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

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26:55I'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? 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.

27:43And it was a highly dedicated and focused team. And so I went out and trained that to financial advisors as a 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 minister and then 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.

28:22I think you're in that money thing. Can you look at my stuff? That money thing. You do that money thing, right? That's what they said. And these were 32-year-olds. Some had made over$100 million 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 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. That's astonishing.

28:59There was no class that we ever took in college, right? And even if there was a class, you probably would not have paid that much attention to personal finance and investing. And so in sports and wealth was not something anybody was really interested in. 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 sports and entertainment divisions at wealth management firms. Nobody was involved. And so I went to Bernstein and said, this is it. This is where I want to be. I'm going to focus the rest of my life on this. I'm going to be a coach, but I do it in finance.

29:39And it was just something that they were open to but not interested in because it was way beyond investing. It was personal finance and cash flow and budgeting and creating a protected circle because there's so many things that could touch someone's money. It could be the car guy. It could be the suit person. It could be the jeweler. It could be the family that needed to be controlled and put the scoreboard up financially as to what required to have success. That sounds a lot like a traditional family office. I had no idea what a family office was at that time. But I was identifying this was the need.

30:15So long story short, it couldn't be done at a traditional wealth management business. It had to be an RIA at the time for me. And so that was the move to start Intersect at the time, which was heavily focused on personal finance and family office. And 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 really interested in this industry. That's unbelievable to me. So 11 people, you're managing$1.7 billion for about 50 clients. How did that grow?

30:57And then when did you start to hear from people thinking, hey, this might be a good tuck-in to a bigger shop? So that happened all in less than seven years. and it was in sports I realized a couple 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 that was going to challenge you to make sure that you create a process a plan and in 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 a baseball player wants to talk to an NBA player and a golfer and so on.

31:40It was a great connection to have community built in there. And that's how all these other sports came up about it. I was a classic case of high growth, trying to keep up with operations. So it's constantly taking my own capital and reinvesting and trying to stay up with the support. And 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 couldn't support it myself. 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 the business.

32:20Client owners, that's pretty sad. Yeah, and that was Mark McCormick was the, for sure, the OG in the sports agency world where his focus was to take an athlete to an entrepreneur, to an owner of everything they did. And that's when he famously got Arnold Palmer out of a Wilson. Palmer did handshake deals on just about everything he ever did and had a handshake deal with Wilson that Mark saw the value of what he was doing for that company and was able to renegotiate that. Most people don't. Wilson was actually a meatpacking company way back when. and a banker came in and saw that it was undervalued because they weren't utilizing the entire cow.

33:04And they started taking the hides and making footballs and basketballs from them. No kidding, wow. And extracted extraordinary value out of that and it eventually became a sporting goods and equipment company. So they were very savvy when they 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 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 he did that and a lot more like everything plus the royalty 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.

34:00And I know Peyton Manning and others have taken on that banner. And so he was a trailblazer very early days. And his level of wealth was extraordinary. That would rival the likes of Stephen Curry and Kevin Durant, as you see today. Yeah. 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 if you can do it yeah it's but there's nothing like golf is a completely different level of financial planning because there is no guaranteed contracts right that's right if you win a tournament yes you may get a you know year or two of of um of your tour card but if you don't and you're missing cuts then there's no money uh and it's it's one of the most difficult sports to survive The successful ones, obviously, as you said, could have 30, 40, 50-year careers.

34:52But it's a winner-take-all. It is. It's very difficult. 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? 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 a service-oriented business. It wasn't a business that was providing services. And so that was very different for me because I actually was not, I didn't come in with any high level of business prowess.

35:40I 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 percent and they would have MAI, which was McCormick Advisors International was the acronym. 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 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 so I 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.

37:09Is that effectively the evolution that you've gone through from Intersect to MAI? 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. The industry is trying kind of torn 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 six or 700 mutual funds to choose from.

37:50And all of a sudden, it was this hockey stick. It just exploded. And what happened? Well, it was the baby boomers were turning 35, which usually tends to be the age where you finally have some money to spend and invest. And then you look at this explosion and the value proposition to that marketplace was simply access, access to the capital market. 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?

38:22And then it became about spending and income strategies in retirement. That was the third one, all satisfying to baby boomers. Now the value proposition has flipped. It's access not to publics, but it's to privates. And it's spending an 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 never would have been a dollar to invest if I didn't control the cash flow. Really, really fascinating. You talk about you're dealing with younger people and especially with athletes.

38:56We'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 simple player? Day by day. Like day by day. Really? Yeah. It's a long game. There's no level of like putting a Monte Carlo analysis in front of someone and showing them 20, 30, 40 years out of what the compounding effect could be. is it looks nice, but it's just there's behaviors and discipline that have to be created day by day, month by month over time.

39:49But if you gamify it, it works. And that's the aspect of putting the scoreboard up of level of are you winning or losing each month? And the one thing 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. Tough to beat. Yeah, it's almost difficult. It's impossible to beat. And so that became my investment philosophy, even with young people or old people, is older. When you think about the laws of physics versus the laws of finance, okay, and we think about this abundance.

40:36laws 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 american express doesn't call but call and say 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 the laws of finance give you no immediate feedback.

41:14And 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 until you become aware of that, most people don't have success in it. 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.

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44:45I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest is Joe McClain. 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 giant business. Suddenly you have 17 and 18-year-old phenoms with potentially seven-figure contracts.

45:33what's it like having a conversation with a suddenly wealthy 18-year-old? And by the way, it's in high school now, too. So people are getting sponsorships in high school. So it's a— 16-year-old, even worse. You know, what's interesting is I was blessed with four years of Coach Lutholson 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 to buy for a million four I just looked at a there are research services out there 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.

46:36They're going to get 1.8 million dollars next year to go play as a sophomore in college. 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.

47:10You owe money to the government. And so that becomes that whole lesson of gross versus net. And then just setting up some success. The good news can be that they're learning these life lessons before they become a pro, right? 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 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.

47:50and so these are all conversations we're just having much much earlier but I think it could be a good thing long term I know as a college sports fan 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 less Huh, that's really fascinating. 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.

48:32Is that your opinion? I think so. And by the way, I think you know 90 % of these NILs are all probably$100 ,000 or less. They're much smaller. And that's by the way, 100's 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, 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 all of a sudden nobody's blocking for you. That will happen. We saw it in the Super Bowl this year.

49:10Exactly. So if you don't think through those types of things and be aware of it, and even like you maybe want to be contributed to that community and create a donor advised fund with some of this money and give it away and bring awareness to what your brand is because your brand really is not what your social followers are. It's being a great teammate, being a great human, being responsible. 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, there's going to be consequences to it earlier. So let's now move into the pros, but we're not talking about 52-year-olds in basketball.

49:51You'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 first year of his second contract calls up and says, hey, are we okay? How do you manage clients who are perhaps a little freaked out by the news flow? So I think over time for me the benefit has been introducing them to other people besides myself, 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.

50:36And 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? So I always go back to that. Yes, the market's down. Let's say it's down 10%. 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 over time. And it's opportunistic. These are all very rational things that, as you know, most humans become very irrational.

51:09And 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 athletes over the last couple of years really haven't been through a major, major market. 15 years of bull market. It's been really good. 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, you know, the consequences of that. But if you don't go through it, I was a benefactor of losing all of my hard-earned money in Europe in 2000.

51:53So I was investing in mutual funds at$10 that went to$100 in these biotech funds. And then March of 2000, everything went to zero. So it was a lesson I learned early not to have concentrated, be all in in one asset class. So most of the clients are fairly diversified. 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 100 so if you think about what you're describing a 25 26 year old on a max contract is is probably making over 40 million dollars a year um let's just talk through a couple things that are happening uh it's a guaranteed contract if you're in basketball or or baseball even hockey to that extent it's not guaranteed for death right right so there's only it is for injury up to it is for injury but not for death so then there's there's a life insurance um planning that's element where both the team's trying to get the coverage on on that person um and for their first 30 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 um again back to now the three it's the three buckets still remain for the rest of their life so you got to 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 so this is the third bucket right and this is the entrepreneurial one where we've got to keep fill in the first two and always know what it costs to be you.

54:04That's always January 1. Do you know what it costs to be you? And how do we make it cost a little less to be you if we can be smart with some of the savings in all areas? So what do we want it to cost to be you when this contract's over? It's, again, back to that burn rate of how much you're going to spend in retirement, because I'm assuming you're never getting another deal. So is it$2 million a year? Is it a million and a half? What is that number that we think you could live comfortably? And obviously, when you're 35 years old, this money has to last much, much, much, much longer. And so just going through that level of planning and giving them information so they can make better choices.

54:43But that is when this entrepreneurial bracket 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 30, 40 years as an entrepreneur. And that's where we start identifying what philosophy they want to have in that sector. So you mentioned 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 entourage that could be a bad influence Deal flows in the DMs is a line I saw that cracked me up.

55:31What do you think is just bad mojo that potentially derails a client? Well, a couple of things. You mentioned risk and injury. You cannot avoid this. And so 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. So we're talking nutritionists, trainers, physical therapists, massage therapists, like straight down the line. And they all have to report to the client, not to the team.

56:08So the team has these people, and they're great people. However, they work for the team. Right. 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 at max contract, they're going to be spending somewhere between$400 ,000 and a million dollars a year into their body. Wow, that's unbelievable. But if you think about what the benefit of that, players are playing to 35, 40, and beyond. I look at Tom Brady, no business playing into his 40s and playing fairly well.

56:48Well, that has to be the result of all that self-investment. No doubt. And so there's a track record there that others can turn to, LeBron James also being one of them, that they see the value in that investment. And they also see the risk of not investing in that. So I've had these discussions on the first contract when I look at it because I see the personal P &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 crushing fast food constantly. But at 23, aren't you kind of immortal? 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?

57:36How do you get a 22-year-old to understand you're not immortal? 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 the salary cap, you will have grossed a billion dollars in contract value. Get out of here. That's unbelievable. A billion dollars. So what are the things you can do now to be around in your fourth deal? It obviously extends beyond just being a good player. Four, three years deals or longer? Between three and four year deals. So if you're 21, by the time you're 31, 33, depending on your cycle of your contracts, you could have grossed a billion dollars.

58:23That's where Cooper flags of the world are trending towards. Jalen Rose, Jason Tatum, that's where they're trending. Wow. I was courtside for the Laker game against the Knicks last year. And what is LeBron, 38? He was last year. He is amazing. He is just a force of nature, and that doesn't happen by dumb luck. That looks like it's a lot of work. My legs were tired in the fourth quarter when I was 21 years old. It's extraordinary what he's doing. He was faster than everybody out there other than maybe one of the point guards. And he's a monster. When he's in the paint, you are not stepping in front.

59:06You're not taking that charge. You'll wake up next Tuesday. The old school guards back in the day, they would play their way into shape the first 20 games, right? Because they were, Lord knows what they did all summer. Athletes' summers now are just as physical and difficult as the seasons in terms of preparation. 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 what leads someone to get fired when you're delivering the cold, hard truth. Let me give you one where I almost got fired first. Okay.

59:46And this was one of my most important clients of the history of my career. And I thought I was doing the right things. And I still today 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 I know who they love and that's who that's who's in the trust um 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 um but do it verbally and so I addressed it and all of a sudden um I got called to to the table for a meeting with the client and uh and they they came at me and said don't you ever just you know come at my friends and this and that and um 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.

1:01:04And I was excited to have this conversation because let's get real about what's happening. And even when you don't know it's happening, 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 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 to have this great professional conflict is you have to have mutual respect and you have to have compromises.

1:01:47And you have to have these conversations in advance. So now I have them in advance. Like, hey, there's going to be times we disagree. And I'm, because I'm never going to give, you know, blow smoke. You have tons of yes people in your life. Right. 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. It did not. It went really bad and we were able to repair it over time. And I've had situations, unfortunately, where I just weren't, maybe I didn't get the client early enough to create behaviors.

1:02:24Gambling, 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 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 um all of the gambling acts and apps And even if you're not touching the draft kings between Kalshi and Polymarket or Robinhood, you could speculate, gamble, just go down a rabbit hole.

1:03:08For someone with a lot of cash burning a hole in their pocket could be really dangerous. This always connected, always on world, what sort of advice are you giving clients who have these seven and eight figure contracts? uh 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 um you know that that's that's even investing or betting on your own sport but um just even getting anywhere near attached to it is something that could affect the the growing wealth that you could create over time i guess there's a level of scare as you can scare them with that and for all of us um it's not Gambling in sports and the amount of revenue, I don't think it's a great – it really isn't a great thing.

1:03:57No, it's pretty awful. And you have a whole generation of young, mostly males, that have become gambling problems, addicted to it. Does fear really work in that? Hey, you're risking a billion dollars against fooling around with$10 ,000 or$20 ,000. It doesn't make any sense. The scarier ones are in Vegas. When you go to Vegas or you go to some of the other casinos, and you learn the very first time what a marker is. And so what Vegas created with the markers is there's no exchange of money. It's just signing your name. And then inside that contract, it also says that they can reserve the right to go into your bank account and take the funds if you don't pay up.

1:04:42And 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. There have been studies that people who spend cash versus credit cards, credit card you're just swiping or tapping. 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. Even to that point, we've had clients where we've decided to have them write every check, pay every single bill. So they feel it. So it's you send a checkbook. Here it is.

1:05:18Now you have to sign it. You see exactly how much you're paying for each of these transactions. It works. 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 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?

1:05:59How has the world of athletic finances changed over the course of your career? you have to be first thing that's changed the most is you have to be sophisticated from day one right so i 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 like it's these contracts are very big and they're they're early and they're coming fast uh 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. And so what are the decisions that we can make now that set you up, not just for yourself, but the future?

1:06:41We're not talking about going broke anymore. This is 100-year money. And so that level of estate planning that exists for a 22 or 23-year-old now versus that we never had that before. And so I don't think the asset allocation needs to change. it's just that entrepreneurial bucket will evolve over time. And so having that level of getting someone with the founder mentality, I don't know about you, but I love being a founder, being a CEO is not as fun. So I like having people say, be the CEO of your money. Like, I want you to be the founder of your money. Like this is, we don't want the shirt sleeves, a shirt sleeves metaphor that everybody talks about.

1:07:23Let's think about that entrepreneurial narrow 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. Really? And I think that's great. Come out of the NBA to be a high school coach. Correct. And I think that would be an extraordinary gift back to the universe as to your mindset and what you believe in and the give back. It's important to fill your time, right? 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 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.

1:08:10You have that professional locker room in life that is established for that third bucket. So I'm seeing more and more of athletes getting involved kind of 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? I think the common ground is just be wary of your time. 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 own SailGP, and then they have a Formula One race team, and they're all limited partners in these things.

1:08:58It 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 access to these things? Yes, but at the same time, 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 a book for the second time, and I'm still not good at it, called Essentialism. I think it's called Essentialism. And that's the disciplined pursuit of less. Because I have a ton of user error in my life where I just say – I help clients say no, but I say yes too much to doing other things.

1:09:38And 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 are opportunities, I think, to own things, but 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. 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? Well, let me, for a second, I'll overgeneralize what's happening in sports, per se.

1:10:22So we went from spending money on materialistic things to overinvesting in private things. And so, yes, it's great. 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, no one really understands risk and taking too much. And at that point, you truly start evaluating what that means. So I don't know if everybody understands yet, as an investor, all these things that we're investing in privately. You don't know how much it's worth. And so that's a significant blind spot for many. back to those mental traits that we all have as athletes that we're willing to bet on themselves, that there is nothing that we're not willing to take risk on.

1:11:08That'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. Some clients' growth buckets were just in muti bonds for 10 years until they produced enough income to support your lifestyle. But it's a significant blind spot right now that nobody really knows what some of these things are worth, but it looks good on paper. Yeah, to say the very least. I have to bring up your podcast, The Pro's Pro. Your first guest was Eli Manning. Is that right? First, what is this podcast thingy? What motivated you to go that way? It's this new thing. It's just starting.

1:11:45It just came out. And what do you want to accomplish by sitting down with people like Eli Manning? For me, I was just hoping it's a gift to the next generation that's seeking information. and get some quality information. So 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 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 ask a bunch of questions of the pro.

1:12:29I just want to now interview a lot of these successful athletes that have been through, like Eli as an example, had to come into 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. 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.

1:13:05But at the same time, we can all learn from them as well. Creating a permanent record is so important because the half-life of financial literacy is so short. I have had the same conversation every three years. Didn't we talk about this in 2023? 23? Yeah, but I kind of forgot. So let's, I only have you for a few more minutes. Let's jump to our favorite 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? 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 Lute Olson.

1:13:55You 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 a freshman. 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.

1:14:26That was a great gift. Outside of all the basketball stuff and always being prepared, that was a great gift he gave us. Jim Escobedo was the example at Frankl Templeton who told me, you don't know nothing about nothing, which was great. And then as I began to get into understanding the mindset effectively, having someone like Ken Heyman, who really retaught 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.

1:15:05But I've found now over time 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 who 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, advisors to be an ambassador on behalf of more clients. It's super powerful. It's not necessarily a mentor relationship, but I think the greatest gift you can give somebody else is your belief in them, even when they don't believe in themselves.

1:15:48And so that's the power of being an ambassador. I think I highly recommend it for as many people as possible. Let's talk about books. What are you reading right now? What are some of your favorites? You mentioned a book earlier. Greg McNown. I think it's Essentialism. Essentialism. Yeah, that's a great, that is a disciplined pursuit of less and getting rid of some of the inefficiencies that's in everybody's life and you could end up doing more. 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 get good grades and stay eligible.

1:16:25And my first book I ever read was John Grisham was The Firm. And for me, it got me excited to want to turn the page. 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, just read anything that would excite. It could be a magazine. It could be a comic strip. Whatever gets you excited to start reading, start. 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? I'm binging constantly on everything Netflix and just watch Madison, which was a great.

1:17:07Oh, really? So sad. Well, I don't give much away, but it's sad. I like good cries on air. I cry more on airplanes than anywhere else. If you watch Madison, I'm assuming you saw Landman. For sure. Yeah. Anything Taylor Sheridan does. He's extraordinary. I don't know when he sleeps. And he's got another, there's like a new show coming out like this month. I'm just astonished how productive he is. Give us another. What else are you watching?

1:17:38Oh, 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 binge outside. Same. I've been trying to watch. There's one where they're dating. The age is like 20-year difference. I can't remember that one. I became dumber every 20 minutes that I watch it. Yeah. I re-watched West Wing and John Adams and Band of Brothers probably twice. No kidding. I'm in a loop. So it's funny. 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 watch. During the pandemic, we watched Mad Men, which I had never seen.

1:18:21And 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? It does help to come with a sports background. However, 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 brought data to help drive more opportunities in sports and be more effective. So you could bring an outside perspective.

1:19:04However, I think 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 job with us and said, hey, I've been paying bills and bookkeeping for clients for the last six months. and I was an honor student at such and such college, like this is beneath me. 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 built to serve with that service mindset, you're going to be successful in anything that you do.

1:19:42I 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? I would have listened to what, when I first job, when Sir John Templeton, at Franco 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 not have any FOMO FOMO when it comes to investing, but I'm there.

1:20:23And I would have listened to a lot of his traits and quotes from back then because obviously he had lived in before me. I just wish I would have listened to early days. 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 podcasts from. I would be remiss if I didn't thank the crack team that helps put these conversations together each week.

1:21:08My audio engineer is Steve 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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