This is the second in a series of articles in which WealthBriefing will examine the world of sports and wealth planning, quizzing institutions and wealth managers to hear their thoughts about the sector.

The wealth management sector has come a long way from the time when looking after the affairs of sportsmen and women was treated as a nice sideline but not the main event.

Today, the sports sector is a vital segment, according to the managing director of sports, media and entertainment at RBC Wealth Management. WealthBriefing interviewed Sandy Swinton, managing director of sports, media and entertainment and newly-hired director Jason Turner, as the publication continues its examination into the world of sports-related wealth planning, (To see a previous article, click here.)

“There is no client segment for which segmentation is more relevant than sports, media and entertainment,” said Swinton. “Especially in sports, it’s about knowing who [the experts are], and working with the key COIs [centres of influence]. We get asked all the time who is the best lawyer or advisor for various issues.”

Swinton, who joined RBC Wealth Management in 2010 from Barclays Wealth, believes segmentation for sports stars in the wealth management sector is a necessary need for any institution.

“With sports clients specifically, there are indeed two-way relationships with the accountants, the lawyers and the agents in the industry as they provide us with our opportunity flow. For them [sports clients], trust is essential, it is all about who can the intermediaries trust to represent their talent. And we like to think we are getting a reputation for being all the things that are essential in building trust," he continued.

Sports stars have specific earnings profiles (they can be relatively short); the need to take care of such a client's wealth is evident. Their situation demonstrates why effective wealth management must take account of the full "balance sheet" of each individual, taking account of specific circumstances.

Turner, who joined the firm in June 2017 from Deutsche Bank, has a background in professional sport as he was a rugby player until his career was ended by injury, and then he moved into the financial sector. He said segmentation has helped forge a better understanding of what sports-related clients want.

“I think segmentation leads into deeply understanding your client and having insight into a client’s world is really important in terms of empathising and understanding the capabilities needed for certain clients,” said Turner. “But also there are differences across sport, there are different profiles of sport persons and the things that they need. For example, professional footballers will have a contract, and will know for three years they are getting x amount of money, and that will drive certain behaviours. A golfer may look at his future and think “I don’t know when I will win the next tournament”, and this can drive different types of wealth planning behaviours and services.”

Turner added: “So if you have an uncertain future, your appetite for long term planning is probably stronger than maybe if your future is quite certain, and that can drive different types of decisions. For the most part, however, for us it is about making sure our client base takes advantage of long term planning capabilities of our business.”

The need for wealth planning for sports stars has skyrocketed over the past 25 years, as more money has been pumped into sports of all kinds. The increase in demand means financial institutions have had to increase their offering to meet the needs of clients. In the recent 2017 Forbes’ list The World's Highest-Paid Athletes, Real Madrid footballer Cristiano Ronaldo made $93 million in earnings and endorsements last year and is the world’s highest paid athlete in the world, followed behind by US basketball star Lebron James ($86.2 million) and Barcelona legend Lionel Messi ($80 million). As if to underscore the topicality of the issue, news headlines are currently full of stories about the astronomical sums being paid by French football team Paris St Germain for Brazilian ace Neymar, reputedly for a cool £198 million, netting the player $33 million a year.

RBC is not the only such institution to cater to sports-related clients; Coutts, the UK private bank, for example has a sports, media and entertainment segment. Barclays' wealth business has a sports, media and entertainment offering. Such segments are valued as differentiators - and it does a firm no harm to be known as one that looks after sporting idols or Hollywood moguls - and also help with the overall branding efforts of firms.

Expansion
RBC Wealth Management has been increasing the profile of its sports, media and entertainment in the UK, especially after the firm’s purchase of City National in Canada in 2015, which is claimed to be the bank to the “stars”, providing financial advice to A-List celebrities.

The hire of Turner, in June, increased the members of the team to eight, and Swinton believes expansion of the segment is an important part of the company’s vision.

“We have been building our client service capabilities for the sports, media and entertainment segment for the past 18-24 months,” said Swinton. “Part of the build is obviously recruitment. I think sports is a very important part of what we do, in addition to, a big entertainment piece, and in order to cover both of those waterfronts, we need experienced people. We are up to eight people and still have ambitions to grow. Jason [Turner] has been a very signature hire. He has a background in professional sport, which is one of the many reasons why we hired him.”

Swinton added: “I do think we can grow this client team but we’ll only do it selectively. When it comes to building this team, we are going to be very picky. We are looking forward to bigger things and RBC is committed to this segment globally, outside London that means working with our colleagues at City National, the LA-based bank we acquired in 2015, and our colleagues in Canada to do the best for all of our clients.”