Former NFL player Terrell Davis had to get rid of an accountant for being unethical.
During an interview with AFROTECH™, the two-time Super Bowl champion reflects on early financial decisions he made during his foray into the league. He had been drafted by the Denver Broncos in 1995 and entered into a three-year deal, worth $484,000, which included a $38,000 signing bonus, per Spotrac.
“When I first got into the league, there was no financial education. It was just trying to figure things out the best way you could and that was it,” he mentioned. “There was no one who came up to me and told me, ‘Here’s the plan. Let’s do X, let’s do Y, let’s do Z.’ There was none of that. So I had to look around and just watch people and see what they were doing.”
Among Davis’ lessons included the importance of hiring the right team to help him navigate the business of being an athlete. Early on, he worked with an advisor, who he was referred to by another individual. It became clear the advisor operated in a way that he claimed was not illegal but rather “unethical.”
The advisor’s actions included creating duplicate accounts to earn more commission.
“I did what everybody else did, right? I found a financial advisor and I thought things were good. The mistake that I made was that my advisor came through another person who referred me to this advisor,” he explained. “Now, he wasn’t a bad advisor, he didn’t do anything illegal, but he was unethical. What I mean by that, he’ll have accounts that he would duplicate. They’ll hold the same stocks and bonds basically. But he would get commissioned based off the amount of accounts that he had open. So, he would just spread you thin and you’d have the same accounts. He was making money, he was making a lot of money. And so when I found that out, because I was getting all kinds of statements and stuff like that, I was like, ‘Man, there’s a lot of statements,’ for the amount of money I had. I didn’t have that much,” Davis explained.
Through the advice of another friend, he decided to hire a team of advisors who now operate as a board.
“He was like, ‘Go get successful people who have no stake or no interest in anything you have. They’re just there because they just want to help you.’ And that’s what I ended up doing,” Davis said.
He currently has a team of five who sit on his unofficial board of directors. They have since been helpful in aiding him with decision making, including within the investment arena.
When Davis entered into retirement in 2002 after tearing his knee, real estate became a top interest as he viewed it as a “tangible asset.”
“I can see it. There was no ‘one day it’s up, next day it’s down’ type thing,” he said.
In the early 2000s, Davis had already become planted in the real estate sector. He faced several difficult times as a result of bad deals and not following the suggestions of his advisors to diversify his portfolio.
“I got into real estate really heavy. It was actually a good thing, but it also was kind of a bad thing because I wasn’t diversified,” he recalled. “Everything I had was in real estate. And then I had a year in 2007, I think 2008, when the economy shifted and real estate just kind of went into the tank. I was really deep into real estate. And that was another moment where I was like, ‘Wow.’ You feel like you did everything right. You feel like you were being smart. You feel like you were just doing what most people would do.”
Davis confessed he was a bit too focused on real estate, and his advisors pointed it out to him. “But again, I was like, ‘I’m just gonna blow past this red flag.’ I liked the feel of it. So anyway, that was a part where things didn’t go well and I had a lot of bad deals.”
He continued, “So I learned from that. And so now coming out of that, it’s being more balanced again. It’s getting back to, ‘All right, gonna have some in real estate, have some in stocks, and just try to manage it more’… That’s what every advisor would say to you, ‘Hey, just be balanced, diversify.’”
Today, Davis is the co-founder of Defy, a performance sports drink. He also serves as an ownership partner at Alpha 1 Tax & Wealth.
