By Eddie Greenblat, Fall 2018 IAC Student Intern
If it sounds too good to be true, it probably is. I’ve had the unfortunate experience of buying a couple of cars in my life. Every time I walk into the dealership I feel like I’m a part of school of fish that could be eaten by a shark at any moment. I’m not a professional athlete, but I imagine some of them feel a similar feeling when they encounter financial advisors.
In October 2016, 60 Minutes produced a segment about Jeff Rubin. Rubin served as a financial advisor to some of the NFL’s best players, including Fred Taylor and Vernon Davis. Rubin, who the NFL Players Association listed in their directory of financial advisors, placed his clients’ money in an electronic bingo game that would appear in casinos in Alabama. Two weeks after the casinos opened then Governor Bob Riley sent Alabama State Troopers into the casino to shut it down.
Rubin is one of many though. Former NBA star Kevin Garnett has sued a former financial advisor and his firm for $77 million dollars after the firm allegedly took no action when they discovered their employee, Charles Bank, stole millions of dollars from Garnett. Garnett only filed suit after Banks was sentenced to four years in federal prison for stealing from Tim Duncan, another NBA superstar.
The NBA and NFL now have programs to help players decide on a financial advisor. However, this Market Watch article shares some important things to remember when selecting a financial advisor. First, nothing in the investment world is guaranteed, so if a financial investor guarantees a return, they likely are not being 100% truthful. Second, make sure you know what type of professional you’re working with. Not all financial advisors are made the same. Check out this John Oliver clip (warning, John Oliver’s show is on HBO and as such, has some explicit language) at 6:00 that details the differences between fiduciaries and non-fiduciaries. Third, search your advisor online and run a broker check on them to see if they have any skeletons in their closet. Lastly, make sure your advisor produces disclosure forms and periodic updates about how the investments are doing in the market.
Moral of the story: Do your homework on the people that control your financial future.