Helping Athletes Manage Their Money, in Their Playing Days and Beyond

So, you just signed a big-bucks deal to play center field or quarterback or race around an asphalt track at speeds exceeding 200 miles an hour. Endorsements will inevitably follow. Soon, you'll be shooting apparel commercials and hawking power bars on Instagram during your lunch break.

Millions of dollars could flow your way. And that's awesome, of course.

But how do you safeguard that windfall and make those funds multiply, so you'll have a comfy cushion for yourself and your family?

Before pricing a Ferrari or two, perhaps you should contact Alex Hernandez, director of sports and entertainment banking at IBERIABANK/First Horizon.

Hernandez and his team don't dispense financial advice per se. They're not brokers or money managers. But if you're a major-league athlete and engage their services, they'll keep a watchful eye on your accounts, and, if need be, hook you up with experts who can make those deposits grow.

"We have a fiduciary responsibility to protect the money, and ensure they have the right infrastructure outside of the bank to guide them through the process," Hernandez says. "If they don't have that infrastructure, we will introduce them to one of our partners, specifically in our planning group, that can help with that aspect of their lives."

Hernandez boasts 30 years of experience, including a decade at IBERIABANK/First Horizon. Previously, he held senior posts at Bank of America, Sabadell United Bank Private Wealth Management and SunTrust. At the latter, working in Nashville, he helped manage the careers of high-profile musicians, producers and songwriters.

"There's a common thread," he says. "A sports figure is an entertainer. The money-making ability is no different. There's one underlying similarity: There's a contract. That means your revenue streams are coming from a fixed source, and you have the sponsorships, the marketing."

In the age of social media, with athletes serving as media platforms unto themselves, opportunities abound to attract brand dollars. In our conversation below, edited and condensed, Hernandez explains his role and mulls what the future may bring:

Muse: How do athletes know about you? Do you have a relationship with players' unions, leagues and teams?

Alex Hernandez: There's no set formula. Typically, athletes have casts of professionals such as agents, insurance professionals, financial advisors, managers. Those individuals understand the work we do. They would introduce a bank that understands how the contracts work, how players' careers work, etc. It's also word of mouth. You do right by somebody and that individual speaks to their friend and colleague.

Have you worked with athletes from all the major sports?

Because we're in south Florida, you have baseball, which is a big concentration and generates a lot of business. Football is also a big part of our infrastructure. There's tennis, golf and then I would say motorsports, which is a significant part of our business.

Is your practice evenly split between male and female athletes?

We're pretty even across the board. We have a diverse client set.

OK, let's say I'm a pro athlete. I just signed my first big contract or commercial deal. What's the first thing you tell me?

The first thing that comes to mind is planning. Not just financial planning, but life obligations/planning. Where are you personally? What's important to you? Do you have any family responsibilities—what are they? It starts there. Let's plan on how you're going to budget and how you're going to spend. But also, it's more of the core personal things such as insurance planning, all the fundamentals. Some athletes do have a professional business manager who helps with their financial affairs. If they got a big check from Reebok and they're walking in the door, I am quite confident that they have an attorney. They definitely have a sports agent and a cast of professionals. And then it's just a matter of having the right bank foundation to help them carry out the next phase of their life and career.

I just signed a $10 million contract. What will you do for me and my money?

Let's start thinking about ensuring that you have the right individual to help with your tax planning, because you're going to pay taxes on that money. You're going to need to be prepared for that. The second thing is, do you have excess money after you look at your budget? Let's go through the math of what you're going to have, what you're going to spend—what you want to buy Mom, Dad, sister, brother, what have you. Do you have someone working with you to put money to work in a vehicle that's going to yield more money and be there for you during your career and into retirement? And then: Do you have your personal affairs in order? In your line of work as an athlete, things happen every day … yes, there's insurance, but insurance doesn't last forever. My role is to be objective. I don't charge commissions. I don't charge fees for being a banker. I have, along with my team, the most genuine role to say to somebody, "Where are you? Let me help you and make sure you have the right people around you to make sure you're taken care of."

When young stars come to you, are their heads full of financial misconceptions? Are they just primed to spend, spend, spend?

Not every single athlete has this mentality. But it's what I call the locker room syndrome. Now they're in a locker room, and some of the megastars are making $500 million and traveling all over the world. You aspire to that. In short, it's peer pressure. And sometimes peer pressure can be a problem.

Can you give me an example?

It happens to be a baseball player. This player has 10 cars and wants to go on and keep buying. Now he's up to 15 cars, and he sees it as a tremendous business, because he's buying very expensive cars and selling them. Every time he buys, he buys high. Every time he sells, it's at a low—and he's not seeing that he's losing money.

What might you try suggest for him instead?

I'm not in a line of work where I provide advice on what clients should do and how they should invest their money. My job is the preservation of capital and ensuring that we are protecting them and their paycheck. But it's like being on a diet. Every so often, you need to let your player have a slice of pizza. It's unfair for them not to have a treat now and then. They've earned it. But there's got to be a balance.

Maybe someone came in and, because of your tutelage, they fared extremely well. Can you talk about that?

A first-year basketball player banked with us through a client introduction. We worked with this professional very closely during the first year of his contract. Through daily interactions with the bank and his banker, the relationship and trust grows. The player is truly humble in regards to his spending. He says, "Hey, I'm thinking about buying a car." And we say, for example, "Instead of a Ferrari, maybe consider a Ford Explorer." Next thing you know, the player signs his second-year contract going from a $300,000 first-year contract to a second-year one that exceeds $35 million. Now, there's a sense of loyalty. When you're there at the beginning of career, that you helped him, been upfront, are genuine and have his best interest at heart … he is thankful, because he knows you're going to continue to do right by him.

Is there a cautionary tale? Maybe some hotshot signed a $35 million deal and lost every cent?

In my 32 years, I've been through a fair share. Two things I see: Sometimes, it's the lack of financial literacy or [not] wanting to understand their own business and their own affairs. Second, which is sometimes the downfall, is: A lot of professionals think they're invincible. The faucet is going to run for 10 or 12 years, and all of a sudden, they're on their last-year contract with a million. With certain clients, I say, "Start thinking about retirement, about planning. Your career is going to come to an end and you're not going to have anything." Some of the hard stories are exactly that. Their careers ended, and they have nothing.

Do you suggest marketing and promotional opportunities to athletes?

We have seen where athletes are pivoting more and more today, especially because of the Covid pandemic, and sponsorship dollars are the driver of their income. We are seeing a lot of that. But in that particular world, we don't provide any advice, we don't sit down and have conversations with them.

Are they aware that at an early age, they can be media forces and generate income?

They're aware [of that] … but the success stories I've seen are the organic, non-scripted, unplanned, never-thought-it-would-take-their-career—their social media career—to a whole other level. I've had clients that averaged $1 million a year for the last 15 years of their life and … they inadvertently did something on social media, [suddenly] they're [generating] multimillions … driven by social media.

Did you always want to be a money guy? How did you get on this road?

I'm a music major. I was a guitar player. At a young age, I became a professional DJ. Next thing you know, I became astute to all types of music. I got an opportunity. My uncle was an executive of a prominent bank here in Florida which is now known as Bank of America. He said, "You're going to be a banker. You're not going to be DJ'ing at a nightclub till 6 in the morning." So, I took the job. I went, at 18 years old, right out of high school—first job. He says, "I'm going to put you at an office where we have a bunch of entertainers [and mainly recording artists, as clients]."

How did your transition to sports?

It was one of those things I didn't plan. I got asked to work with one athlete, two athletes, three athletes. But, really, what changed my dimension was that I got hired by SunTrust in 2003 by Brian Williams, who pioneered the concept of sports entertainment—working out of Nashville's Music Row.

How do you see your role evolving in the next few years?

With the recent life-changing events we have with the pandemic … [I'd place renewed emphasis on] planning and ensuring that our clients and friends of the bank have the right plan in place. That they're sitting with a professional—and that these planners are not selling investments or insurance. All they're doing is saying, "This is where you are, this is where you want to be, and this is where you ultimately want to be. And by the way, what the hell are you doing with your money in between?" That's where I think the opportunity is for us in the future, to really help and connect all the dots.

What I'd like to see more of is teaching individuals early on the fundamentals of finance. Things can change, and unless you do things right and have the proper infrastructure … your career can come and go, and the money will be gone. The industry has done a great job of promoting financial literacy and education, but more needs to be done.