Lessons - Why Most Pro Athletes Go Broke and How He Didn't | Marques Colston - Saints All-Time Leading Receiver & Super Bowl Champion

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In this lessons episode, discover why exciting investments can create hidden risks and liquidity problems.

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Understand how experience and access shape better investment decisions.

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Explore why financial advisors may have conflicting incentives and uncover how education can lead to smarter, more diversified wealth building.

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Talk to me about other things that did not go so well when you started to invest, like things that you...

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people, opportunities, anything that would be like a really good lesson for somebody that, again, is just sort of trying to get into the game.

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One thing that was very important that you said was you did leverage your experience.

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So you understood one component of the business that you were investing into.

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But what were some things that didn't go well?

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Maybe you don't want to redo them because they're really good lessons, but things that you should...

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Be aware of if you're going to start investing in anything, really.

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I say the one common theme that I ran into and personally and I saw a lot of my colleagues and peers running into is, is, you know, just.

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The the most accessible investment opportunities are typically the riskiest.

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Right.

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When you when you major in in early stage companies and startups, you are literally investing in the riskiest asset class that there is.

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And the challenge, the challenge becomes when when you are an athlete and you have the visibility that we have.

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but you don't necessarily have the access.

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You don't have the team that's set up to go find the quality deals.

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The deals end up finding you.

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And that was a common theme that I kind of had to work my way through was most of the deals are going to be early stage, which means the chances of them working and the chances of them becoming home runs are slim.

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But even in the companies that you do quote unquote win,

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the companies that do make it, do they make it to a level that actually returned your capital?

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Right?

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So, you know, I saw it even in my portfolio, I saw a handful of my colleagues.

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It's you have these investments that are doing well on paper and the founders and everyone is out, you know, pounding the drum and, you know, talking about how successful these things are.

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But as an investor, when you're not seeing the return come back in and that capital is just locked up,

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Sometimes you have capital locked up seven to 10 years as a company is trying to mature through those different phases in a world where your average career as an NFL player is three and a half years.

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Right.

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So you play your three and a half years.

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You've done the smart thing.

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You tried to start investing.

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You maybe got into some early stage companies.

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You end up getting injured in year four.

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the income turns off, you now have this gap.

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You have this liquidity crunch now.

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You have these assets over here that, you know, you got a ton of equity over here, but equity doesn't pay the bills.

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So just that misalignment and that miseducation on what are the different stages of companies, what are the different types of asset classes that you can be in, that was the biggest challenge.

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It still remains a challenge just because there just aren't very many platforms that offer you access.

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And that's one of the reasons that our firm kind of came to be is to try to help and fill that void.

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that's really good advice.

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Um, not just for athletes, for anybody, because there's so many different types of investment vehicles that even some of them cashflow, right?

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Like when you're talking about the kind of money that those pros are making like that, that for the average person is I built a business and now I exited a small exit kind of money.

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And if you put that money in the right spot, that cash flows, I mean, you could be pulling in a couple hundred thousand bucks a year, just in an interest on that money.

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If you're smart, you could do real estate.

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You could do private equity.

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You could do REITs.

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You could do funds.

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I mean, but I guess...

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if you don't have the right people around you, it's, it's, it's easy for us to say that because we've been in this game for a minute and now we understand all the different opportunities.

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But if you didn't have the right people around, you sort of putting this stuff in front of you, I'm assuming you're getting hit up with all these like super sexy startup ideas because they, they seem great, but then ultimately you get your money locked up and then they're not cash flowing.

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And then that's when you think you're doing the right thing, but ultimately you're still stressed.

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Like you're talking about with, with your liquidity.

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Um,

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So, okay, so then you start to move from, you're doing some deals.

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I'm assuming everything that you're teaching you've experienced at some point in your own life.

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I feel that.

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But when did you start to raise a fund, actually, as opposed to just investing?

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When did you actually build out something that you wanted to sort of give back to other players, raise a fund, educate, all of that?

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So this is that that was a lot later in the journey.

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You know, I before the current fund, I tried my hand at a early stage fund that was more of a value add platform.

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This is back in 2018.

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At the time I was in the Arena Football League, had ownership stake in the Philadelphia Soul there.

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And what we wanted to do was was find early stage technology companies to integrate them into the teams in the league there.

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And

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You know, it started out as kind of this value-add consulting firm, and then we realized that the early stage companies didn't have the capital to actually pay us.

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So then we started like, all right, can we raise a micro fund around this idea?

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And we got some traction, had some really good conversations, ultimately couldn't raise the fund.

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So in my mind in 2018...

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But why do you think that is, though?

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I just want to... Why do you think that is?

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I think for a lot of different reasons.

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You know, I think...

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at that point in time, you know, being, being the face of a fund with, with no real track record, um, outside of, you know, catching football from Drew Brees, um, to the, to, to, to the layman.

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Um, you know, I think that was one of the main drivers.

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Um, but you know, it, it's, it's another one of those things you, you, you, you're swimming in unfamiliar waters.

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And at that point, the water was too cold.

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So I had to retreat and kind of, kind of recalibrate some things.

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But, um, yeah, I think, uh,

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At that point when that fund didn't work, I had some other things going on, you know, on a personal level.

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And I never saw myself getting back into the fund business just because it was it took me so far out of my comfort zone, so far out of my wheelhouse of how I typically operate.

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You know, I played receiver in one of the most visible positions on the field on Sundays, but I'm a super introvert and I like to play the background in my everyday life.

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So it took me super far out of my comfort zone, really good learning experience, personal development experience, all those things.

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But when I left that opportunity, I didn't see myself getting back into the fun business.

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And from there, I kind of went into this mode where I wanted to try and educate and just create that exposure that I saw was lacking.

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Um, so I actually went into, of all places, I went into higher education, um,

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ended up you know had this idea for a program ended up partnering with with a friend of mine and and that had a connection at Columbia Business School and we took this concept around teaching professional athletes entrepreneurship and venture capital we took that concept and we rolled it into and created an exec ed program at Columbia Business School that we ran for three years and again

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Another chance to get outside of my introverted comfort zone in front of the class and actually talk to my peers about experiences and about, you know, cap tables and, you know, what is a convertible note.

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term sheets and all these different things.

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And I kind of fell in love with the opportunity to create exposure to something that was new in a way that was kind of tailor-made for us.

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So that's kind of when the light bulb went off that, all right, there's something that I can do that's maybe not front-facing on an investor side, but there's something that I can do to help educate other players and my peers

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And that kind of got that program kind of got me started, you know, down this pathway that led to me ultimately going to get my Series 7 and my Series 66 to become a financial advisor.

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And, you know, that's where, you know, I started to see some of the inner workings of financial services and where some of the gaps are, you know.

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So when I when I'm able to talk about, you know, some of the deficiencies in the teams that surround these athletes,

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I'm able to kind of talk about it from two different lenses, as the player himself, but then also as the advisor who was, you know, felt handcuffed at times because I couldn't bring the right insights, I couldn't bring the right products that I knew my clients needed.

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I kind of had to stay in my lane as a broker.

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What are the, I mean, it's 2024, I would assume, like outside looking in,

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that financial advisors should be helping people understand basically all the things that you built out in that program, which is wild to me that that didn't exist or wasn't like a kind of like a league standard.

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Like I feel like this is, this is not, this is not new information for a lot of people in the business world.

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Why would a financial advisor, but I actually, you know what, when I say that,

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I have to check myself because even the financial advisors that you get from a bank that would help my mom retire, I still have issue with some of the information they give her.

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So...

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Yeah, I guess I'm a little bit far down the rabbit hole as to why I think that it should be common knowledge and common sense, but I guess it isn't.

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So what is the – I mean, the average financial advisor that's helping an NFL player with millions, if not tens of millions of dollars, what's the advice that they're giving them or what products are they allowed to offer?

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Like, what's the lane that you have to stay in?

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It really becomes this game of – I can –

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I can sell you the products and services that my firm gets paid for.

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Right?

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So think about it this way.

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When you think about the fee structure of a financial advisor, right, to get paid off of the assets under management.

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So if I'm managing 100% of your portfolio and most of it's in, you know, your typical equities and bonds, and you might have some alternatives here and there, but they're more institutional alternatives.

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I'm getting paid a 1% fee off of everything that I manage.

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If you take money out of this, from under this management and you deploy it into a startup company or you deploy it into this venture fund, I no longer have visibility into what's happening as an advisor, but I'm also not getting paid my fee on those assets.

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So if it goes well, I don't get any of the credit.

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If it goes bad, I'm going to get the blank.

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Right.

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So an advisor is literally misaligned with building this holistic portfolio that, you know, that, you know, 22 to 30 year old athletes have time to kind of build out and they need to be in some of these alternative asset classes because that's what portfolio theory tells you at that age.

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Right.

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You have time.

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So there's just some fundamental misalignments with.

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The athlete community and the financial advisement community, which is one of the reasons you're starting to see more and more athletes kind of move into that.

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The ones that are in a really good financial position, they're starting to move into that family office model because it offers a more holistic solution.

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Thanks for tuning in.

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