Full-Time: The Importance of Wealth Management for Athletes

It’s no secret that a large proportion of professional athletes that hit the big time at an early age, or throughout the early stages of their career, struggle financially later in life. Disturbingly, it is reported that 40% of football players now declare bankruptcy post-retirement.[1]

Entering the world of professional sport, athletes are often young, vulnerable and haven’t been educated in a way that will prepare them for everything that’s going to be thrown their way, including vast amounts of fame and money.

Many high-profile athletes will earn in a year what most of us will earn in a lifetime, then enter into retirement just a few short years later. Considering the average football player retires after just eight years, it’s critical that these young sporting stars are prepared for what lies ahead following their careers in order to provide financially for themselves and their families.[2]

Good financial habits and decisions need to be made as early as possible. However, many of us are five years into a career before we consider reviewing our own financial situations. The thought of pensions, investing in an ISA or purchasing the relevant protection products don’t typically enter an average person’s mind until later on in life, often when it is too late. If a high-profile athlete were to follow the same timeline, it may well be too late to plan for stability in the future.

For a young athlete arriving at the big stage, it can be very easy to get caught up with a ‘keeping up with the Joneses lifestyle. Watching your teammates and in some cases, idols buying luxurious cars, big houses and designer clothes, it can be harder than it seems not to fall into the same trap. After all, earning £50k+ a week it’s affordable, right?

So how can a young, vulnerable and potentially uninformed athlete take the correct steps to manage their wealth through their career whilst also planning for post-retirement life?

As their sporting careers come to an end, they will need to prepare for a second career, which may be far less remunerative and less ‘glamorous’ than they are used to. Most will rely significantly on wealth amassed by their mid-thirties to provide for their lifelong needs. If they fail to get it right, they may never get another opportunity.

What can an athlete do?

An agent can play a significant role in helping their athlete make decisions throughout their career. Securing the services of a ‘good’ football agent is vital, so the athlete can receive the best advice going forward.

Many agents will have relationships with wealth management firms in place, enabling them to point their athlete in the right direction if they’re seeking financial help or advice. A responsible agent should suggest meeting with an experienced financial planner at the outset of the athlete’s career.

Long-term planning of finances are linked to decisions about career and lifestyle and too many athletes have suffered from advisers who take only a partial, short-term view. It’s vital that expert help is provided and plans for now and the future are implemented.

So, what can a wealth management company help an athlete with?

A wealth management firm can provide more than just financial advice for athletes. We can help with services such as:

  1. Managing day-to-day expenditure in support of the lifestyle needs of the athlete and their family.
  2. Making long-term investments that helps to build a capital base. This will provide for their financial needs when earnings have diminished.
  3. Managing, reviewing and administering their investment portfolio.
  4. Managing the risks (including insurance), particularly the risk of injury which may cause an unexpected loss of income or and a premature end to the career.
  5. Setting up appropriate structures for their assets in order to promote tax efficiency.
  6. In some cases, assisting with the purchase of family homes and commercial property through mortgage advice.

By making these decisions, perhaps over time, an athlete will be able to draw on the experience of his agent and recommendation of a wealth manager. The agent and wealth manager will work together as a team, which will not only help plan the future but support him or her through the difficult transition period.

Pure Wealth Management has created strong, trusting and sustainable relationships with multiple agents and athletes across the United Kingdom. In doing so, we’re able to use our independent/whole of market status and years of experience to maximise returns and plan for a healthy future for athletes.

If you’re interested in financial planning for athletes, then contact us.

[1] https://www.moneynest.co.uk/bankrupt-footballers/

[2] https://www.stonehagefleming.com/insights/detail/the-unusual-wealth-management-needs