About seven out of 10 professional athletes go broke after their careers are over. It’s because professional athletes have
… limited earning careers, high-flying lifestyles, tax challenges and a frequent lack of familiarity with basic financial principles.
So what’s a financial advisor to a professional athlete to do?
- Educate: few professional athletes have any education, training or experience in finance. The role of the planner is to try to fix that.
- Gatekeep: profesional athletes (or anyone who suddenly has great wealth) will be subjected to incessant requests for money, often by relatives and friends. The advisor’s job is to defend the athlete against being taken advantage of.
- Set Goals: create a plan and provide milestones that must be met to achieve financial security after the career is over.
- Investment Strategy: creating an investment portfolio that manages taxes, provides liquidity and achieve the long-term goals of financial security.
- Insurance: make sure that the risks that athletes are subject to are adequately covered.
- Compatibility: is the athlete willing to listen to advice? If not, the relationship is flawed and will not last.
When you review these issues, professional athletes are not that different from other people. They may have famous names, lead high energy lifestyles and have more income for brief periods of time, but they simply experience the same issues that the rest of us face, times ten.
Need help getting educated, setting goals, deciding whether to follow your brother-in-law’s advice? Call an RIA and get an opinion.