How the College-Athlete Market Could Blow Up for Financial Advisors

Before 2021, the NCAA forbade so-called NIL deals, arguing that the ban was necessary to maintain college sports’ distinctness from professional leagues. That changed when the U.S. Supreme Court ruled that the restrictions were unfair. The 2021 decision kicked off a new era when college athletes could monetize their fame.

The highest-paid college athletes now earn millions. Bronny James, the son of NBA star LeBron James, and Shadeur Sanders, the son of retired NFL legend Deion Sanders, lead the pack, with NIL deals worth a reported $5.9 million and $4.8 million respectively. Olivia Dunne, a Louisiana State University gymnast, has endorsement deals reportedly worth $3.2 million. While those athletes have grabbed headlines, five- or six-figure earnings are more typical, advisors say.

“It’s a very small percentage of college athletes who are making the large money,” says Noel LaMontaigne, a former NFL football player who now heads the athlete and entertainer focused arm of $2.7 billion-asset Verdence Capital Partners, based in Hunt Valley, Md. “But there are a higher and higher percentage who are making $50,000, $100,000, or $250,000 a year.”

Athletes’ NIL deals range from to promotions of car dealerships to endorsements of products on social media to appearances in Super Bowl ads. The bigger an athlete’s social media following, the more endorsement-deal leverage they have. Dunne has a reported social media following of 10 million, which helps explain why she’s in the seven-figure club alongside stars with eye-catching pedigrees in higher-profile sports.

“It’s not even about the most popular sport,” says Adewale Ogunleye, another former NFL player, who heads the sports and entertainment business at UBS Wealth Management U.S.A., “it’s about the most popular athletes, those who have the biggest following on social media.”

New court case. Meanwhile, advisors are keeping a close eye on a court case that could put a lot more money in college athletes’ bank accounts. House v. NCAA, an ongoing class-action lawsuit in federal court, could result in colleges having to share revenue from broadcasting, ticket sales and endorsements. Such revenue amount to billions of dollars annually.

Revenue sharing at major programs could not only boost incomes for more athletes, creating more college-age wealth management prospects, but it would likely allow for more sophisticated investing strategies. Says Kelly: “Rather than mostly focusing on budgeting and cash flow management, the rise in assets for the athletes would allow financial advisors to pursue alternative opportunities such as venture capital, private equity, and real estate.”

Financial advisors typically wait to see if athletes are likely to go pro before courting them as clients. But higher and more consistent earnings could also extend the time athletes stay in college before turning pro, potentially prompting advisors to seek them out earlier.

Of course, the wealth management industry already serves countless clients who owe their wealth to NIL revenue, including professional athletes, actors and celebrities of all stripes. “UBS advisors have a ton of clients who capitalize on their name, image and likeness,” says Ogunleye. “It’s just that over the past year and a half, it’s gotten a lot younger.”

Best approach. Advisors with a presence in the college NIL market say an education-based approach to providing financial advice is essential because college-age athletes often lack basic financial management skills, let alone the sophistication needed to deal with big windfalls. “These are 17-, 18-, 19-year-old men and women who all of a sudden are dealing with the same type of considerations as somebody in their 50s selling their company,” says LaMontaigne.

Firms that serve college-athlete clients aren’t necessarily going hard after that market yet, in part because most college athletes’ earnings wouldn’t throw off adequate AUM fees. At Verdence, the NIL-era consensus at first was to wait until athletes went pro before considering them prospects, says LaMontaigne. Then LaMontaigne’s alma mater, the University of Virginia, approached him about a student athlete who had attracted potential five- and six-figure endorsement deals. The family needed help with things like planning, cash flow and tax strategy.

Swayed by the demand for financial education, Verdence decided to accept college athletes as clients, selectively. It now has around a dozen. “We’re very educationally based even with older clients, so this was in our wheelhouse,” says LaMontaigne. “We’re not going to go out and put it up on billboards, but if we’re presented with the chance to help a 19-year-old coming into $250,000 or $500,000 or a million or more, we will,” he says. “Whether they go pro or not, you can change somebody’s life if you take care of them.”

Cresset, which has some $41 billion of assets under management, saw things similarly. “In the past, we’d engage with athletes once they’d made the transition to turning pro,” says Kelly. “But with them generating income, we felt there was an opportunity to add value from an education perspective.”

The firm started by publishing an educational white paper about key questions student athletes should ask when thinking about NIL deals. Later it built a free financial education program with an inaugural class of nine athletes—high school seniors and collegians—spanning baseball, basketball and football. Parents and other family members were invited to educational seminars, which covered everything from business entity creation to cash flow management to the basics of investing. The firm also provided complementary services including budgeting and cash-flow modeling.

“We recognized an opportunity to educate these athletes in a low-level way, getting them comfortable with some core concepts,” says Kelly. “The hope is that as we build relationships over time, when they do shift to potential clients, they’ll be able to come on board.”

Cresset didn’t have to build its educational program from scratch: It had done similar work for professional athletes, including members of the NBA’s Orlando Magic. “So it was a very easy transition,” says Kelly. “We just shifted to younger athletes.”

Cresset says expects its college-athlete client count to hit 15 in the next few weeks. But in a market in which the most effective marketing is word-of-mouth, Kelly sees Cresset’s educational efforts as a multiyear investment. “It’s a win for us if in five years our clients’ families are telling the story that we’re the firm that focuses on education,” he says.

At UBS, Ogunleye’s unit provides educational material and other resources to advisors serving or seeking to serve NIL college athletes. In a sign of how seriously advisors are taking the college-athlete market, Ogunleye’s team has also presented financial education courses to student athletes at numerous colleges. It’s unclear how NIL will ultimately impact colleges and their athletes. “But we do know that athletes who are getting checks need to have a foundation when it comes to their education and finance,” Ogunleye says. “And we want to lead the way.”