Reggie Bush represents one NCAA athlete whose life was affected by a financial incident. (Creative Commons)

From high school to college to the pros and into retirement, athletes usually have a financial advisers in their ears.

Ed Butowsky, the managing partner for Texas-based Chapwood Investments, and Tony LaPlaca of Sacramento-based Perry-Young Associates, explained last week on KXSC Radio how college athletes live on scholarships, where athletes go wrong in protecting their wealth and how the recession is affecting retirements.

Read some of the highlights below, or listen to or download the audio from the full show.

1. Athletes are no different than anyone else.

“Money truly doesn’t know who owns it,” said Butowsky. “[Athletes] have a moment in time when they are professionals when they are playing a sport where they make a lot of money in some cases and a fair amount of money in some cases.”

2. The number one reason athletes go broke is they over-allocate money into private, illiquid investments and they overspend.

Restaurants, night clubs, small business and real estate are all problematic investments for athletes when it becomes the dominant part of their portfolios, Butowsky said.

His other piece of advice: don’t emulate  the businessmen sitting in the front row.

“They made their money through concentration and taking a big risk of some kind,” Butowsky said. "All of these people are not the smartest people in the world...The truth is they got lucky. There are thousands that are smarter that it didn’t work out for.”

The smartest athletes, he said, are the ones that use their fame and personal brand to meet network with those high-rollers rather than copy-catting how they act, dress and spend their money.

3. A mix of financial literacy and common sense is a great pairing.

On the side of advisers, Butowsky complained about ones that don’t know how to build portfolios or manage risk.

“My industry is an absolute joke,” Butowsky said. “I think we have the blind leading the blind.”

He offered a question every athlete should ask a potential financial adviser: “If you had a portfolio with a rate of return of 10, what should your standard deviation be?” The answer? Six.

“Everyone in my business should know that,” said Butowsky, who said he should be named “financial literacy czar” of the nation.

LaPlaca said athletes just need to remember some basic wisdom.

“If it smells to good be to true, it probably it is,” LaPlaca said.

He added that athletes shouldn't be their financial adviser’s richest clients because that opens the door for them to mishandle their money.

4. Reform is needed on the college-level.

First, the rise of recruiting websites such as Rivals.com since LaPlaca was a college athlete in the 1990s has fueled a world without privacy that makes young athletes feel entitled, he said. Anyone can reach them via Twitter, Facebook or the recruiting websites, which leads to bigger egos than athletes might have carried into college in the past.

“They come in thinking the school owes them something rather than the other way around (that they owe the school something for giving them a free education)," La Placa said.

The problem gets worse when they can't live and pay their bills on inadequate scholarships and spending money, he said.

LaPlaca called for a minimum cell phone to be a part of scholarships since coaches and sports information directors contact athletes through cell phones.

“Some of these guys get into trouble because they are looking to make a couple hundred dollars so they can pay a bill or take a girl out,” LaPlaca said. “Just a basic increase across the board for the stipend for athletes to keep up with the times.”

5. Retirement is scary.

Athletes retire because they are hurt or no one wants them anymore.

“It’s a forced retirement and a lot of them aren’t ready for that psychologically or financially,” LaPlaca said.

That leads to a large number of divorces, and lots of pain when athletes find themselves in a new position.

“The brakes are on. No one cares who you are. You aren’t doing anything anymore. You don’t have as much money as you thought you would have. It’s a tough life,” Butowsky said.

Meanwhile, athletes should take their lump-sum pension payments now while interest rates are low, Butowsky said.

6. Lockouts have opened eyes.

The MLB Players Association has always had an open-door policy for labor negotiations, LaPlaca said. He credited the NFLPA for taking on a similar policy of letting any player that desired to sit-in on talks during the lockout.

“The more you know about your situation, the easier it is for you to avoid the trappings of fame and wealth,” LaPlaca said.

Now, it's become NBA players' turn to become more involved and knowledable about their financial situation. Like NFL players earlier this year, LaPlaca said more basketball players are asking courts to reduce their paternity payments -- sometimes as high $15,000 a month -- so they can survive on a slim or no paycheck.

“If you’re not bringing in any money, that becomes a very scary situation,” LaPlaca said.

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