NBA Finals Bonus: MAI Capital's Joe McLean on Being the NBA's 'Money Whisperer'

On this special bonus episode as Jalen Brunson and the New York Knicks take on Victor Wembanyama and the San Antonio Spurs in the NBA Finals, Barry speaks with Joe McLean, managing partner of sports & entertainment at MAI Capital Management. Known in NBA circles as being the "money whisperer", Joe discusses how he pivoted from a playing career to managing money for high profile celebrities and professional athletes. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 2:11Speaker 01

  This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

• 2:16Barry Ritholtz?

  This week on the podcast, what a fascinating conversation. Joe McClain, managing partner at MAI Capital, began his career as a professional and college basketball player before effectively becoming the money whisperer to pro athletes. He works with pretty much all major athletes across every sport, basketball, football, hockey, baseball, golf, NASCAR, you name it. I thought this conversation was really fascinating. Obviously, the average person who's listening to this doesn't have a $100 million contract,

• 2:57Barry Ritholtz?

  but a lot of the ideas, a lot of the rules, a lot of the ways of thinking about money with college athletes and professional athletes are surprisingly applicable to the average investor. I thought this conversation was really fascinating. The idea of saving a substantial percentage of your income in your first bucket, and once that's covered, moving to a second bit of saving that you're going to be able to live off in the future, that's your growth and investing bucket before the fun entrepreneurial types of investment. I thought this conversation was fascinating, and I think you will also.

• 3:41Barry Ritholtz?

  With no further ado, my interview of MAI Capital's Joe McClain. I've been looking forward to this for a while. I got to start with your undergraduate years, four years at Arizona, Division One ball. What was the original career plan?

• 3:59Speaker 03

  100% to play professional basketball. The time I was eight years old, Michael Jordan, Larry Bird, posters on the wall. I remember when the ball was put in my hand, that's all I wanted to do. I was super blessed. Grew up in Pittsburgh, Pennsylvania, and then my dad, T. Boone Pickens, in 84-85, he worked for Gulf Oil, and we either had to move to Houston or San Francisco Bay Area. And so we chose the Bay Area and it became Chevron. And I met a point guard named Jason Kidd.

• 4:27Barry Ritholtz?

  Oh, really?

• 4:28Speaker 03

  Who was, uh, who was my high school AAU point guard. And, um, so I was kind of blessed to be put in that position. The whole world would come watch him play. And I got seen by all the right people. And my mom was the one who decided which really what college I was going to go to. Because during the recruiting visit, Lute Olson and Bobby Olson, his wife showed up. And she really connected with, with his wife. And she said, that's, that's who you're going to go play for. I want you to be in that environment.

• 4:55Barry Ritholtz?

  So, so we'll, we'll get to Lute in a minute.

• 4:57Speaker 03

  Yeah.

• 4:58Barry Ritholtz?

  Did you have height in high school? Like, when did you shoot up?

• 5:01Speaker 03

  I did. I was always six, three, six, four, and then grew another two inches in college. Was a, I, I, but a full disclosure, I peaked around 19.

• 5:09Barry Ritholtz?

  Right.

• 5:10Speaker 03

  Uh, uh, cause everybody, I remember, um, I'm fast forwarding, but I was in an NBA pre-draft camp. And I was six foot six. I think it was Ron Artest was right, right on the same height as me. And then we were standing in our underwear and he, he extended his arms. And I had, I was in proportion and he was not in proportion. I think he had a six foot 10, six foot 11 wingspan. And I was like, I don't know if I'm going to make it.

• 5:33Barry Ritholtz?

  So Lute Olson, Hall of Fame coach, right? Multiple trips to the final four. You played all four years under him, averaging 10 points a game. Small forward, what was your position?

• 5:45Speaker 03

  Shooting guard and guarded, guarded the small forward and big forward positions. Yeah, it's, I, I had to learn very quickly how to, how to hold on to a guards jersey. Cause everybody was getting much quicker, much faster than me.

• 5:56Barry Ritholtz?

  And so you graduate college, uh, you, you start playing pro in Europe. Did you, tell, where did you play? What countries?

• 6:03Speaker 03

  So they, you would basically, I would try out for an NBA team and then get cut. And then you had two decisions to make. One, go to the minor leagues, which is now the NBA G League. It was the CBA at the time. So you go to Bismarck, North Dakota. I lived there for a year, living in Bismarck Hotel and, um, traveling by bus. And then decided to go to Europe for the, for the years after that. So I played in 11 countries because there's only two Americas per team, no binding contracts. You lose a couple of games, they'll rip up your contract and send you home.

• 6:29Barry Ritholtz?

  Really?

• 6:29Speaker 03

  And so, uh, it's a great way. Way to see the world.

• 6:32Barry Ritholtz?

  What countries did you, did you play in?

• 6:33Speaker 03

  I played in, played in Spain, Portugal, China, Australia, Cyprus. I moved to Ireland for a year to try to get dual citizenship. Cause then I wouldn't be counted as one of those Americans. So it's, it's the equivalent of probably division three basketball. I was sponsored by a pub, uh, lived in a town called Ballina, which was eight thousand people, eighty four pubs. We were sponsored by Team Longnecks. I made three hundred dollars a week and it was, I have family, family for life there.

• 7:00Barry Ritholtz?

  Really?

• 7:00Speaker 03

  It was a great way.

• 7:01Barry Ritholtz?

  That, that sounds like, that sounds like a blast. Uh, so what was the moment when you kind of realized, hey, maybe a pro career isn't my future? What, what, what was that come to Jesus moment?

• 7:12Speaker 03

  They were, they were both on the court and off the court. Um, the closest, I will say the closest I ever got to the NBA was when they went on strike. And the Sacramento Kings had the seventh pick in the draft and I lived in the Bay area. And I knew they didn't have any NBA players to work out their draft picks. And so, uh, I went and called the scout and said, hey, I'll bring my own lunch. You don't have to pay me. I'll just guard the guys.

• 7:35Barry Ritholtz?

  You're just red shirting the whole, gotcha.

• 7:37Speaker 03

  And I couldn't believe it, but he said, if you can be here next Tuesday, show up. And so Tuesday turned into twenty two straight days of workouts. Uh, if I was just literally working their draft pick out, they ended up taking Jason Williams, but I, I got to listen to everything they were looking for and the process and long story short, twenty three, the twenty third day, nobody else was there but the coaches. And they said, we're working you out. Today's your day.

• 8:01Barry Ritholtz?

  No kidding.

• 8:01Speaker 03

  And made it all the way through pre-draft, um, all the way through the final cut. I was getting on the bus to go to the very first game, opening day, and I watched Oliver Miller walk past me in the locker room. And I was like, well, Oliver Miller's not on our team. And then I realized, no, he's coming to take my spot. And so Rick Allman looked at me and his head went down. And I don't even remember what he said. I just knew that was, that it was over.

• 8:27Barry Ritholtz?

  Right.

• 8:27Speaker 03

  Right. That was as close as I was going to get was, was walking to the bus. And now I had to figure out what to do next.

• 8:34Barry Ritholtz?

  So, so how do you get from, uh, you know, working out with a, uh, NBA team to pivoting into? To finance, what was the, what was the factor that tipped you that way?

• 8:45Speaker 03

  I went in, I had no idea what to do. All my buddies at the time, this is 1999. So everyone that I knew in the Bay Area was working for a dot com company. Everything was, everything was dot com at the time. So I did all my interviews and I would show up in a suit. I would go to Oracle and I'd go to pets.com. I'd go to, I mean, literally, I did, I think I did 50 plus interviews.

• 9:06Barry Ritholtz?

  Wow.

• 9:06Speaker 03

  And I would show up in a suit and everyone else was in flip flops and T-shirts and it's like, this doesn't feel right. I need structure and so I started playing basketball for this club called the Olympic Club. And I met lawyers and accountants and financial service people. And so they put me in the direction to interview. I interviewed every financial service company. A lot of the big ones, the Goldman's of the world said, go get experience and come back. And then I met an old former athlete who had success at Franklin Templeton. And he said, I'm going to give you a shot. I didn't even know what I, I had experience investing in mutual funds with the money I made in Europe. But didn't really know what it was. And so I just said yes, because he looked like a coach to me.

• 9:45Barry Ritholtz?

  Huh.

• 9:46Speaker 03

  That was it. That was the only reason I got into financial services.

• 9:48Barry Ritholtz?

  And how'd you do at Franklin Templeton? They're great. The trillion dollars, great shop. Jenny Johnson is the CEO.

• 9:54Speaker 03

  Uh, honestly, the best company I've ever worked for.

• 9:57Barry Ritholtz?

  Wow.

• 9:58Speaker 03

  And for transitioning, the transition for an athlete to do anything else is a very, very difficult thing. Because it's, the thing that you have as an athlete is you have structure, you have a schedule, you have a sense of accountability, you have goals. You have a connection with a team, you have all of that. And the day you stop playing, you're on an island. There is no schedule. There is no level of accountability. And so what they gave me was, and this was, I think you wrote it in your first book. The first thing that, that this Jim Escobedo told me, he was my manager at Franklin Templeton. He said, you don't know nothing about nothing. And he goes, the sooner you learn that, the sooner you'll be curious to start having this level of intellectual curiosity. And I, I hold on to that every day. It's one of the great, great gifts he gave me, uh, honestly. And they.

• 10:43Speaker 03

  What I got to do at Franklin Templeton was spend six years in a car. I think I drove over 400,000 miles as a wholesaler, all over the state of Pennsylvania, all over the state of Arizona and Northern California were my regions, and do hundreds of rubber chicken dinners, communicating. I wasn't the advisor, but I was working with a financial advisor. And I got to just meet hundreds and hundreds and hundreds of people going through different situations with their money. And I just, I learned from all these other people. That's, that was, it was an awesome experience with them.

• 11:15Barry Ritholtz?

  So, so I want to roll back a moment. You described the structure of being an athlete and you gave me six bullet points. They sound like they would be useful for anything. Run through those bullet points again.

• 11:30Speaker 03

  So they have a, I don't know, I never do, which was a sense of accountability. There's a, there's a schedule. There's a structure. Every day you wake up knowing, you know, what the, what the common goal is, both as an individual and the role you play. And there's a level of expectation as to what you need to, not just accomplish in one day, but one month, six months down the line. You have the NCAA tournament, you have all these things going on that have longer term or goals, but you gotta have a day-to-day discipline to execute on that. When you transition, it's all gone.

• 12:05Barry Ritholtz?

  Well, that, that structure, that setup, sounds like it can be applied to any endeavor in life, any organization, especially where you're working with other people.

• 12:17Speaker 03

  That's right. And the, I, I see a little bit too much where younger people jump to become an entrepreneur. And I get the premise to, to want to be an owner of everything you do quickly, but there is, there is a level of foundation and humility that can be accomplished by going and seeking out another environment that provides those tools for you.

• 12:39Barry Ritholtz?

  So you're a former college player, you're a former almost pro player. What did you learn shooting hoops that the CFP or CFA curriculum just simply can't teach?

• 12:55Speaker 03

  Perseverance, this is something I'm trying to teach my kids. I learned to fail and really enjoy it. And for a while, I was failing and not, not really reflecting on why I failed. People, I think that's, people use that term a lot, like failure's a good thing. It's the best thing that happened in my life. It's not the failing part. It's what you learn from failing that that really is effective. And so, and the, and the idea that you're willing to bet on yourself at all costs, no matter what, if you think about that as an athlete, then the mindset is, I'm willing to do whatever it takes. I'll go broke to try to get this done. I have been broke. I'll take as many risks as I possibly can

• 13:36Speaker 03

  take. I'll fail, fail, fail. Those are not necessarily great attributes as an investor in terms of translating that mindset. So as an advisor, to appreciate where an athlete's coming from, to actually make them aware of those types of traits that are great qualities to have success in your, in your craft, but may not be great qualities to have when you become, start thinking about financial advice and investing.

• 13:59Barry Ritholtz?

  So, so let's talk a little bit about athletes as clients. You somewhat famously won't take on a new client if they don't save at least 60% of what their basketball earnings are. I'm, I'm curious, how'd you come up with that rule? How many potential clients turn you down? How many clients do you have to turn down? What, tell us a little bit about the genesis of that. It seems to make sense. What's the average NBA career? Seven years, something like that?

• 14:31Speaker 03

  A little bit less than that, probably.

• 14:32Barry Ritholtz?

  All right. So it makes sense. Tell us where this rule came from.

• 14:36Speaker 03

  It, it came from learning from my early mistakes as an advisor, because I was willing to take anybody as a client. That was the one, one, one thing. If I looked back, I wouldn't have done that. But you're building a business. You try to get revenue and, and you know, that, that happens. Everybody does it. What, what, how I came up with the, the measurement was a young person saying, I want to be a millionaire. And they had an MBA contract. It was a three-year deal. And I said, all right, when do you want to be a millionaire? Because here's the money you're gonna make. Here's the taxes that you're gonna pay. You can actually make that choice as to when you want to log into your account and see a million dollars. And so it's like, well, what do you mean?

• 15:17Speaker 03

  He's like, well, if you save 30%, it's gonna be May 1st of 2028. That's when you're gonna have a million dollars. He goes, well, I don't want to wait that long. I said, okay, well, what if you did 40%? What if you did 60%? And so what I realized is using fear is not a great motivator for young people to make decisions. Putting it around a milestone and/or a level of respect that they want to attain does. And so for me, that became the parameter of then, okay, if you want to become a client, we want to have a relationship built on mutual respect, then there's some things that I'm gonna require. And for me, it was 60 cents of every net dollar that they earned.

• 15:58Barry Ritholtz?

  After tax, after agent, after all that stuff.

• 16:01Speaker 03

  And then it's second deal, then it goes to 70%. Third deal, it's 80, 85%. And then what we realized is we had clients talking in the locker room about how much they're saving. Eventually, it's with investing, but how much they're saving. And then we would show a scoreboard report of, hey, so-and-so, you know, that he saved 92% last year. You saved 74. And he's like, I don't believe it. And then like they're texting back and forth and it begins this dialogue. And it was awesome. And so it sounds strenuous, but it's easier said than done now when you see the level of the contracts and how much money is going in and out of someone's life.

• 16:36Barry Ritholtz?

  This is, this is the exact opposite of the 30 for 30.

• 16:41Speaker 03

  Right.

• 16:42Barry Ritholtz?

  Sports Illustrated story, 80% of NFL players, 70% of NBA players subsequently filed bankruptcy. Like crazy, crazy numbers.

• 16:54Barry Ritholtz?

  How significant is that in your mind? It sounds like that sort of fearful threat doesn't really get the job done.

• 17:06Speaker 03

  It doesn't. And if you think about, if I'm talking to a 19, 20 year old and I say, you know, what if in three years from now, the next number one draft pick walks into the locker room and they walk directly to your locker? Because everybody knows that, you know, it's, we'll talk a little bit about the pros pro, but everybody knows that you handle your business on the court and you handle your business off the court. And that you're someone that's respected in both the business community and, and the community around the team that you play in. Because there's going to be pros in that locker room and there's going to be knuckleheads. And if you don't know who the knucklehead is, I promise it's probably you. So, so what we want to do is just teach you the traits to become that person where someone wants to walk directly to your locker and ask questions.

• 17:50Speaker 03

  And so that, that versus showing them statistics of going broke.

• 17:54Barry Ritholtz?

  Right.

• 17:54Speaker 03

  Most young people are going to be like, I'm a one in a million. That's not going to be me. And the reason why a lot of them do go broke still is not, many clients, many athletes, sorry, retire with $10 million, $15 million, $20 million, but they have significant burn rates that are $3, $4 million. And so do the math and five years, it's gone.

• 18:13Barry Ritholtz?

  Divorces are expensive. Child support is expensive. There are a lot of friends with business plans.

• 18:20Speaker 03

  That's right.

• 18:20Barry Ritholtz?

  That could be inexpensive. Right. Can't, can't miss. By the way, everybody in that locker room probably statistically is one in a million.

• 18:28Speaker 03

  That's right.

• 18:29Barry Ritholtz?

  Right? Yeah. How many people play in the NBA?

• 18:31Speaker 03

  Less than 400.

• 18:33Barry Ritholtz?

  All right. There's 350 million people by, almost by definition. 350 people are one in a million. It's, it's kind of a, kind of amazing. The other thing you have your athletes do is to try and save two years of cash. That's a quote of yours. Quote, athletes need two years of cash as a buffer. How do you sell that idea to someone who just signed an eight-figure, you know, multi-year deal?

• 19:00Speaker 03

  Well, you get a chance to show, especially early days, like the rules evolve over time once someone has shown their level of professionalism with their money. So, early days, you know, there's that three bucket strategy that I've always put in place, which is that safety and security bucket that you're referencing. And then, but that's the first time someone's learning what an NBA or an NFL or an MLB contract looks like. Like, here's the deal I just signed, but then what's all these red numbers that go through it? And who's FICA? And all these, all these terms? And, and, you know, they see that, you know, what a $10 million contract really is.

• 19:35Barry Ritholtz?

  Much less than $10 million.

• 19:37Speaker 03

  It's much, much, much less. And then there's, in the NBA, there's another tax. It's like a jock tax that they may or may not get back based on basketball-related income, which is another 10% that's attached to these things.

• 19:46Barry Ritholtz?

  What is the 10% jock tax?

• 19:48Speaker 03

  So, there's a, there's a tax that everybody in the NBA, you know, gets that's up to 10%. And it's related to the agreement they have with the owners that they have to get up to 49% of a, of a number of a revenue. And if the owners don't get that number, then they get to dip into the cookie jar.

• 20:04Barry Ritholtz?

  Really?

• 20:05Speaker 03

  And take that basketball-related income and put it in their pocket. So, most of the time, they get 65% of that back. So, but that in our budget, that we, we, we budget as if you're never going to get it back. So, it is a nice cherry on top at the end of the year. But when you think about paying taxes in every single state, and sometimes city that they play in.

• 20:25Barry Ritholtz?

  Right.

• 20:26Speaker 03

  And whether, you know, could be playing for the New York Knicks or the, or the Golden State Warriors, and you're paying a much higher level of tax. And so, going through that whole experience for the very first time.

• 20:35Barry Ritholtz?

  Or the Toronto Raptors.

• 20:36Speaker 03

  Exactly.

• 20:37Barry Ritholtz?

  And you're even higher.

• 20:38Speaker 03

  Exactly. So, it's a, you know, helping someone's pre-experience what it's going to look like and feel like to get paid for the next three years. And because we've seen the movie over and over. I'm, I'm just trying to show you the movie. Your, your story is going to be different than everybody else's, but there's going to be common ground.

• 20:53Barry Ritholtz?

  Right.

• 20:54Speaker 03

  That, that, it's just, it's just for you to pre-experience it and understand it. And then for you to put your own goals and, and milestones on top of that.

• 21:01Barry Ritholtz?

  Explain the three buckets. What are the three buckets you'd discuss?

• 21:05Speaker 03

  So, it's, there's the safety and security bucket. And that, that typically is your cash to support at least, those are 24 months. Because I think in the NFL, you may get paid during the season. Major League Baseball, maybe six months. The NBA could be over a 12-month period. Everyone's cash flow is different.

• 21:22Barry Ritholtz?

  Right.

• 21:23Speaker 03

  So, I want two years of season, seasonality to support your lifestyle inside the safety and security bucket. If you buy a home. It has to be necessary. It's a home that where you want to live, not necessarily where you play. Quite often, someone gets traded multiple times. They bought homes in multiple cities and now you're trying to sell a house in Milwaukee when you're playing in Dallas, but you really live in, you know, Florida. So, put, just put the house that you want to live in long-term in the safety and security bucket and typically will buy that with no debt. Because I don't know what, when the next contract's going to come. Once you've filled that bucket, the second bucket is the growth bucket. Okay, this is where now you're starting to get to understand how money works for you. And, and in theory, all

• 22:03Speaker 03

  I want young people to understand is if you get 24 paychecks from the NBA, you know, over a 12-month period, our goal by the end of your contract is to find 24 other ways for you to get compensated. It could be in bonds, it could be in dividend, it could be in real estate over time. However, inside the growth bucket for the first contract of their life, 85% of it has to be liquid. It has to be liquid. Because quite often, I saw when I was researching, young athletes were far too illiquid. They were investing in private deals, they didn't know the value of it, they didn't, that it wasn't supporting their lifestyle, and then all of a sudden, they didn't have the safety and security bucket, and they were, had to sell everything, and most of it wasn't worth anything. So,

• 22:45Speaker 03

  it's, it's no genius asset allocation strategy from Yale that I came up with. It's just life, and having someone prove to us over time that they know how to save, and they're responsible with money, so they can reserve the right for the third bucket, which is the dream and entrepreneurial bucket.

• 23:02Barry Ritholtz?

  Okay, so what goes into that?

• 23:03Speaker 03

  So, that could actually be, um, setting up a business. It could be even, I, I throw venture capital and private equity over there. Um, early-stage opportunities. It could be the second car. Um, because it's, I don't, I don't care what kind of car you get. I don't care what kind of watch you buy. You just get one. Right. If you want to get, you want to get another great car, sell the other one and get, get, get the next one. But that extra bucket, it could be five to 10% of your life. That sits over there. Now, when you, when you put a safety and security bucket, a growth bucket and a dream bucket in front of a young person, which one do you think they want to fill first?

• 23:42Barry Ritholtz?

  Well, the dream bucket.

• 23:43Speaker 03

  Of course, we all do.

• 23:44Barry Ritholtz?

  That's the fun one.

• 23:46Speaker 03

  So the discipline is you've got to fill the first, the first two, you know, before you, you had to reserve the right to be an entrepreneur or to fulfill that dream. Cause part of the, what we talk about a lot is live the dream that you're playing right now. Don't try to go out and establish all these other things and crafts because it's focus on what you do well. And, and because this is your, as you said, seven years or less could be the greatest earning capacity in your entire life right now.

• 24:11Barry Ritholtz?

  Huh. Really, really fascinating. Coming up, we continue our conversation with Joe McLean discussing why he launched a boutique asset manager for athletes. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 24:32Speaker 00

  At Brookfield, we believe you can own wealth that's measured in generations because true ownership looks beyond today and beyond cycles. For 125 years, we've built long-term wealth through expertise, discipline, and a clear vision for the future, providing investors access to alternative strategies built for what's next. Brookfield, own what's next. Learn more at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital. Past performance is not indicative nor a guarantee of future results. Please review performance and offering materials before investing.

• 25:09Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty.

• 25:35Speaker 01

  To Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs. And hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices. But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity,

• 26:20Speaker 01

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• 26:36Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest today is Joe McLean. He is known as the money whisperer to professional athletes. Let's talk a little bit about how you got that title. You're a wholesaler for mutual funds at Franklin Templeton. What led you to launch a boutique asset management shop, catering to star and professional athletes?

• 27:06Speaker 03

  Well, I went on from wholesaling and then I ended up, I went to two other companies, Lord Abbott and then Alliance Bernstein. And Alliance Bernstein at the time launched an advisor institute, which was, there was these 300 advisors at Bernstein at the time that were bringing in 100-plus million in assets every year. And it was a highly dedicated and focused team. And so I went out and trained that to financial advisors as how to build a business and work with centers of influence. And I met another kind of mentor in my life, who was a former

• 27:41Speaker 03

  Former minister and then got a had a master's in neuro linguistic programming and then understood how to communicate effectively with people and I spent two years on the road doing that and then eventually became an advisor at Bernstein. A bunch of old teammates, I was less than a year into my financial advisory career, came up to me when they were getting ready to retire and they said, I've been watching you. I think you're in that money thing. Can you look at, look at my, my stuff?

• 28:07Barry Ritholtz?

  That money thing. You do that money thing, right?

• 28:10Speaker 03

  That's what they said and, and these were 32 year olds. Some had made over a hundred million dollars in assets. I had not grown up with any wealth, but now I'm 15 years into the career and just kind of learned from other families and obviously the companies that have taught me things and being on the road and realized like, no one has ever sat you down and walked through a level of planning that would be required for this level of wealth to prepare you at age 32 to live off of this money.

• 28:39Barry Ritholtz?

  That's astonishing.

• 28:40Speaker 03

  There was no class that we ever took in college, right? And even if there was a class, you probably didn't would not have paid that much attention to personal finance and, and investing. And so, and, and sports in wealth was not something anybody was really interested in. I, I've, I heard it from other firms who said, I don't want to get involved with athletes. It's just babysitting. And so back then there was no, there was no sports and entertainment divisions at wealth management firms. Nobody was involved. And so I went to Bernstein and said, I, this is it. This is where I want to be. You know, I'm going to, I'm going to focus my whole rest of my life on this. I'm going to be a coach, but to do it in finance. And it was just something that they were open to, but not interested in because it

• 29:24Speaker 03

  was way beyond investing. It was personal finance and cash flow and budgeting and creating a protected circle of, because there's so many things that could touch someone's money. Could be the car guy, could be the suit person, could be the jeweler, it could be the family.

• 29:39Speaker 03

  That needed to be controlled and put in, put the scoreboard up financially as to what required to have success.

• 29:44Barry Ritholtz?

  That, that sounds a lot like a traditional family office.

• 29:48Speaker 03

  I, I had no idea what a family office was at that time. In that, but I, that, I was identifying this was the need. So, um, long story short, it, it couldn't be done at a wealth, traditional wealth management business. It had to be an RIA at the time for me. And so that was the move to, to start Intersect at the time, um, which was heavily focused on personal finance and family office and, and, and I was, I was still learning the game too. And the contracts weren't as big as they are today, but I remember being in the 2011 draft. I think I was competing against two other financial advisors. Maybe, maybe. Nobody was, was really interested in this industry.

• 30:27Barry Ritholtz?

  That's unbelievable to me. So, so 11 people, you're managing a, a 1.7 billion dollars for about 50 clients. How did that grow? And then when did you start to hear from people thinking, hey, this might be a good tuck into a bigger shop?

• 30:44Speaker 03

  So that happened all in less than seven years. Um, and it was in sports, I realized what, a couple of things. One, I didn't want to have a client base where it was only athletes. I had, you had to pass the test of a 50 year old business owner who was going to ask more sophisticated questions, um, that was going to challenge you to make sure that you create a process, a plan and, and a, a portfolio that was sophisticated enough to support his, his or her needs. So this became this mutual admiration club of entrepreneurs, business owners and athletes. And I found that, you know, baseball player wants to talk to an NBA player and a golfer and so on. It was, it was a great connection to have community built in there. And that's how all these other sports came up about it.

• 31:27Speaker 03

  I was a classic case of high growth, trying to keep up with operations. So, so it's constantly taking my own capital and reinvesting and, and trying to stay up with the support. And, uh, that's when I had someone come up to me and I was trying to find an investor just to help me out because I was, I couldn't support it myself. Uh, and that's when I was introduced to MAI at the time. Who unbeknownst to me, really, that was a very quietly built family office for athletes. Dating back to Arnold Palmer and Mark McCormick were the first owners and client of of the business.

• 32:01Barry Ritholtz?

  Client owners. That's pretty savvy.

• 32:03Speaker 03

  Yeah, and that was Mark. Mark McCormick was the for sure the the OG in in the sports agency world. Um, where his his focus was to take an athlete to an entrepreneur, to an owner of everything they did. Right. And that's when, you know, he got famously got Arnold Palmer out of a Wilson. Uh, Palmer did handshake deals on just about everything he ever did. And had a handshake deal with Wilson. Um, that that Mark saw the value of what he was doing for that company. And and was able to renegotiate that. Most people don't like Wilson was actually a meatpacking company way back when. Uh, and it was, uh, and a banker came in and saw that it was not, it was undervalued because they weren't utilizing the entire cow.

• 32:45Speaker 03

  And they started taking the hides and making footballs and basketballs.

• 32:49Barry Ritholtz?

  No kidding. Wow.

• 32:51Speaker 03

  And extracted extraordinary value out of that. And it eventually became a sporting goods and equipment company. So they were very savvy when they they, uh, did that deal with Arnold Palmer and McCormick came in and unlocked all kinds of value for Palmer. And so when you look at athletes now, they talk about becoming an owner of everything they do. This is something they did. This is 1973, 74.

• 33:13Barry Ritholtz?

  I kind of remember Arnie Palmer, um, designing golf courses and putting his names in and getting fairly well compensated for that. Am I recalling that correctly?

• 33:23Speaker 03

  He did that and a lot more like everything.

• 33:25Barry Ritholtz?

  Plus the drink.

• 33:26Speaker 03

  Rights and the drink, right? And that that umbrella, that iconic logo that he has, if you're in that golf world, you know, that's Arnold Palmer. Um, and he was the one who famously told every athlete, if you're going to put your signature on something, make sure people can recognize who you are. Uh, and I know Peyton Manning and others have have taken on that that that banner. Um, and so he was, he was a trailblazer very early days. Um, and his level of wealth was extraordinary. That would rival, you know, the likes of Stephen Curry and Kevin Durant, as you see today. Yeah.

• 33:58Barry Ritholtz?

  And and the other thing about golfers, they have a much longer, the successful ones have a much longer career life. And then they start playing in the seniors for another.

• 34:07Speaker 03

  If you can do it, yeah, it's it's but there's nothing like. Golf has a completely different level of financial planning because there is no guaranteed contracts, right?

• 34:15Barry Ritholtz?

  That's right.

• 34:16Speaker 03

  If you win a tournament, yes, you may get a year or two of your tour card, but if you don't and you're missing cuts, then there's no money. It's one of the most difficult sports to survive. The successful ones, obviously, as you said, could have 30, 40, 50.

• 34:33Barry Ritholtz?

  But it's a winner take all.

• 34:34Speaker 03

  It is. It's very difficult.

• 34:36Barry Ritholtz?

  So, so MAI acquires Intersect. After the acquisition, you go from a founder, CEO, to managing partner and running the multifamily office inside this larger platform. You spent a long time building up culture and trust. How do you maintain that when you're tucked into a larger shop and a very different brand?

• 35:01Speaker 03

  The, the, the good thing was, and it took a long time for me to figure it out before I made a decision, was the firm was very, was a service oriented business. It wasn't a business that was providing services. And so that was, that was very different for me because I actually was not, I didn't come in with any high level of business prowess. I was a service provider. I still am. I think there's nothing beneath me in terms of what's required to serve a client and the people around them. And they had the same mindset because it was actually at the time a loss leader for the IMG business. And so IMG would charge their 20, 30% and they would have MAI, which was McCormick Advisors International was the acronym.

• 35:43Speaker 03

  And that was a, just a service center to do your taxes, your bills and build your portfolios. And so that, they had the same mindset that I had. And so, but there was another level, as you know, of acquisitions and really growing. And so, you know, we had gone from 12 billion to 80 plus billion in assets. So that's, it is difficult to maintain the culture, but it's a very independent fiduciary minded world that, that was aligned to me. I think the evolution of where the advisors and the clients are going now from here is this level of partnership because that was what I was experiencing in my boutique is not a client advisor or advisor client relationship. It was a partnership because it's young people don't be, want to be told what to do. They want to be given information to make better decisions, but don't tell me what to do.

• 36:27Speaker 03

  And so I think I've learned a lot in that culture that that's where now the term family office is everywhere. That's how you got to build it going forward.

• 36:36Barry Ritholtz?

  So I love the idea of the distinction between simply managing money, which is this money thing your friend asked you about, versus managing wealth and all the related services. Is that effectively the evolution that you've gone through from Intersect to MAI?

• 36:57Speaker 03

  A little bit. I would say the MAI and the rest of the industry is coming quite interesting to how we've serviced athletes. And it's not just because they were athletes, it's just because they were young people. You know, the industry is trying to turn towards how to service the next generation, right, of wealth and this transfer of wealth that's happening from the baby boomers. And if you look at the history of advice, the history of advice really was built on the backs of the baby boomers. So I always look at 1981 had, I think it was 600 or 700 mutual funds to choose from. And all of a sudden, it was this hockey stick. It just exploded. And what happened? Well, it was the baby boomers returning 35, which usually tends to be the age where you finally have some money to spend and invest.

• 37:42Speaker 03

  And then you look at this explosion and the value proposition to that marketplace was simply access, access to the capital markets. So that was, I always tell the young people, if you ever watched Pursuit of Happiness, great movie, Will Smith, cold calling, he was just giving you access. And then it became about alpha and generating, like, how do I, my black box research is better than this person. Right? And then it became about spending and income strategies in retirement. That was the third one, all satisfying the baby boomers. Now, the value proposition has flipped. It's access not to publics, but it's to privates. And it's spending and income, not in your retirement, but in your entire life, for your entire life in terms of managing that lifestyle. So these are things that we've done from the very beginning because there would never would have been a dollar to invest

• 38:27Speaker 03

  if I didn't control the cash flow.

• 38:29Barry Ritholtz?

  Huh, really fascinating. You talk about you're dealing with younger people and especially with athletes. We'll get to college athletes in a little bit. How do you get a young person to understand that owner mentality? Both from a risk perspective, from a compounding perspective, especially in today, that they're always connected, there's so much stuff going on and so much speculative distractions. How do you get them to think like an owner and not like a, you know, a simple player?

• 39:07Speaker 03

  Day by day, like day by day.

• 39:08Barry Ritholtz?

  Really?

• 39:09Speaker 03

  Yeah, and it's, it's like there is.

• 39:11Barry Ritholtz?

  It's a long game.

• 39:11Speaker 03

  There's no level of, like putting a Monte Carlo analysis in front of someone and showing them, you know, 20, 30, 40 years out from, of what the compounding effect could be is, it looks, looks nice, but it's just, there's behaviors and discipline that have to be created day by day, month by month over time. But if you gamify it, it works. And that's, that's, that's, that's the aspect of putting the scoreboard up of level of, are you winning or losing each month? And the one thing with, with, if you look at contracts today in sports and how big they are, as you know with anything, with great abundance typically comes less discipline. Right? You see a lot of people with great talent, but they don't necessarily work that hard. But if you work hard and you have talent.

• 39:56Barry Ritholtz?

  Tough to beat.

• 39:57Speaker 03

  Yeah, it's almost, it's almost difficult. It's impossible to beat. And so that's, that became my investment philosophy. When, with, even with young people or old people is, is older. When you think about the laws of physics versus the laws of finance. Okay, and we think about this abundance. Laws of physics say, I'm trying to cross the creek. There's a log that I'm going to walk on. If I take my eye off that log, there's instant feedback. I'm going to fall in the water. Right? If the laws of finance say, if there's, if I have abundance of money going out of my life, and I'm, and if I take my eye off my money. Nothing happens. There's no immediate feedback.

• 40:41Speaker 03

  American Express doesn't call into, hey, if I'm paying my bills every month, slow down. Like, you just spent $55,000 this month. Slow down. No, they're giving you more benefits. And so laws of finance give you no immediate feedback. And so the philosophy has to be creating a standard of what you're going to focus on in the future. It could be a month from now. Let's just win this month, and then let's win the next six months. And all of a sudden, now we're winning for years. But that's until you become aware of that. Most people don't have success in it.

• 41:14Barry Ritholtz?

  Fascinating stuff. Coming up, we continue our conversation with Joe McLean, managing partner at MAI Capital, discussing what it's like to advise athletes and entertainers on their finances. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 41:44Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume, so writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk, and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs, and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 42:26Speaker 01

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• 43:09Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest is Joe McLean. He is the managing partner at MAI Capital, where he has helped build not only the firm's family office group, but the sports and entertainment division, serving hundreds of professional athletes and entertainers. So, that sounds like a very, very fascinating group of people to work with. I want to start by thinking about what's going on at the college level. Name, image, likeness, this has become a

• 43:49Barry Ritholtz?

  giant business. Suddenly, you have 17 and 18-year-old phenoms with potentially seven-figure contracts. What's it like having a conversation with a suddenly wealthy 18-year-old?

• 44:03Speaker 03

  And by the way, it's in high school now, too. So, there's the people are getting sponsorships in high school. So, it's a...

• 44:08Barry Ritholtz?

  16-year-old, even worse.

• 44:10Speaker 03

  You know, what's interesting is, I was blessed with four years of Coach Little Olson at the University of Arizona, and had an extraordinary network of alumni and teammates that I got to know, or were also coached by him. So, I see this, I see the benefit of staying for four years for, you know, not jumping around school to school. And so, at the same time, I'm trying to not sound like I'm 52-years-old, and say, "Back in the good old days, this is what we did," because, you know, we weren't getting contracts offered to us for a million four. I just looked at a, there are research services out there

• 44:50Speaker 03

  for each of these sports, and I just looked at one for a player, and they averaged 5.6 points a game this year, but they're projected to have success. They're going to get $1.8 million next year to go play as a sophomore in college, right? And that's extraordinary. And so, how do you pass up going to another school for those types of things? So, it's really getting them to sit down and think about some things that are important besides money. Their college experience, who's the coach that you're going to be coaching for? Does that match the style that you think you could have success in? Then outside the financial advice that's required that, hey, you're now a 1099 contractor. There's no taxes taken out of these deals, right? And so you can't just spend 100% of it. You owe money to the government.

• 45:35Speaker 03

  And so that becomes that whole lesson of gross versus net. And then this setting up some, some success. The good news can be that they're learning these life lessons before they become a pro. Right? And because what we also remind them is that every NBA NFL scout is watching how you're reacting to this money. Now, if you get a million dollars and you go buy a Ferrari, which happens, they're, they're going to put that on their board. That this is someone that may not be responsible when we give them $10 million. And so they're getting a window into the human being as to how they may react once they turn pro. And so these are all conversations we're just having much, much earlier. But I think it could be a good thing long-term.

• 46:20Speaker 03

  I know as a college sports fan and everybody's like, I don't like these portals and I agree with them. But as a young person with opportunities, they're going to be smarter. They're going to want to learn faster and there will be more successful outcomes than, than less.

• 46:34Barry Ritholtz?

  Huh, that, that's really, that's really fascinating. The, the obvious things that are potential minefields, they seem to be getting good advice and avoiding. And it sounds like a lot of the college athletes that are getting big paydays are making, most of them are making better decisions than poor ones. Is, is that your?

• 46:56Speaker 03

  I think so. It's a, and by the way, I think you know 90% of these NILs are all probably a hundred thousand dollars or less. They're like, they're much, they're much smaller. And that's by the hundreds, a lot, but there's much smaller deals. It's reminding, if they don't have a base around them of that professional locker room that we talk about.

• 47:16Speaker 03

  Reminding them first and foremost, the number one priority is to be a great teammate. Because we've seen the scenarios where the quarterback makes $2 million and is disrespectful in the locker room and now all of a sudden, nobody's blocking for you. That will happen.

• 47:31Barry Ritholtz?

  We saw it in the Super Bowl this year.

• 47:34Speaker 03

  Exactly. So if you don't, if you don't think through those types of things and be aware of it, and even like, you know, you maybe want to be contributed to that community and create, you know, create a donor advised fund with some of this money and give it away and bring, bring awareness to what your brand is. Because your brand really is not, you know, what your social followers are. It's being a great teammate, being a great human, being responsible. You know, you can have all these extraordinary experiences in say, the NCAA tournament, but if you're a knucklehead off the court or off the field, it's, there's going to be consequences to it earlier.

• 48:08Barry Ritholtz?

  So, so let's now move into the pros, but we're not talking about 52-year-olds in basketball. You're 23, 24, 25, early in your career. I'm curious about a couple of things. The first thing is, you have a day like last week where the market's melting down, a 25-year-old guy in his, his first year of his second contract calls up and says, "Hey, we okay?" Like, how do you, how do you manage clients who are perhaps a little freaked out by the news flow?

• 48:42Speaker 03

  So I think over, over time for me, the benefit has been introducing them to other people besides myself, for want, for most and foremost, other professionals in the markets and other asset classes that they can get on the phone with and understand really what the facts of the case are versus the noise around it. And typically, every scoreboard we have is projected out through their entire contract. So, what are the things that we can control versus the things that we can't control? Right? So I always go back to that, yes, the market's down, let's say it's down 10%. You know, what are the things we can control right now? Well, we can control our spending and our decision-making and our attitude. And so those may be opportunities where let's look at our spending, maybe we dial it back so that we may want to invest more.

• 49:26Speaker 03

  Over time and it's opportunistic. These are all very rational things that as you know, most humans become very irrational and and and the more I've learned, the more I can get someone to talk about their emotions, then they move to a more rational state. So it's just talking out loud. Let's talk through this. A lot of these, a lot of these athletes over the last couple of years really haven't been through a major, major market.

• 49:49Barry Ritholtz?

  Fifteen years of bull market, winning it back, right?

• 49:53Speaker 03

  I mean, I, I remember early days this happened and I had one player liquidate all their 529 plans because the market was down 15%. And that was, obviously, you know, the mistakes that, that, that, you know, the consequences of that. But if you don't go through it, I was, I was a benefactor of losing all of my hard earned money in Europe in 2000. So I, I, I was investing in mutual funds at $10 that went to $100 in these biotech funds and, and then March of 2000, everything went to zero. So it was a lesson I learned early not to be, have concentrated, all be all in one, one asset class. So most of the clients are fairly diversified.

• 50:37Barry Ritholtz?

  So, so let's hold the 23, 24 year olds aside and talk about a 25, 26 year old with a max contract, their second contract. You don't think of a 26 year old as a potential family office client, but essentially at that level of income, that level of wealth kind of makes sense. Is this the right model for, for those athletes, for those professionals?

• 51:07Speaker 03

  A hundred percent. So if you think about what you're describing, a 25, 26 year old on a, on a max contract is, is probably making over $40 million a year. Let's, let's talk through a couple of things that are happening. It's a guaranteed contract if you're in basketball or, or baseball, even hockey to that extent. It's not guaranteed for death.

• 51:28Barry Ritholtz?

  Right.

• 51:29Speaker 03

  Right. So there's only

• 51:30Barry Ritholtz?

  But it is for injury.

• 51:31Speaker 03

  Up to, it is for injury, but not for death. So then there's, there's a life insurance planning that's element where both the teams trying to get the coverage on, on that person. Um, and for their first thirty million and then you're trying to get coverage. And if you're a big, if you have big endorsements, there's other Coca Colas and all these other Gatorades are all trying to get coverage on you as well to protect theirs. So it's, there's a level of sophistication that they've got to start thinking through from a risk management standpoint.

• 51:58Speaker 03

  Again, back to now, the three, it's the three buckets still remain for the rest of their life. So you gotta keep filling them. Um, but now it's, this gets complicated. It's you, do, what's the goal here with this money? Is it just to save it? And sit on it or now the, they're getting access to really interesting opportunities. They want, they want to maybe own a team someday.

• 52:21Barry Ritholtz?

  So this is the third bucket.

• 52:22Speaker 03

  Right. And this is the entrepreneurial one where we've got to keep filling the first two and always know what it costs to be you. That's always January one. Do you know what it costs to be you? And, and, and how do we make it cost a little less to be you if we can be smart with some of the savings and all, in all act areas. So what do we want it to be cost to be you when this contract's over? Right. It's again, back to that burn rate of, of how much you're going to spend in retirement because I'm assuming you're never getting another deal. Alright, so is it, is it two million dollars a year? Is it a million and a half? What, what is that number that we think you could live comfortably? And obviously, um, when you're, this is your thirty five years old, this money has to last much, much, much, much longer. Uh, and so just going through that level of planning and giving them information so they can make better, better choices.

• 53:07Speaker 03

  But that is when this entrepreneurial bucket really kicks in. They've established a brand as a great player. Performance is the number one factor of their success financially. However, now there's an opportunity to really develop something that could be sustainable for thirty, forty years as an entrepreneur. And that's where we start identifying what philosophy they want to have in that, that sector.

• 53:29Barry Ritholtz?

  So, so you mentioned, uh, death or injury. I'm curious as to your take on what are the most? Or the least appreciated risks on a modern team roster? Is it, we mentioned injuries, is it lifestyle creep? Is that that entourage that could be a bad influence? Deal flows in the DMs is a line I saw that cracked me up. What do you think is just bad mojo that potentially derails a client?

• 54:02Speaker 03

  Well, a couple of things. You mentioned risk and injury, you cannot avoid this. And so there's a, there is a way to protect yourself over time. So it's now at this point, at this level of wealth, at the size of these contracts, you have to have your own doctors, you have to have your own trainers. You have to get information that comes directly to you, not through the team to you.

• 54:21Barry Ritholtz?

  So we're talking nutritionists, trainers, physical therapists, massage therapists, like straight down the line?

• 54:29Speaker 03

  And they will all have to report to the client, not to the team. So the team has these, has these people and they're great people. However, they work for the team.

• 54:38Barry Ritholtz?

  Right.

• 54:39Speaker 03

  And so we've had situations where clients have gotten injections and it's killed cartilage in their hip and it's eroded over time. And all of a sudden now they're in a situation where they may not get the next deal. So it's at the, at max contract, someone, they're going to be spending somewhere between 400,000 and a million dollars a year into their body.

• 54:58Barry Ritholtz?

  Wow, that's unbelievable.

• 55:00Speaker 03

  And it's, but if you think about what the benefit of that, people, players are playing 35, 40 and beyond.

• 55:07Barry Ritholtz?

  I look at Tom Brady, no business playing into his 40s and playing fairly well. That has to be the result of all that, all that self investment.

• 55:16Speaker 03

  No doubt. And that's, so that's, and so there's a, there's a track record there that others can turn to, LeBron James also being one of them, that it's, they see the value in that investment. And they also see the risk of not investing in that. Right? So it's, we, I've had these discussions on the first contract when I look at, cause I see the P, the personal P and L on everybody, when we're paying all their bills. And I could see, are we really still going to McDonald's? Like you're, you're, you're crushing fast food constantly.

• 55:45Barry Ritholtz?

  But at 23, aren't you kind of a mortal? How do you get someone who's been the biggest, fastest, strongest guy everywhere he went to realize, hey, this is a rusty bag of bolts if you don't take care of it? How do you get a 22 year old to understand you're not a mortal?

• 56:05Speaker 03

  You show them that if you're in the NBA and you're a draft pick today and you get to your fourth contract, assuming a 5% growth rate of, of, um, of the salary cap, you will have grossed a billion dollars in contract value.

• 56:21Barry Ritholtz?

  Get out of here. That's unbelievable.

• 56:23Speaker 03

  So, so what are, what are the, what are the things you can do now to, to be around in your fourth deal, right? It, it obviously extends beyond just being a good player.

• 56:32Barry Ritholtz?

  Four, three years deals or, or longer?

• 56:34Speaker 03

  Three, between three and four year deals. Yeah. So by, so you're, if you're 21, by the time you're kind of 31, 33, depending on your cycle of your contracts, you could have grossed a billion dollars. That's where Cooper flags of the world are trending towards. Jalen Rose, Jason Tatum, that's where they're trending.

• 56:52Barry Ritholtz?

  Wow. I, I was courtside for, uh, the Laker game, uh, against the Knicks last year and what is LeBron, 38? He was last year, he, he is amazing. He is just a force, force of nature and that doesn't happen by dumb luck. That looks like it's a lot of work.

• 57:14Speaker 03

  My legs were tired in the fourth quarter when I was 21 years old and I don't, it's extraordinary.

• 57:19Barry Ritholtz?

  He was faster than everybody out there, other than maybe one of the point guards. And he's a machi, he's a monster. When, when he's in the paint, you are not stepping in front, you're not taking that charge. You'll wake up next Tuesday.

• 57:33Speaker 03

  The old school guards back in the day, they would play their way into shape the first 20 games, right? Cause they were, Lord knows what they did all summer. That there's, athlete summers now are just as, as physical and difficult as the seasons in terms of preparation.

• 57:47Barry Ritholtz?

  Huh. That, that, that's fascinating. There's a quote of yours I really like. The number one trait of a great advisor is being willing to get fired. Give us an example of, of what leads someone to get fired, um, when you're delivering the cold hard truth.

• 58:06Speaker 03

  Let me give you one where I almost got fired first. Okay. Okay, the, and this was one of my most important clients of the history of my career. And I thought I was doing the right things, right? And I, I still today, I think I was, but I was doing it the wrong way. So this was a situation where the client was just, there was a bunch of knuckleheads surrounding them. They were going to really affect that person's brand off the, off the quarter field. And it was really starting to irritate me. And so I decided to take it in my own hands and address that personally with them, with, with the friends and with the family members. And I kind of, I got into everyone's face and, and I was ready to take them down because I, and I look at doing trust planning for a client.

• 58:47Speaker 03

  I know who they love and that's who, that's who's in the trust, literally, and who we're going to take care of financially, and the ones that are outside the circle. And most of them were outside the circle and they were really affecting this individual. So I was going to take, try to take them out. How'd that go? But do it verbally. And so I addressed it and all of a sudden, I got called to, to the table for a meeting with the client. And, and they, they came at me and said, don't you ever just, you know, come at my friends and this and that, and, and if, you know, if this ever happens again, we're never going to work together again. And that for me, this is the first time we're having some conflict and I was ready for it.

• 59:28Speaker 03

  And I was excited to have this conversation because that's like, let's get real about what's happening. And even when you don't know it's happening, but the, but the person was shutting down more and more. They weren't ready for conflict. And so if you're going to say a great advisor is willing to get fired, you also have to prepare your clients for conflict, healthy conflict. And so I realized I never prepared to have this conversation with someone that I'm going to, we're going to, you know, be brutally honest with each other. And so the two traits I found that you have to have is, is to have this great professional conflict is you have to have mutual respect and you have to have compromises. And you have to have these conversations in advance.

• 1:00:13Speaker 03

  So now I have them in advance, like, hey, there's going to be times where we disagree. And I'm because I'm never going to give you blow smoke. You've got tons of yes people in your life.

• 1:00:21Barry Ritholtz?

  Right.

• 1:00:22Speaker 03

  But I'm never going to disrespect you. So don't disrespect me. And at some point I'm going to win. And sometimes you're going to win in terms of a level of compromise. If I would have had that, I think this would have gone better.

• 1:00:32Barry Ritholtz?

  Yeah.

• 1:00:33Speaker 03

  It did not. It went really bad. And and I we were able to repair it over time. And I and I've had situations, unfortunately, where I just weren't maybe I didn't get the client early enough to to create behaviors.

• 1:00:48Speaker 03

  Gambling, mental health, all these aspects that are all over life and in the world are highly they're all over sports, too. And there's some people I just you just can't can't save. And so those are some unfortunate situations where we did have to fire somebody.

• 1:01:03Barry Ritholtz?

  So so that raises a really interesting question. Everybody walks around with these devices. And these devices are everything from social media, which can be a minefield to all of the gambling acts and apps. And even if you're not touching the the DraftKings between Kalshi and Polly Market or Robinhood, you could speculate, gamble, just go down a rabbit hole. For someone with a lot of cash burning hole in their pocket could be really dangerous. This always connected, always on world. What sort of of advice are you giving clients who, you know, have these seven and eight figure contracts?

• 1:01:49Speaker 03

  Those are those are the ones where you use a little bit of fear and and start sharing some stories that have happened to others and, you know, potentially getting blackballed. That's that's even investing or betting on your own sport. But just even getting anywhere near attached to it is something that could affect the the growing wealth that you could create over time. I got there's a level of scare as you can scare them with that. And for all of us, it's not gambling and sports and the amount of revenue. I don't think it's a great it really isn't a great thing.

• 1:02:21Barry Ritholtz?

  No, it's pretty awful. And you have a whole generation of of young, mostly males that have become gambling problems addicted to it.

• 1:02:33Barry Ritholtz?

  Does fear really work in that? Hey, you're risking a billion dollars against fooling around with $10,000 or $20,000. Why? It doesn't make any sense.

• 1:02:41Speaker 03

  The scarier ones are in Vegas. When you go to Vegas or you go to some of the other casinos and you learn for the very first time what a marker is. And so what Vegas created with the markers is there's no exchange of money, right? It's just signing your name and then inside that contract that also says that they have, they can reserve the right to go into your bank account and take the funds if you don't pay up. And so as you can imagine, when there's no exchange of funds and you just sign your name and it's a rabbit hole that you can go down, that's disastrous.

• 1:03:15Barry Ritholtz?

  There have been studies that people who spend cash versus credit cards, credit card, you're just swiping or tapping, you know? It doesn't feel like you're spending money when you're counting out hundreds to buy a watch or whatever. I can imagine the market in Vegas has to be really dangerous.

• 1:03:31Speaker 03

  Even to that point, we've had clients where we've decided to have them write every check, pay every single bill.

• 1:03:39Barry Ritholtz?

  So they feel it.

• 1:03:39Speaker 03

  So it's you send the checkbook, you know, here it is. Now you have to sign it. You see exactly how much you're paying for each of these transactions. It works.

• 1:03:47Barry Ritholtz?

  I would say, I would imagine that's effective, but that raises a really interesting question. So the economics of being an elite athlete, I mean, you go back to the 60s and 70s, the top of the team roster really wasn't making a lot of money. Now, across the whole industry, it's big bucks and the top is, you know, crazy big bucks. How has this changed the way you think about asset allocation, planning, looking at everything from, you mentioned safe assets, dividends and bonds to speculative venture capital and privates? How has the world of athletic finances changed over the course of your career?

• 1:04:30Speaker 03

  You have to be, first thing that's changed the most is you have to be sophisticated from day one, right? So if you think, when I was getting into the business in 2009 and 10, these contracts didn't exist and I was, I knew enough to get clients into mutual funds and get them to save. These contracts are very big and they're, they're early and they're coming fast. And so it's just from a level of planning and understanding how to build this, you know, one of our lessons is the next generation is watching, right? And so what, what, what are the decisions that we can make now that set, set you up not just for yourself, but the future, right? We're not talking about going broke anymore. This is hundred year money. And so that, that level of estate planning and that exists

• 1:05:13Speaker 03

  for a 22 or 23 year old now versus that, that we never had that before. And so I don't think the allocation needs to change. It's just that entrepreneurial bucket will, will evolve over time. And so having that level of, of getting someone that with the founder mentality, I, I don't know about you, but I, I love being a founder, being a CEO is not as fun. So I like, I like having them, people say be the CEO of your money. Like I want you to be the, the founder of your money. Like this is, we don't want the shirt sleeves, the shirt sleeves metaphor that everybody talks about. Let's think about that entrepreneurial bucket and where you think you could have great impact. Some of them may say, I just want to be a coach. I just want to coach my high school team.

• 1:05:55Barry Ritholtz?

  Really?

• 1:05:55Speaker 03

  And, and I think that's great. And that's,

• 1:05:57Barry Ritholtz?

  Come out of the NBA to be a high school coach?

• 1:06:00Speaker 03

  Correct. And that's, I think that's, that would be an extraordinary gift back to the universe as to, as to your, you know, your mindset and what you, what you believe in and the give back. It's important to have, fill your time, right? Cause that's, so having more meetings with people that are either executives or other coaches and whatever your aspect is, you have to start thinking, beginning with the end in mind, you know, by the time you're 25 years old, even though you may play to your 40, so that you can fall into that and make that transition back to what we started with, with the schedule, the predictability, the accountability. You have that professional locker room in life that is established for that third bucket.

• 1:06:39Barry Ritholtz?

  So I'm seeing more and more of athletes getting involved kind of a, across different sports. Michael Jordan now owns a NASCAR team or is an investor in a NASCAR team. And we see other athletes buying British soccer teams. How do you think about sort of cross pollination from one sport to another to another?

• 1:07:04Speaker 03

  I think the common ground is just be wary of your time. Like you start spreading yourself. It's very easy to look on social media and then you see someone owns three or four different teams and they're in, they own Sale GP and then they have a Formula One race team and they're all, they're all limited partners in these things, right? It's, it looks great, but just think about how you want to spend your time in retirement. Do you want to be spread out all over the world and having, you know, access to these things? Yes, but at the same time, you've got to go fulfill, you have an obligation to fulfill your time in these things. And so part of it is like, how do we simplify your life? I'm reading now my, a book for the second time and I'm still not

• 1:07:44Speaker 03

  good at it called Essentialism, I think it's called Essentialism, and that's, that's the disciplined pursuit of less. Cause I have a ton of user error in my life where I just say, I, I help clients say no, but I say yes too much to, to, to doing other things. And that's where we have to remind, yes, you have a ton of access, but let's be most careful of your time and where you want to spend it. There, there are, there are opportunities, I think, to own things, but to, to spread yourself out and be all over the world in these soccer teams and all that, it's an interesting, it sounds interesting, but I don't think it's effective.

• 1:08:25Barry Ritholtz?

  So what do you think athlete investors are either not thinking about or not talking about? What's a blind spot that would be really useful for them to better understand, have greater awareness of?

• 1:08:39Speaker 03

  Well, let me, for a second, I'll, I'll over generalize what, what's happening. So we've, in sports per se, so we went from spending money on materialistic things to over investing in private things. And so it, it, it, yes, it's great that we're talking about how much we're saving, but it's also like I invested in this deal and I invested in this deal and I invested in this deal. And as you know, like no one really understands risk until they've taken too much. And at that point, um, you truly start evaluating what that means. So I, I don't know if everybody understands yet as a, as an investor, you know, all these things that we're investing in privately, you don't know how much it's worth. Um, and so that, that's a, a significant blind spot for many.

• 1:09:23Speaker 03

  Back to those me- mental traits that we all have as athletes that we're willing to bet on themselves, that there is no, nothing that we're not willing to take risk on. That's not the trait that you want as an investor. Again, it's reminding that we don't need to take this type of risk. Um, you know, some clients' growth buckets were just in muni bonds for 10 years until they produced enough income to support your lifestyle. Um, but it's a significant blind spot right now that nobody really knows what some of these things are worth. Um, but it looks good on paper.

• 1:09:53Barry Ritholtz?

  Yeah, to say the very least, I, I have to bring up your podcast, The Pro's Pro. Your first guest was Eli Manning, is that right? Uh, first, what, what, what is this podcast thingy? What motivated you to go that way?

• 1:10:08Speaker 03

  It's this new thing, it's just starting, it just came out.

• 1:10:10Barry Ritholtz?

  And, and what do you want to accomplish by sitting down with people like Eli Manning?

• 1:10:14Speaker 03

  It's a, uh, I, for me, I was just hoping it's a gift to the, to the next generation that's seeking information. Um, and get some quality information. So it's, I, we see now in the NIL world where I'll have a young person come to me and say, hey, I play in Oregon, but I'm going to set up my LLC in Texas because I have an aunt there. And because I read this thing on Instagram where I could not pay any state income taxes. And so there's, there's, there's information out there and it's just not right. And so this whole idea of wanting each of these clients to be the person that someone walks to in their locker room and asks a bunch of questions of the pro. I just want to now interview a lot of these successful athletes that have been through,

• 1:10:59Speaker 03

  like Eli is an example, you know, had to come in to New York and lead a city and have to understand the most important things to build trust quickly with his teammates and with his coaches. Like, there's all these really built-in athletic things that are important, and then he came into an extraordinary amount of wealth and he had to manage it. And then, for him, it's learning how to give money away the most effectively. And so, the more I can just extract information from people that have been there and done that, and just share that with everybody, it's a testament to what these individuals have done. But at the same time, you know, we can all learn from them as well.

• 1:11:32Barry Ritholtz?

  Creating a permanent record is so important because the half-life of financial literacy is so short. Like, I have had the same conversation like every three years. Like, didn't we talk about this in 2023? Yeah, but I kinda forgot. So, I only have you for a few more minutes. Let's jump to our favored questions I ask all of my guests. Starting with, you referred to a few people, but let's put them in one place. Who are your mentors who helped shape both of your careers?

• 1:12:06Speaker 03

  My mom, for sure. You know, she did whatever it took to raise three boys and then put me in the right situation to have an opportunity to be around Lou Olson. You know, something that Coach did, one of the great gifts that Coach Olson gave us was he made us go and do public speaking at school. So, we had to do sixth, seventh, and eighth grade when we were freshmen, and then sophomore year, you get started working your way into high school. And by senior year, you had to speak at a high school graduation. But he brought in people to teach you how to communicate effectively. I had no idea the power of that over time. Once you get into the work world and the level of confidence it gives you, while at the same time, always having a high level of humility, that was a great

• 1:12:51Speaker 03

  gift. Outside of all the basketball stuff and always being prepared, that was a great gift he gave us. You know, Jim Escobedo was an example at Frank L. Templeton, who told me, "You don't know nothing about nothing." Which was great. And then as as I began to get into understanding the mindset effectively, having someone like Ken Hayman, who really re taught me Maslow's hierarchy of human needs. And this level of safety and security, so many humans are stuck in. And if we can give them a reason to say no to a lot of things and a power of a plan to get them to some level of a connection, whether it's a human or professional, that was a great gift that he gave me, but gave me. But I've I've found now over time

• 1:13:31Speaker 03

  that it's less just mentors and more just finding ambassadors for you. Like I see it with my kids as an example of like I have a daughter didn't necessarily have great confidence in her stuff athletically. And then just someone just took extra time to say, you know, if you did this, this and this, I think you could be exceptional. And it's like, and then they work with you. And it's just finding more ambassadors. And that's just what I'm trying to do as an advisor advisor is to be an ambassador on behalf of more clients. It's super powerful. It's not necessarily a mentor relationship. But it's just, I think the greatest gift you can give somebody else is your belief in them, even when they don't believe in themselves.

• 1:14:12Speaker 03

  And so that's the power of being an ambassador. I think I highly recommend it for as many people as possible.

• 1:14:18Barry Ritholtz?

  Let's talk about books. What are you reading right now? What are some of your favorites? You mentioned a book earlier. I want to

• 1:14:25Speaker 03

  Greg McNown, I think it's essentialism.

• 1:14:27Barry Ritholtz?

  Essentialism.

• 1:14:27Speaker 03

  Yeah, that's a great, that's a, that is a disciplined pursuit of less and getting rid of some of the inefficiencies. It's in everybody's life and you could end up doing more. I always my my favorite book is always the one like for me, it's whatever got you reading. I didn't read in college. I did what I had to do to to get good grades and stay eligible. And I my first book I ever read was John Grisham was The Firm. And it was for me, it was it got me excited to want to turn the page. And and so and now I read as often and as much as I possibly can. I just can't get enough of it. But I always say for those that aren't reading,

• 1:15:08Speaker 03

  just read anything that would excite. Could be a magazine. It could be a comic strip. Whatever it gets you excited to start reading, start.

• 1:15:17Barry Ritholtz?

  Let's talk about streaming. What are you either watching or listening to? What keeps you occupied when you're traveling around the country, visiting various athletes?

• 1:15:26Speaker 03

  Binging constantly on everything Netflix and just watch Madison, which was a great.

• 1:15:31Barry Ritholtz?

  Oh, really?

• 1:15:32Speaker 03

  So sad. Well, I don't want to give much away, but it's sad. I like good cries on air. I cry more on airplanes than anywhere else.

• 1:15:40Barry Ritholtz?

  If you watch Madison, I'm assuming you saw Landman.

• 1:15:44Speaker 03

  For sure. Yeah.

• 1:15:45Barry Ritholtz?

  Anything Taylor Sheridan does.

• 1:15:46Speaker 03

  He's extraordinary. I don't know when he sleeps.

• 1:15:48Barry Ritholtz?

  And he's got another, there's like a new show coming out like this month. I'm just astonished how, how productive he is. Give us another. What else are you watching?

• 1:16:02Speaker 03

  Oh, my God. I can't even remember the one I'm watching with my wife. We always have these rules where we have to watch them together. We can't be outside.

• 1:16:09Barry Ritholtz?

  Same. I've been trying to watch.

• 1:16:11Speaker 03

  There's one where they're dating. The age is like 20, 20 year difference. I can't remember that one. It's, I became dumber every 20 minutes that I watch it.

• 1:16:23Speaker 03

  I rewatch West Wing and John Adams and Band of Brothers probably twice. I'm in a loop.

• 1:16:30Barry Ritholtz?

  So, so it's funny. I was, I don't remember what I was doing when West Wing was on, but it wasn't watching TV. And it's on my list of things to go back and, and watch during the pandemic, we watched Mad Men, which I had never seen. And it's really amazing. Amazing show. Final two questions. What sort of advice would you give to a recent college grad interested in either a career as a professional athlete or working with professional athletes in a financial capacity?

• 1:17:05Speaker 03

  It does help to come with a sports background. However, it's, it's nowhere near the most important trait. The more you can bring interesting experiences and knowledge to sports, the better. That was the example of Moneyball, when a bunch of statistical nerds, you know, brought data to help drive more opportunities in sports and be more effective. So you could bring Outside perspective, however, I think in whether it's getting into sports or anywhere else, coming in with this service mindset of nothing is beneath you. I did have a situation one time where an honor student came in as an early, early job with us and said, hey, I was, I've been paying bills and bookkeeping for clients for the last six months and I

• 1:17:46Speaker 03

  was an honor student at such and such college, like this is beneath me. And, and I'm saying, well, last week I was cleaning gutters in a client's house because it was the first time them being a homeowner and we're trying to teach them how to manage a home. Nothing's beneath you. So I think if you just come in with, you know, built to serve with that service mindset, you're going to be successful in anything that you do.

• 1:18:05Barry Ritholtz?

  Huh. I love that answer. And our final question, what do you know about the world of investing and wealth management today? Might have been useful 25 years ago when you were first getting started.

• 1:18:17Speaker 03

  I would have listened to what, when I first job, when, when Sir John Templeton at Franklin Templeton was giving us some of these quotes, like the four worst words in investing is this time it's different. You know, bull markets are born on pessimism, they grow on skepticism, they mature on optimism, and they die on euphoria. I would have listened because nothing's changed. And it's taken me a long time to have, to not have any FOMO, FOMO when it comes to investing, but I'm there. And I would have listened to a lot of his traits and quotes from, from back then because obviously he had lived in before me. I just wish I would have listened to the early days.

• 1:18:55Barry Ritholtz?

  Huh. Joe, really fascinating stuff. Thank you for being so generous with your time. We have been speaking with Joe McLean. He is managing partner at MAI Capital Management. If you enjoy this conversation, well, check out any of the previous 600 or so we've done over the past 12 years. You can find those at iTunes, Spotify, Bloomberg, Apple Podcasts, or wherever you get your favorite podcast from. I would be remiss if I didn't thank the crack team that helps put these conversations together each week. My audio engineer is Steve

• 1:19:34Barry Ritholtz?

  Gonzalez. Anna Luke is my producer. Sean Russo is my researcher. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

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