When professional athletes reach the pinnacle of their sports, they often acquire substantial amounts of money within a relatively short time frame. Those who excel in their fields face distinct financial challenges and opportunities. That's why they can greatly benefit from the guidance of a financial advisor for athletes, who can provide specialized assistance to help them navigate their unique circumstances.
At first, you might wonder if you need a financial advisor and how much you pay a financial advisor. A financial advisor for athletes’ salary can vary based on experience and clientele. However, keep in mind you get what you pay for.
Here are some reasons to consider hiring a financial advisor for athletes:
1. Personalized Financial Planning
Professional athletes need to understand the importance of having a financial advisor. Given their careers' unpredictable and short-lived nature, they need a solid plan for long-term financial stability. In 2021, the National Collegiate Athletic Association (NCAA) has allowed student athletes to earn income from brand deals. Now, more athletic careers can allow athletes to earn higher income.
Financial planning for athletes can take into account potential early retirement due to injuries or unexpected circumstances. Working with a financial advisor for professional athletes can secure your future even in uncertain circumstances. A fiduciary should be working with your unique financial situation and goals.
2. Long-term Investment Management
Financial guidance is essential for athletes looking to grow their wealth. By receiving advice on prudent investments, diversifying portfolios, and managing risks, athletes can maximize their financial potential and secure a prosperous future.
Financial planning for professional athletes prepares them for post-retirement careers and retirement accounts. Advisors are a valuable resource in this process as they can provide guidance on various options, such as investing in businesses or pursuing broadcasting opportunities.
They help athletes take charge of their investments by overseeing portfolios, carefully selecting suitable investment vehicles, and consistently reviewing and adjusting them based on performance and changing needs.
3. Coordination with Other Professionals
Wealth management and financial advice should come from a single voice. Financial advisors for pro athletes must work closely with accountants, lawyers, and agents to ensure that all aspects of an athlete's financial life are in sync.
Advisors need expert legal advice when it comes to endorsements and contracts. Athletes need a comprehensive approach to provide valuable guidance to ensure that these opportunities are financially beneficial and align with the athlete's goals.
4. Informed Tax Planning
Athletes, given their potential for substantial incomes and bonuses, often encounter intricate tax circumstances, mainly when they earn money in multiple states or countries. With the guidance of a financial advisor for athletes, they can effectively optimize their tax strategies and maximize their financial benefits.
As high income-earning individuals, athletes are subjected to higher taxes and won't be able to qualify for certain benefits. You might want a financial advisor for athletes to structure investment portfolios that minimize taxes. Numerous tax strategies exist, but athletes need to know what will work best for them.
These include tax-loss harvesting, investing in funds that are designed to be tax-efficient, and holding onto investments for longer durations to qualify for lower long-term capital gains rates.
5. Educated Decision Making
Financial education is critical to establishing healthy spending habits. Budgeting and tax plans from a financial advisor only work if athletes understand their finances. Athletes need a financial advisor who can provide essential guidance and help them comprehend their personal finances to make well-informed and empowered decisions.
Professional athletes are often targeted by scammers, which is regrettable. However, having a reliable financial advisor can be a strong defense against fraud. They act as gatekeepers, rigorously assessing investment opportunities and safeguarding your assets.
6. Dedicated Risk Management
To ensure an athlete's wealth and future earning potential are safeguarded, they need to be supported by comprehensive risk management. Financial advisors for athletes help them take control of debts with practical strategies for managing and reducing them, covering everything from mortgages to credit card balances.
They ensure regular reviews are conducted to discuss performance, goals, and changes in the athlete's financial or personal situation. Cash flow is the difference between your income and expenses. A solid risk management strategy will help athletes avoid costly mistakes in determining the amount that can be allocated toward investments. They need consistent positive cash flow and plan for its sustainability in the future.
7. Charitable Giving
Athletes may have a strong desire to contribute to their communities. By seeking guidance from a financial advisor for athletes, they can ensure that their charitable giving has the most significant possible impact and enjoy tax benefits. There are various options like donor-advised funds, which can offer an immediate tax deduction. Proper financial planning for athletes will help you make the best decision to give back sensibly.
Get a Team on Your Side
You deserve to work with a team that takes your unique financial situation into consideration. At Asset preservation Wealth and Tax, our advisors work with certified public accountants, lawyers, and wealth managers to give you the best financial advice. Our holistic approach puts you first so you can reap the benefits of your hard work.
Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
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