State Street Research, the Boston-based investment management arm of Metropolitan Life Insurance Co., is revving up its private-client group with sports as a driving force.
The Boston-based investment arm manages about $45 billion of assets, primarily for institutional investors. Yet its private-client business doubled last week when State Street hired a sports group that has 100 athletes as clients and about $50 million of assets under management.
The sports group is headed by Derek Sanderson, a former Boston Bruin who spent 13 years in the National Hockey League. He and the three other money managers in the group-Philip Kenner, Brian O'Dell, and Susan Ritval-joined State Street from Freedom Capital Management, a mutual fund company. The group was established in 1994.
Managing money for athletes who start making six-figure salaries in their teens and may not be playing 10 years later is a different ballgame, Mr. Sanderson said
"What's different are the risk parameters," he said. "I was finished at 31. That's a lot of living to do."
Because of their unusual circumstances, athletes need a lot of hand- holding and education, said Mr. Sanderson, now 51. He added that the money management has to be more "personal" than "clinical."
He said his team made the move to State Street to offer their clients access to a broader range of investments. To deal with the new client base, State Street transferred senior vice president F. Gardner Jackson to oversee portfolio management for the private-client group.
Though there are many money management boutiques that invest on behalf of athletes, a few banks are in the game too. Star Banc Corp., Cincinnati, has over 60 professional athletes as private clients in a program that started informally and grew into its own unit two years ago.
State Street charges athletes an annual fee of 1% of assets in accounts. But Mr. Sanderson said he knows of plenty of people who take advantage of athletes by offering to manage their assets for 2% of their annual salaries.
State Street can probably strike a more trustworthy and empathic tone with prospects by introducing them and their agents to Mr. Sanderson.
A Stanley Cup champion, who in 1972 was the world's highest-paid athlete, with a $2.65 million salary after becoming a free agent, Mr. Sanderson said he later went broke. He said his former money managers discouraged him from taking any interest in finances.
"They'd say, 'Enjoy yourself. Go play your game,'" Mr. Sanderson said.
He apparently took that advice. Mr. Sanderson said alcoholism late in his career and after his retirement caused him to ignore financial concerns and that he partied a lot of his earnings away.
Going broke is an experience he wants to steer other professional athletes away from. Education and "caring" are mainstays of his group's fiduciary mission.
"I know the world from an athlete's eyes," he said.
