Money Talks with Johnathan Perrin

Welcome to our newest segment, Money Talks with Jonathan Perrin. Follow along and hear the latest on all things current in the financial sector with Jonathan Perrin, a current professional baseball player and also certified financial advisor. Here we hear from an expert on both sides of the field and give you insights to latest trends in the market from a professional athlete. Think A Frugal Athlete's version of Mad Money with Jim Kramer. Before we start with the segment, we figured we'd give you a chance to get to know him. 


Q: You are to our knowledge the only current professional athlete that is also a certified financial investment advisor? Can you talk about that process and what it was like taking the Series 65 exam?

A: I’m not sure if I’m the only one certified or not, but I know for a fact that I’m certainly not the only person that is interested in investing and there are surprising number of players in the game that handle their own finances. The process for me taking the series 65 exam to become a Registered Investment Advisor was the culmination of about 3 years of personal education in finance once I graduated college and signed my pro contract. I actually graduated from Oklahoma State University with a degree in history, and by the time I finished school and signed a professional contract I had very little education when it came to finance. I am an avid reader so I began reading books on investing, finance, and general economics. After about a year and a half of research, combined with some saving that I had done over the first couple seasons of my career, I opened my own personal investment account. During that offseason I was actually working as a host in a restaurant when I met who is now my current boss; Jonathan Fink of Satya Investment Management. He would come in for lunch a few times a week and would always be carrying some stacks of research reports with him. After a few days I started chatting him up about what his was reading and started to give him my own input based on what I had learned from my own research. Eventually we met up for coffee and kept in touch over the course of the 2017 season. Then when I came back home for the offseason he offered to hire me as an investment advisor and have his firm sponsor me to get licensed and take the series 65 exam. The series 65 is a comprehensive 3-hour 130 question exam that is required to be a registered investment advisor. The test consists of four parts: 1) Laws, Regulations, and Guidelines, Including Prohibition on Unethical Business Practices. 2) Client Investment Recommendations And Strategies 3) Investment Vehicle Characteristics and 4) Economic Factors And Business Information. To pass you must get at least 94 questions correct for a passing score of 72%. You are required to be sponsored by a firm to be eligible to take the test. Once you are sponsored by a firm to take the test you are eligible to sign up for the test with the Financial Industry Regulatory Authority aka FINRA. The process of studying for the test was a long one, I began studying while I was playing in the Arizona Fall League in October and continued to study on a virtually daily basis until the day I passed the test in late January. The exam itself was extremely difficult. Of all the tests that I have ever taken (including the LSAT) this was by far the most difficult and the most stressful. The overall experience is one that I am thankfully for, I certainly learned a lot of things that I didn’t know before my months of studying, and I believe the test does a really good job of making sure you understand the broad range of content that is required of being an investment advisor.

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Q: As an athlete you have made an effort to continue your education and post career opportunities taking the LSAT exam and Series 65 exam, how important should further learning be for professional athletes?

A: I have made it a priority in my career to use that down time to pursue interests outside of baseball and continue to round out my life. I have to give a lot of credit to my mother for instilling the value of being a well-rounded person and continuing to pursue passions outside of just sports.

One of my favorite quotes is “Your education doesn’t stop once you leave school” and I have certainly taken that to heart. I think it is extremely important to continue to seek out knowledge and educate oneself even after you leave school. For athletes I think we are given a very unique situation where many players have at least a few months per year where we have down time in the offseason. Particularly when it comes to financial literacy I think that is one area the American education system falls drastically short on. However, there are plenty of resources out there on the internet that are completely free that are available to help people educate themselves on basic finance. I understand that most athletes are going to hire advisors to handle their finances, but it is still the responsibility of the athlete to have some level of financial literacy to be at the very least a competent client, which makes it more difficult to be taken advantage of.

Q: Baseball players typically have the longest careers but also may have the toughest time breaking into the majors, what is your advice to young baseball players trying to get where you are?

A: My advice to young players is continue to work hard and play this game with passion. The grind to get to the big leagues can be extremely hard at times and if you don’t have a passion for the game it will be even more difficult. The minor league grind is certainly not glamorous and from a financial standpoint it is certainly hard to make ends meet at times. For those players who receive large bonuses when they first get drafted, my advice would be to be sure to get as much of that money put away into investments as early as possible. And then to live a minor league lifestyle while making minor league money. That bonus is an opportunity to set yourself up for a successful financial future regardless of if you play in the big leagues or not.


Q: Changing gears a little bit, with the recent news with the stock market, how important is it to have a plan and strategy when you are investing?

A: Having a clear and consistent plan with your investment strategy is very key. The two most important factors for successful investing in my opinion are knowing your own risk tolerance and staying diversified. Knowing your personal tolerance for risk is extremely important because markets can go both up and down. Everything is hunky dory when markets are rising and you are making money. But as the events of the last few months have shown us, markets do not go up in a straight line, and understanding your tolerance for risk will help you better weather the storm when things get choppy. Diversification is the way you can spread out your investment risk. Having your money in multiple different asset classes, for example: Stocks, Bonds, Real Estate, and Cash. Is a way to limit your potential for losses. And even within your stock portfolio, you never want to have all your eggs in one basket, and owning a variety of different stocks across multiple sectors will help you mitigate your risk. For example, over the last two weeks or so the tech sector has been taking a pretty hard hit. Now even if you own a basket of 10 stocks, but 8 of them are related to the tech sector. You are not properly diversified and would have taken a much harder hit than if your 10 stock portfolio was spread around across multiple sectors. At all times we want to have our money spread across in different places so that we are not over exposed to the downside risk of any one investment.  

Q: As a certified investment advisor, what’s your advice for professional athletes who may try to get into investing?

A: Know what you’re doing before you get into it and start small. I have been approached by other athletes who know about my interest in stocks and many if not most athletes have interest in investing in some form or another. The stock market has made a lot of people a lot of money, but it can also lose you a lot of money if you don’t know what you are doing. I suggest doing your own research and doing a lot of reading before you ever open a trading account. A couple great books for beginning investors are A Random Walk Down Wall Street by Burton Malkiel, The Intelligent Investor by Benjamin Graham, and Real Money by Jim Cramer. After you get a base of knowledge there are also some great investment simulators out there where you are given something like $100-500k of fake money to trade with to test out your investing chops. I started out doing one of these simulators for a few months to get the hang of making stock trades before I ever did anything with my own money. Of course, if you aren’t inclined to handle this on your own, there is no shame in hiring an advisor. Having a financial advisor is a great option, but it is never a bad idea to educate yourself and work to make yourself financially literate.

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Q: With the influx of professional athletes getting into VC funding, what are some trends athletes should be aware of?

A: Venture Capital funding is a tricky subject. Athletes are certainly targets for shady business deals that take advantage of the people that invest on the front end. There are plenty of horror stories about athletes who get involved in various business deals and they end up getting ripped off and coming out of the deal with nothing. Anyone, not just athletes thinking about investing their money into an upstart business needs to do their due diligence. Go over the business plan, make sure you have a very clear understanding of what the business does, and if you do not understand what is going on make sure that the person on the other end of the deal can articulate It clearly to you so that you understand. If you don’t understand the business I wouldn’t recommend getting involved.

Q: What does it mean to you to be a frugal athlete?

A: To me being a frugal athlete is being someone who realizes the short window of opportunity one has to play the game they love. By understanding the fact that your timeframe to play sports is so short, that enables athletes to understand that the money they make during their career is not going to be pouring in forever. This understanding will lead to quality budgeting, lifestyle, and investment decisions that will allow the money that one makes during their career to be able to last long after their playing career ends.