How a $5-billion RIA is using a client's legendary Rolodex to build a sports practice

Constellation Wealth Advisors LLC has launched a new sports-focused business to attract sports clients and to help get the word out, the firm enlisted the help of one of its own top clients, who is well-known to many athletes.

Seth Abraham, former president of HBO Sports at Time Warner and former chief executive of Time Warner Sports, has agreed to open up his Rolodex and introduce Constellation advisors to elite tennis players, boxers and baseball players he has known over the years. See: Constellation Wealth Advisors nabs a major rainmaker.

“My greatest asset is my Rolodex,” Abraham says. “Having worked in sports for 42 years, I have been given access to many different people – both agents and athletes. I’m going to make introductions to these athletes and participate in the presentations to them.”

For now, Abraham, who has been a Constellation client since 2007, is serving as an unpaid consultant to the firm.

The New York-based RIA launched its sports division on Aug. 31 and is hoping the initiative will attract more high-net-worth clients. The firm manages nearly $5 billion in assets for about 180 households. Currently, less than 20% of those households are sports clients. The current minimum is about $10 million in assets. The average client has $40 million to $50 million in assets.

Building muscle

Having former athletes and industry insiders on board will help Constellation expand this line of business more quickly, says its CEO, Paul Tramontano. The company began making moves to attract athletes in January 2010, when it hired former NFL quarterback Steve Bono for its Menlo Park, Calif., office.

Bono and Abraham serve on the company’s sports advisory board, along with PGA Tour golfer Joe Ogilvie.

These insiders give the RIA introductions to the nation’s best athletes, Tramontano says. They also share horror stories about how some athletes have been taken advantage of over the years by unscrupulous or incompetent advisors.

Ron Rubin: You can make the
sexiest website in the world for
athletes, and that’s not where you’re
going to get your clients. People
are referred to you because of
someone you’ve done business with.

“Seth Abraham has been a longtime friend and he also saw a need and an opportunity because he saw terrible things happen to boxers who made a lot of money,” Tramontano says.

Making it last

Even though athletes typically have very short careers, Tramontano says he sees similarities between these sports stars and other high-net-worth families his business typically advises.

“They want to build something that will last for several generations,” he says.

He feels his firm can offer specific guidance to athletes to properly save and invest their money so they can pass it down to heirs.

“When you hear of athletes who made all of this money and have nothing left, it’s because no one around them told them that they’re making a terrible mistake and that’s the kind of influence and opportunity we think we have,” he says.

Targeted approach

Abraham is helping the RIA with a specific strategy to attract athletes. For instance, Abraham has already lined up discussions with about six athletes. Abraham has suggested the firm focus on athletes in baseball, boxing and tennis.

Paul Tramontano: Seth Abraham has been
a longtime friend and he also
saw a need and an opportunity
because he saw terrible things happen
to boxers who made a lot
of money.

Abraham is known for bringing boxing to HBO during his 24 years at Time Warner. Later, he was president of Cablevision Systems’ Madison Square Garden/Radio City Entertainment from 2000 to 2004. In 2005, he started his own sports marketing corporation, Starship SA.

Abraham says the best athletes to approach are those who are veterans and may be in their mid-20s, as opposed to 18-year-olds who can’t quite begin to start thinking long-term about financial plans. He also believes that his connections in sports can help Constellation succeed.

“If I can go to a handful of elite athletes and retired athletes who know me well, then we’ll likely see success,” he says. “If we can secure a number of athletes, they will spread the word.”

Deep bench

Crafting partnerships with those in the sports industry is one of the best ways to build an athletic client base, agrees Ron Rubin, managing principal at Bridgewater Wealth and Financial Management LLC, a Bethesda, Md.-based RIA that was rolled up last year by Focus Financial.

Rubin has been working to build this niche for 20 years, and his firm works with about 30 athletes – including former Olympic speed skating gold medalist Dan Jansen, and pro football and basketball players. See: Focus Financial breaks into the American sports world with its latest RIA deal.

About 15% of Bridgewater’s $250 million in assets are from sports clients. The firm’s average client range is from $3 million to $5 million in assets but the athletes it serves typically have significantly more – above $10 million in assets.

Sports a challenge

Rubin concedes that developing a sports niche is a challenge, and having connections with marketing firms or agents is a huge plus. Still, even with connections getting new clients can be a long and slow process.

On average, it may take him 12 months to get a new sports client. In the last year, he’s gotten lucky and secured two new athletic clients – a golfer and a basketball player.

“You can make the sexiest website in the world for athletes, and that’s not where you’re going to get your clients,” he says. “People are referred to you because of someone you’ve done business with.”

For his part, Abraham also believes it’ll take some time to recruit a great deal of athletes. At this point, he is taking a low-key approach setting up a handful of meetings to help build the sports division, but he adds that if the efforts became successful quickly, then he may ask for compensation from Constellation.

“For me, it’s a wonderful opportunity to add something else to my work schedule which is very flexible,” he says. “I can come and go as I wish and at the heart of it, it’s a very good idea.”