As NIL turns 3 years old, financial literacy is imperative for athletes

As the NIL Era celebrates its third birthday today, consider how swift the evolution has been over the last 36 months, especially within an industry that historically moves with glacier-like speed.

We’ve progressed from athletes for the first time monetizing their brands to the proliferation of donor-driven collectives to the brink of an entirely new frontier – the precipice of a landscape-shifting revenue-sharing model.

All of which underscores one thing: Financial literacy has never been more critical for college athletes.

On3 caught up with Aaron Ryan, president of NorthRock X, which views itself as a first-of-its-kind financial and lifestyle advisory firm dedicated to modern athletes and beyond. A veteran of 22 years at the NBA, and the first commissioner and president for Overtime Elite, Ryan shared perspective on a host of issues related to the need for athletes to be financially literate in this new ecosystem.

This interview has been lightly edited for context and clarity.

Q: Are you satisfied with the level of financial literacy that college athletes have now three years into the NIL Era?

RYAN: “We’ve made a ton of progress, especially in the last five years. It’s become popular to think about yourself as a brand. It’s been inspired by folks like LeBron, and prior to him, Magic Johnson. There’s a lot of conversation around building businesses. But I’m not satisfied. I think we’re just scratching the surface in terms of what’s now going to be required. We’re talking about [potential] employment of student-athletes on college campuses at ages earlier than we could have ever fathomed.

“As that entire economy develops, the services that support those athletes are going to have to meet them. You go to college, you’re in business school, or you’re in the engineering department, the responsibility of the institution is to prepare you for your future. Well, part of that future has to do with fast-approaching wealth and complexity. And so the services that surround that are going to require universities, athletic departments and these institutions, generally, to really surround these athletes with everything that prepares them for being a pro – professional as an athlete, or professional in the working world like the rest of us. 

“The reality is a lot of Division I, II and III student-athletes become really good leaders outside of sports, when their dreams don’t come to reality. And so I don’t think it necessarily needs to be exclusively geared towards how you prepare for sort of unthinkable wealth, but it should be preparing for life in a professional setting.”

Q: What are a couple points of emphasis that NorthRock X looks to stress with young athletes?

RYAN: “North Rock X is a segment of our business. It’s the focus segment on a community of clients that reside in sports and entertainment. So it is athletes, executives, even owners, chefs, folks who are in this realm who we want to tailor advice to really fit the industry. As it relates specifically to athletes, we recognize that there is an unorthodox earning potential but also a truncated peak in earnings typically. If you’re lucky, 12, 15 years sort of peaking in that part of your career, but there’s usually a second act that follows. So we end up with these clients, specifically athletes, oftentimes at younger ages than other ultra high-net-worth individuals. 

“And so our focus as a division is to find this intersection between mentorship and advice. Advice is around what we’re going to do together, how we’re going to execute it, and what we expect the performance to be. Couple that with why we’re doing it, and to have the patience to be an educator, to mentor young people as they’re learning about this and having to make decisions. You need a special type of advisor who appreciates that journey, which is a bit different than being an advisor to clients like C-suite executives, or money managers. 

“In the sports realm specifically around athletes, we’re gearing and really matching advisors with athletes who really appreciate that journey. Now that we’re working in college, it’s even more important that our advisors embrace that part of their role as mentors.”

Q: How much responsibility do you feel should fall to the school in helping to ensure that their athletes are financially literate?

RYAN: “Increasingly more responsibility, especially now that we’re talking about distributing in some cases $20-30 million on a single campus. Yes, they do have a responsibility to increase their role, and part of that role is partnering with experts who deliver these services like NorthRockX. These partnerships not only provide tangible, practical education, but also are prepared to directly service the athlete.

“If you think about the evolution of what recruiting and services have looked like for student-athletes, everything from world-class coaching, world-class tutoring, and sort of student-athlete guidance, to incredible facilities, strength and conditioning, nutrition – a lot of this didn’t exist 25 years ago. You think about sort of resources related to travel and sleep. Now you’re paying these athletes. 

“This just sort of extends the responsibility of services that surround a student-athlete. Now that these athletes are effectively [potential] employees, there’s new responsibility. So it’s increasing. And the leaders in the space, whether it’s at the conference level or at the university level, are really diving into this right now and taking it very seriously. There’s going to be some really amazing programs and leadership that come out of the next year and a half that will change the game forever.”

Q: What are one or two questions that college athletes should ask potential agents as they vet them?

RYAN: “I’m going to start with three words: curiosity, engagement, and investment. The athlete has to stay engaged in the process. The questions are: Do the agents that you’re contemplating have experience working with young athletes? And specifically, even though it’s early days, do they have experience working with collegiate athletes and specifically those who are navigating this new evolving space called NIL?

“The second is, like any resource that any of those would seek, ask for references, talk to people who have experience working with them, and try to uncover style and fit and scope of service and credibility – not credibility as an agent – but credibility in that what they pitch you is what their clients are actually experiencing. That’s incredibly important.

“Because whether you buy a house, or you’re going on a vacation, you need to make sure that the resources and the services that are being provided to you fit your needs. And so starting to make sure that we’re not – as parents, coaches, administrators – taking all of that burden away from the athlete, because it’s a really good teaching moment, to get an athlete to stay engaged in their own future.”

Q: What did you learn from your Overtime Elite experience about young athletes and their experiences that you didn’t already know?

RYAN: “One of the things I learned was how much pressure and expectation comes from being great at something. You’re a great athlete, and so folks start to expect excellence in everything around you, even though you have very limited experiences. You have very little experiences with money, you have very limited experiences with notoriety and popularity. You don’t understand both the opportunities and the risks with how you use your voice. And so it comes faster than you could ever expect. 

“As a result, the adults around that athlete start to also assume that you’re going to be a fast learner in all these things. And the reality of it is, the same patience that I have to extend to my own children has to be extended and protected around these young athletes. It was very eye-opening to see how quickly that all happens for an Alex Sarr or for a Ausar and Amen Thompson, because we’re watching it happen live. 

“That’s been happening for them for the last four and a half years. But also what I learned is how resilient and how transferable discipline and excellence can be if done the right way. So you have an athlete who knows how to get up early, work hard for what they’re dreaming about, get better, look at film. Those same skills are convertible to other aspects of their life. Just have to catch them and stoke a certain amount of curiosity.”

Q: From your experience with the NBA, what did you learn about what brands are seeking in young athletes, and what athletes should look for in brands to ensure that both parties are aligned?

RYAN: “The sooner an athlete can establish their values, what they stand for, what their passion points are, what are the things that they’re actually interested in that will carry through a campaign or partnership, that the fan and the consumer believe – the sooner you become marketable. So the early part of an athlete’s journey, whether it’s a ChrisPaul, a Devin Booker – we know the list – the sooner they established their own consistent, authentic voice, the more attractive they became the brands because it was actually something to connect to. 

“What I appreciate about really good partnerships is when the authenticity and the values and passions of an athlete are established, it becomes much easier for us all to figure out who makes a good fit for this campaign, or this brand or this product line. It becomes a lot easier. When an athlete is too fluid and too willing to just do anything and everything, it becomes hard for there to be a point of connection.

“Seeing some of the best campaigns I think I have witnessed, whether it was early days Blake Griffin and Kia or Chris Paul and State Farm, those were built because those athletes and the people around them helped really establish what their brand was, what their voice was to the consumer and how to best leverage it.”

Q: What percentage of college athletes grasp how best to use social media and what social media practices to stay away from?

RYAN: “That generation is very adept at just leveraging social and how to use the different channels to express themselves. It becomes a different tool when you’re trying to build a brand and trying to really use it to drive a business. I’d say less than 40% of athletes are adept at using it as a business and brand-building tool as much as a communication tool. I think as a communication tool they are amongst the best. 

“Now with that comes the trade-offs of what you’re communicating and how you’re communicating it. Once you acknowledge the fact that you are someone who a lot of people follow and want to emulate or at least are attracted to, that’s when those tools become more business-oriented than just fun and games. You want to start to be really selective on how you use them. 

“We’re going to see in the next three to four years, as more money comes into NIL and more opportunities are provided to the amateur athlete, you’re going to see them become more and more savvy at this. Because they’re going to have to be in order to deliver on partnerships and to deliver results for people who are paying them a lot of money.”

Q: As we talk about financial and lifestyle guidance for college athletes, what is an important topic that few people are paying attention to right now?

RYAN: “People are talking around this. But at the heart of this is it’s important to establish and define what a healthy relationship with money looks like. Prioritizing a budget, setting your goals, understanding the importance of taxes – they’re a big part of this equation, it’s probably one of the most important things early – and recognizing the long-term power of liquidity. 

“If you can build that scaffold around a defined, healthy relationship with money, that’s when the fun begins. If you can get that baseline set, the ability to prepare for both a rainy day and bright opportunities when it comes to investment becomes a lot easier to take advantage of. Too many people want to talk about investments and investing and finding new opportunities to get involved in, but they don’t spend enough time on the baseline, which is do you have a great team and a healthy relationship with money, which has to do with goals, budgeting, taxes and liquidity.”