Today, we begin a series of posts dedicated to the topic of financial advising for professional athletes. When athletes “go pro,” their lives change quickly. New team. New city. New lifestyle and new money. For these athletes, having to juggle the complexities of their new lives can be a little overwhelming and exhausting. However, an experienced financial advisor can help simplify things so they can keep their focus on the field or on the court.
In Part I of this series, we’ll delve deeper into why professional athletes need a financial advisor.
We’ve found that many professional athletes may not fully understand the value of a financial advisor. The perception is often that we’re just “money managers.” But in reality, there’s a lot of value in working with an advisor who can guide a professional athlete based on the creation of a personal financial plan that also teaches how to make good monetary decisions, both during and after the athlete’s career. For example, such decisions might include making the right investment choices, renting versus buying a home, developing an asset-protection plan and evaluating different insurance policies. There are also decisions that need to be made to help ensure that athletes don’t spend above their means.
The professional sports industry is incredibly complex, so athletes really need a partner to help them navigate the financial side of the business. In particular, working with a Registered Investment Advisor can provide an investment philosophy and structure that puts the athlete’s best interests first. There’s so much more to financial success than just putting money into a diversified list of investments.
Athletes Should Enjoy Their Money, But Also Make Smart Decisions
Headlines abound about pro athletes spending above their means and, unfortunately, going bankrupt after earning mega-figure salaries. We find that some athletes really struggle because, first and foremost, they don’t have a financial plan. They’re thinking more in the moment instead of five years or even 20 years down the road. Having a plan in place and having an experienced financial advisor who they can lean on for insight into important lifestyle decisions can help build and preserve their wealth into their retirement years.
Newly found money is exciting (as it would be for anyone). We certainly want these athletes to enjoy it, but we also want them to make smart financial decisions, too. It’s imperative for professional athletes to have financial advisors they can count on for astute recommendations on any and all aspects of their lives that will impact their wealth—whether it’s buying a house, purchasing a vehicle, donating to charities or even how they should go about helping out family members. There are very strategic ways to approach these activities.
As an example, an amateur baseball player has just been drafted, so he signs a contract with an MLB team that includes a lucrative signing bonus. One of his goals is to pay off his parents’ mortgage. Does he just write a check to pay it off? If so, are there tax or gifting ramifications for him and/or his parents? He should be advised as to the best strategy for accomplishing this goal. A good financial advisor can help walk him through this process.
It’s also important to remember that many professional athletes have targets on their backs, so they need to have an advisor as part of their off-the-field team who has the financial and life-planning experience to not only grow, but also protect, their assets. At BIP Wealth, we really see our role as financial advisor being more like the athlete’s personal chief financial officer (CFO).
In the upcoming Part II of this blog series, we’ll discuss when professional athletes should start working with a financial advisor, as well as the importance of certifications and experience in an advisor’s background.
For more information on how a financial advisor can assist you or the professional athlete in your family, contact BIP Wealth at 404-495-5230 or email@example.com