement.

THINKADVISOR: Can you explain how you got into the niche of serving highly successful athletes? Did you always want to be an advisor to such clients?

Kristopher Martin: I definitely have one of those atypical paths into this industry.

I was born and raised here in Miami as the son of a single mom who immigrated from Jamaica, and I followed in her footsteps and went to the University of Miami. Originally, I thought I would study engineering, but I quickly realized that was not the right path for me.

I ended up majoring in business and minoring in music, so from early on I had this connection to the world of events and entertainment. During the summers, for example, I would work internships in New York that eventually led me, after graduation, to get a job working for the concert promotion company Live Nation.

Over seven years there I worked my way up to being one of the booking managers for the state of Florida, which gave me great experience negotiating with booking agents in the theaters and clubs division. It was primarily events with 5,000 seats and below, which meant I was working with a lot of successful but still up-and-coming artists.

As I spent more and more time with the entertainers and everyone surrounding them, I just saw so much there — the good, the bad and the ugly, especially on the financial management side.

That’s what really sparked my interest in this whole world of financial advice for these young, successful people. So, I started interviewing at banking and brokerage firms, and eventually a mentor of mine connected me with David Savir here at Element Pointe, and I realized how the independent RIA space is where I am meant to be.

We had a great connection from the start, and I was actually the first advisor hire after David left J.P. Morgan to start this firm.

What are some of the defining features of your client niche? I assume many of them enter ‘retirement’ much earlier than the typical wealth management client?  

Yes, so with the high minimum that we have, we are generally going to be working with those second-contract or third-contract athletes, so they really have been successful in their world.

As you would expect, a lot of my clients’ earnings potential is maximized in the first third of their lifetime. Hopefully we see them play well into their 30s, depending on the sport. With football and the NFL, as you can imagine, retirements tend to come a little earlier compared with baseball or basketball.

Beyond that, however, this client niche is very diverse in terms of how people understand and view their wealth. So our approach is to really build an individual’s plan around lifestyle questions and their long-term life goals.

We also have a lot of really personal discussions that go beyond wealth. Many of our clients are people who are really identified by their participation in their sport right now, but these are people with big life goals and identities outside of their sport.

As a fee-only RIA, we have the space to get to know them and make sure we are the right fit, rather than just focusing on investments and portfolios.

What is interesting is that, with the $15 million minimum, many clients could indeed just choose to retire and then do nothing for the rest of their life. So, that’s a big part of the planning process. We help them figure out what they are going to do with their time and their identity. All advisors do this, but for my clients, it’s just such a big question because of their younger ages.

Do you find that many successful athletes also have an entrepreneurial spirit?

I would say that they tend to have a competitive spirit and a curiosity-driven spirt.

In a sense, these people are already all entrepreneurs. They have earnings that resemble those of very successful small and even midsize businesses out there, and the fact is that the earnings potential of highly successful athletes keeps going up and up.

We are seeing more mega-contracts with the type of clients that I work with, and that is opening up some incredible opportunities for these athletes to impact their families and communities.

Look, highly successful professional athletes have always made a lot of money, but this is almost a new world we are entering. They are generating huge contracts, and there is more guaranteed money today.

I mention all this just to point out that the sky is the limit for a lot of these athletes nowadays, so it’s really exciting to be able to work wit them to decide how they want to deploy their wealth and what they want to accomplish in business, philanthropy and life.

What are some of the bigger challenges that come up in this niche?

One thing to mention is that a lot of advisors who work with athletes are more worried about pleasing their clients than they are about really ensuring we are achieving the best possible outcome, so that’s something to be aware of.

As with all highly wealthy clients, it’s really important for the advisor to offer that sense of realism and responsibility for athletes. Yes, they have a lot of wealth, but it’s not infinite. Something we do, for example, is make sure we are also planning for those potential bad outcomes that could really derail the client.

For example, we build the main plan based on their future earnings expectations, but we also come up with a backup plan for how they could manage if they happen to have a career-ending injury or that last big contract just doesn’t materialize.

There is also just the normal challenge of educating the client, because the world of financial planning is pretty far away from what they are doing in the day-to-day.

For some athletes, the meetings with us could be the first time they are learning about asset allocation, stocks, bonds, etc. That’s part of the reason why we set a higher minimum — so that we can really slow down and spend that extra time learning about and educating our clients.

I would emphasize again that our position as an independent, fee-only RIA makes all this work so much easier. Our athletes really value the transparency and the focus on the relationship, not on investment product.

You have said you are very optimistic about the future of the practice. How do you see the firm evolving in the years ahead?

Yes, I think the sky is the limit here, and not just because revenues are catapulting upward in the world of professional sports.

We are seeing more guaranteed deals, and even players coming off the bench are making really good money, so we are bullish about this space and about the firm’s future in general.

But there are some trends to be aware of. For example, we are seeing private equity companies coming in and buying minority stakes in many different RIAs. Personally, I wonder about what pressure that may create for the industry. It will be crucial to maintain our independent perspective and to ensure our clients understand why this is so important.

Pictured: Kristopher Martin of Element Pointe Family Office

John Manganaro

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