Lots of people are rooting for their favorite player to perform well in the World Series this year, but Pete Bush has a special interest in Major League Baseball's championship series.
Since 1992, Bush has focused his financial service practice on helping athletes, with a special focus on baseball players. A former player at Louisiana State University, and a member of the team that made the school's first appearance at the national championships, the game has always been in his blood. And his connections to it helped him build a niche business into an empire.
Bush will be the first to tell you he isn't as active in direct financial planning today as he once was. As his company, Horizon Wealth Management, has grown, he has shifted more into a CEO role. But all totaled, the company works with roughly 75 athletes in the MLB, NFL, NASCAR and even Japan's Nippon Professional Baseball.
"There's a certain culture and vernacular that goes with each little niche and that went well with who we are," said Bush in an interview. "We established relationships with agents and coaches who could refer us business."
Bush initially used his LSU connections to help build his player roster. Many players from the school went on to join the pros. But it was partnering with an old teammate (and longtime pro player) Jeff Reboulet that really kicked things into overdrive.
The two played together on that 1986 winning team and Reboulet was drafted to the majors. In 2002, he reached out to Bush as his MLB career was coming to an end and said he was interested in getting into the financial services business. He studied for and received his Series 7 General Securities Representative exam during his last year in ‘The Show.’
"That's what really opened up the market," said Bush. "He had played pro ball for 18 years and his network was like a who's who. At that point, it started opening up other people. ... We don't have anyone in the Hall of Fame in Cooperstown yet, but we have several top earners and All Stars."
Three years after Reboulet and Bush joined forces, they met Pete Roe, who had clients in the NASCAR world. Other advisors now include Jason Bell, who played for the Dallas Cowboys, Houston Texans and New York Giants; Brian Bass, a former pitcher for the Baltimore Orioles; and Reiko Powderly, who specializes in Japanese athletes.
Pro athletes, of course, earn more than most people do, but they also have a much shorter career lifespan. That's one of the biggest challenges advisors face, said Bush.
"The main challenge they have is their risk profile and time horizon are out of alignment," he said. "Because they're young, you think 'you can be aggressive because you have all this time.' The problem is their careers are really short. So a 28-year-old baseball player is like a 58-year-old plant worker. They only have a few years left before they have to live off of their money or have to find a new line of income.
Another challenge? The characteristics that make up a great player don't go hand in hand with sound financial decisions. (Related: Building your financial pyramid)
"The things that make an athlete really good on the field are aggressiveness, a sense of overconfidence and a sense of invincibility," said Bush. "When you're in between the white lines, they help you. They make you focus. But if you look at what blocks people financially, it's aggressiveness, overconfidence and invincibility."
Players also face an abrupt career shift when their days in baseball are over. That's something Horizon tries to plan for, so they don't feel the immediate pressure to take a job in another field (or can take time to look for an adjunct one, such as coaching). Those transition periods can last up to two years.
If players start thinking about life after baseball soon enough, though, it's possible to financially prepare for that transition period. The typical MLB player has a career of 4-6 years, said Bush. But instead of being handed multimillion dollar contracts from day one, as some NFL and NBA players are, there's a progression, which can make them a little wiser with their money.
For the first three years, player salaries can be kept at the league minimum ($535,000 in 2017). After that, they enter the arbitration phase, where they might receive a contract of a couple million dollars. Six years in, assuming they've played well and are one of the best in the league, they're eligible for free agent status, where they can earn even bigger paydays. (Players who last 10 years in the league become eligible for the MLB pension, which pays $230,000 per year for the rest of the player's and wife's joint life.)
The trick to maintaining the lifestyle the players are used to is teaching them to spend and save wisely, keeping the timeframe of that player's contract as the focus.
Bush says Horizon advises players to have their houses fully paid off before they retire ̶ and to fully fund their children's college plans. The idea is to finish the game with no debt. Once that's done, accumulate enough assets to supplement whatever income they earn after their playing days.
That might sound basic enough. But drilling it into the heads of athletes is the real challenge.
"We plan with what we know," says Bush. "So if you've got a two year contact, this plan is only good for that contract. Every contract, you get to re-dream the future. ... Ultimately, our job is a combination of education about how money works and how hard it is to replace once it's gone. And we have multiple discussions around 'if you live differently that everybody else [in your profession] does, you can live way different later'. Now, I can say that to a young person several times, but it's kind of like Vitamin C. It doesn't stay in their body and you have to keep replenishing it."
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