FINANCIAL PLANNING FOR PROFESSIONAL ATHLETES
The earning potential for professional athletes can range from hundreds of thousands to millions, but instead of being financially secure for life, many athletes face tax challenges, short career lengths, lavish lifestyles and limited financial knowledge. Without the right planning and advice from an experienced and trusted financial advisor, an athlete can encounter financial difficulties very early on in their career.
Educating rookie and young professional athletes on proper financial management and spending habits is key to the overall financial success of their future. Listening to an athlete’s financial goals is one of the first conversations to have with your client. Financial advisors should work closely with an athlete to set spending and saving budgets, and review these budgets with the athlete often. Young athletes will most likely be inclined to allow their family or friends to manage their finances, but it seems in the majority of these cases, the individuals do not have the necessary financial education and experience to handle the management of large assets. A trusted and experienced financial advisor’s goal is to guide an athlete on the proper management of their finances, to educate them on the wide range of options available to preserve their income, and the overall well-being of the athlete.
Guidance from a financial advisor on investment and retirement options is key to proper portfolio management, which may also limit the amount of risk to an athlete’s current income and future retirement income. Due to the uncertainty of the length of an athlete’s career, it is important to take every opportunity to begin saving and investing early on in their career. Early saving and investing can allow an athlete to accumulate a significant amount of money, providing the opportunity for financial security during retirement.
Setting practical goals and managing an athlete’s earnings and expenses are crucial to the stability of current and future income. With expectations from society, family and friends, many athletes experience financial pressure, which can have damaging outcomes to their earning and potential retirement income. Advising and guiding an athlete to maintain their financial goals during the early years of their career will provide a greater opportunity for life long income and financial security. Likewise, employing a transition plan for the athlete’s post-playing career is important. Some professional athletes face substantial financial hurdles or bankruptcy, in just two to five years after retirement. As a financial advisor to professional athletes, the goal is to work together to create and manage a plan that is in the best interest of their current and future financial security.