E11: Financial Wisdom from a Former Pro Athlete Craig Brown

In this episode, Alec Ogletree and Kris Benson chat with Craig Brown, a partner at NKSFB, one of the largest business management firms in the world. They discuss important topics like understanding cash flow vs cash burn, investing for the long term, and more. You don't have to be an athlete to benefit either - the wisdom applies to anyone!

Craig is a Partner and Co-Head of the Sports Business Division at NKSFB, the largest business management firm in the country. Craig oversees a team of world-class business professionals who act as the CFO and family office for almost 100 MLB, NBA, and NFL top-athletes and retired pros.

Here are some power takeaways from today’s conversation:

[07:10] NFL careers, longevity, and post-playing life

[11:35] Craig’s baseball career and getting bitten by the financial bug

[17:32] Career transition and financial planning

[36:33] Core advisor vs. vendor

[48:56] Education is a journey not a destination

[53:30] Cash flow vs. cash burn

[54:58] Risk vs. return

[1:06:22] An example of conservative safe investment

[1:13:26] Promoting financial literacy to young athletes

 

Episode Highlights:

[36:33] Core Advisor vs. Vendor

A core advisor is someone who gets paid regardless of whether the client takes their advice or not. Their responsibility is to provide impartial guidance and recommendations to the client. A vendor, on the other hand, only gets paid if the client acts upon their advice, such as by investing money with them. There is a conflict of interest, as the vendor benefits financially by convincing the client to choose their products or services. Craig emphasizes it's important for clients, especially athletes, to understand whether someone is a core advisor or a vendor. This will help them evaluate the impartiality of any advice or recommendations they receive.

[53:30] Cash Flow vs. Cash Burn

Cash flow refers to the money that is regularly coming in, such as from investments, rental properties, business income, etc. It's the money that is generated without having to sell an asset. Cash burn refers to the money that is regularly going out, such as living expenses, mortgage payments, car payments, etc. It's how much money someone needs each month/year to support their lifestyle.

Craig emphasizes the importance of understanding an individual's cash flow versus their cash burn. Their investments and income sources need to generate enough cash flow to cover their monthly/annual cash burn. If cash burn exceeds cash flow, lifestyle expenses will eventually exceed assets over time unless spending is reduced or additional income sources are found. Proper cash flow management is key to long-term financial stability and independence.

[54:58] Risk vs. Return

Craig advises clients to determine the level of return needed to support their desired lifestyle and long-term goals. This return target should then dictate what level of risk is appropriate and reasonable for different asset classes or investments. Investors should have a realistic understanding of normal market behavior so they are not susceptible to seemingly "too good to be true" opportunities. Proper consideration of risk tolerance and risk/return expectations provides a framework for making prudent long-term investment decisions.

Resources Mentioned:

NKSFB