Chris Moynes is an IIROC advisor with Aligned Capital Partners Inc. in Toronto. About 95% of his clients are NHL players, agents and coaches. The remaining 5% are in the entertainment industry, including actors and directors.
A client wanted to build a luxurious new home for him and his wife. He approached his advisor, Chris Moynes, to ask if he could afford it.
But it was July 2012, this client was an NHL player, and there was a collective bargaining agreement between the NHL and NHL Players’ Association. When the contract comes due, explains Moynes, if both parties don’t agree on the terms there can be a lockout or strike. If there’s a lockout, his client doesn’t get paid.
Moynes, an IIROC advisor with Aligned Capital Partners Inc., suggested the couple wait a year. They agreed. That turned out to be a good idea: there was a half-season lockout from Oct. 2012 to Jan. 2013.
Because they’d taken his advice, they were able to better manage their finances. Moynes notes he “hoarded a lot more of their money in money markets, so they’d have access to capital.” As a result, they didn’t have to make any sacrifices.
“Also, they were able to finish the house the way they wanted to a year later, without any financial st ress,” he says. “And they didn’t have to deal with a shoestring budget.”
For Moynes, these types of discussions are typical—95% of his book is NHL players, coaches and agents. He often has clients who want to purchase an expensive car or boat on a whim. His goal is to help clients understand if they can afford it, and shed light on the right financial decision.
Still, he’ll leave money for fun purchases. “We’ll always have an amount that’s liquid, and that number depends on the individual,” he says. “For some, it’s $50,000. For others, it’s $500,000.” The amount depends on what important life events the client expects in the next year, such as an engagement proposal or wedding.
There have been instances where clients haven’t listened and bought items they couldn’t afford. “Sometimes, [advising them against] it is not what they want to hear and, ultimately, it’s their dollar,” says Moynes, adding he’s never fired a client as a result of a splurge. Instead, he’ll rework the plan and continue to remind him that big paycheques won’t always come in.
In fact, players’ careers are short—the average is 5.5 years, he says, and they’ll earn an annual salary of about $2.4 million, for a total of $13.2 million [see “Advising (really) early retirees”].
“If you don’t plan properly then, unfortunately, five years after their career is over, about 70% of players are bankrupt or in financial distress,” he notes.
Moynes breaks down their plans into seven categories, which he outlines in his book, The Pro’s Process. This includes: banking (e.g., credit card debt and mortgages); money market high-yield funds (which are liquid investments); pension; other investments; insurance; real estate; and estate issues. The amount that’s in any given category depends on each player’s goals. For instance, only about 20% of his clients invest in real estate outside of their homes. Again, it comes down to affordability, explains Moynes.
“Some of the property they’re buying, taxes are $20,000 to $50,000,” he says. “Even if they pay off the property by the time they’re finished playing, they’ll still need income to continue to pay taxes. If there’s no income, the option is selling and adding that chunk of money to the portfolio.”
There are many variables. If the player hasn’t signed a contract with the team, or his deal is short-term, he could be traded. In these cases, Moynes suggests renting.
“I’ve seen it too many times where a guy is sitting on a property that’s in a different city than where he’s playing, and he can’t get rid of the property because there’s no market for it,” he says. “If you’re signed to a one-year deal, don’t buy a house.”
These clients are also at high risk of injury. Though any injuries sustained while practicing are covered within their contracts, Moynes still includes disability insurance as part of their plans. Premiums can be anywhere from $1,000 to $100,000, depending on the coverage. For instance, off-ice insurance is usually cheaper, and covers the player for any injuries they sustain while off the ice. Meanwhile, 24-hour coverage is more expensive, but covers the player for every second of every day.
Also, whole life (WL) insurance is equally important to mitigate risk. “There are two components,” says Moynes. “We can have large sum deposits that earn money while they’re young and spin off income down the road, and also the insurance part to protect their families.”
His research has shown this is a better option compared to universal life (UL) policies, which “got beat up in 2008.” He adds, “I prefer WL because, behind the scenes, the investments are being chosen for us. It’s not market-driven and has more certainty compared to UL.”
Once clients are done playing, some go into other lines of work, including coaching, sales or broadcasting. But the goal, he says, is they shouldn’t have to work unless they want to.