It’s a well-worn a cliché, mostly used among Accountant in Miami and with professional team sports and meant to convey a cutthroat but fundamental reality: You’re only as good as your last game. It may be harsh, but such is the nature of professional sports, a world where high-stakes games are played by extremely wealthy, though frequently unsophisticated young men who all too often have a meteoric rise to stardom, only to have it be accompanied by a sudden, abrupt fall from grace.
For even star players, however accomplished, nothing is assured beyond their next hit, three-point shot or touchdown pass. Off the field, this holds especially true – When the cameras stop rolling and the paychecks stop coming, many professional athletes are woefully unprepared financially for the next phase of their lives.
Hiring Pro Advisors Accountant in Miami
Indeed, for every Magic Johnson, the former Los Angeles Lakers superstar who has become perhaps the gold standard when it comes to transitioning from the world of big-time sports to successful business entrepreneur – there are dozens, if not more, cases such as Curt Schilling, the three-time World Series winning pitcher who recently declared bankruptcy despite having earned over $114 million over the course of his career.
While pro athletes undeniably have outsized earning power, the career span of a professional athlete is short and unpredictable, with salary taxed at exceptionally high rates – not the more tax-efficient capital gains rates so often paid by the ultra-wealthy. Without the help of a competent and professional Accountant in Miami it is somewhat easy to see how the fortune of a professional athlete can vanish so quickly.
Accountant in Miami note common pitfalls pro:
Trusting Family and Friends to Invest, Manage Money
Many, though not all, pro athletes come from tough, economically depressed backgrounds. As a result, they lack even basic financial literacy skills, making balancing a checkbook difficult, not to mention properly diversifying a multi-million dollar portfolio. When they turn to friends and family, most of whom are inexperienced in money matters, the outcome is almost always disastrous, ending in outright theft in extreme cases or, more commonly, poor investments choices.
In our increasingly celebrity-driven culture, athletes more and more are becoming bigger than any one individual, with the athletes themselves becoming a representation of a larger overall brand. Right or wrong, there is therefore enormous peer and media pressure on young athletes to convey an image by living a certain lifestyle. As a result, whether it’s a fleet of luxury cars or a 15,000 square-foot estate in the Hamptons, they make purchases they neither require nor can sustain.
Not Having a Sense of Their Own Mortality
As stated earlier, athletes, for the most part, have very short shelf lives, with the average NFL career, for instance, lasting only 3.5 years, according to the NFL Players Association. Still, there’s a sense of invincibility among athletes, who having been glorified from a very young age are frequently the last ones to know when their skills have diminished or star has faded. To them, there’s always another contract on the horizon. To that end, they spend money like it will always be there, and in reality, it won’t.
Considering some of these pitfalls, what are some the strategies Accountant in Miami can utilize to protect and grow the assets of their professional athlete clientele? The following are four key tips for advisors who aspire to manage money for professional athletes:
The Accountant in Miami needs to be the gatekeeper. Structure an agreement with the professional athlete upfront that centralizes decision making on financial gifts to so-called friends and family with the advisor, not the athlete. By taking ownership and deciding who gets what and when, the Accountant in Miami may not be popular, but they will be perhaps the only one who has the best interest of the athlete in mind.
Assume the current contract is the last contract. An athlete is always one serious injury away from retirement, and if their money has been mismanaged, where there was once an endless stream of income is now an untenable flood of debt obligations. Of course, much will depend on the age of the client and the size and length of the current contract, but the key is to build a substantial nest egg that can generate income that will fund a comfortable lifestyle for a lifetime and preserve generational wealth rather than a five-year spending extravaganza. If the contract renewed, then the strategy can be modified accordingly.
Establish a very clearly delineated monthly budget. With a set of long-term lifestyle goals in mind, earmark maybe 20 percent of their income for expenses and invest the rest, avoiding needless purchases on big-ticket items like a second car, an extravagant home or a handful of other frivolous material goods. Considering that athletes by nature are not conservative in their spending, it can be difficult to lasso them into traditional asset allocation portfolios. It is far easier, however, to raise expectations moving forward than it is to wean a client accustomed to a particular lifestyle off of dwindling assets.
Don’t try to be their friend. A star struck Accountant in Miami, one that asks for autographs or tickets to games, may be a bad advisor, likely prone to allowing the client to do things that are not in their best interests. Whether it’s the media or legions of adoring fans, pro athletes rarely hear the word ‘no.’ While you should respect each client, don’t placate an athlete simply because of who they are. This is often easier said than done.
Whether it’s Evander Holyfield, the former boxer and heavyweight champion of the world who misspent nearly $250 million or former NBA star Allen Iverson, who despite making over $200 million in salary and endorsements over the course of his career is reportedly now broke, squandering a vast fortune is becoming an all too familiar story among retired professional athletes.
A skilled money management Accountant in Miami, however, following the tips outlined above, not only can help pro athletes steer clear of wasteful spending habits but help them work toward thriving long term by facilitating a lifetime of wealth preservation for them and their family.