A Guide to Financial Planning for Professional Athletes

A guide to financial planning for professional athletes can help aspiring entrepreneurs navigate the maze of investment advice and the complex world of professional sports. The advice given here includes discussing how to identify a fiduciary wealth advisor, Tax planning, and income management. Athletes looking to give back should have clear guidelines and a fiduciary wealth advisor to guide them. Tharp recommends making monthly deposits to recipients who can use the money for their own needs.

Advice from a fiduciary wealth advisor

When it comes to finances, professional athletes have unique needs. In addition to earning a large paycheck, these athletes have very limited time to save and invest for retirement. As such, traditional financial advisors are not equipped to meet the financial needs of professional athletes. Financial planner professional athletes must also know their clients’ decisions and communicate the information so that athletes can understand. A fiduciary wealth advisor is an ideal choice for such clients.

A professional athlete’s unique situation makes it particularly important for them to work with a multidisciplinary team of financial professionals. This team should include an insurance agent, estate planning attorney, and accountant. Unless the team works closely together, an individual’s financial situation could spiral out of control without proper guidance. Professional athletes must develop a financial playbook off the field to avoid ruinous financial decisions down the road.

Tax planning

To make the most out of their lucrative careers, professional athletes must understand how to maximize their income using the most effective tax planning strategies. First, they should work with a CPA, financial advisor, or banker to ensure they follow the right rules for their particular situation. When it comes to the timing of salary and bonuses, athletes should discuss these matters with their trusted advisors. It should be done even before they start planning their investments. Unlike traditional business owners, athletes are not allowed to deduct agent fees. A CPA or financial advisor is not the only person who can help athletes with their specific situations.

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In addition, athletes in international leagues often don’t reside in the United States. As a result, they may experience double taxation. If this is the case, they must file taxes in two jurisdictions. The key to minimizing their total tax burden is understanding tax treaties and residency definitions. By understanding these rules, athletes can maximize their tax benefits and minimize their total tax liability. It is also vital to understand the tax rules in the country where they play.

Retirement planning

As a professional athlete, you have to plan for your future. Many sports organizations offer retirement benefits that are as generous as any in the world, and the NBA, NFL, and MLB have the best packages available. However, these are only short-term investments, and many athletes may feel lost and unprepared for life after retirement. Instead, think about what you enjoy doing in your free time. Perhaps you would like to start your own business or pursue another career.

While athletes rarely appear in the mainstream media, they must still mount a wealth management strategy to prepare for their retirement. Professional athletes face financial challenges similar to those of the average public, including overspending and trying to help a struggling family. However, unlike most people, athletes often receive a large percentage of their lifetime earnings over a short period, so they must implement special wealth management and tax strategies. Choose a professional advisor who can help you understand your tax obligations and the best retirement plan for your unique situation.

Income management

Many professional athletes have unique financial needs, making wealth management a critical step in ensuring a successful retirement. It is especially true if an athlete plans to pursue a post-career career in sports management. In addition to addressing short-term financial concerns, financial planning services for professional athletes can include retirement planning, asset allocation, and post-career business consulting. A secure online portal allows clients and athletes to view aggregated investment accounts. Financial analysis is used to determine the impact of various investment choices on long-term goals. Investing in blue-chip stocks and municipal bonds is a sound choice for income management.

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Many professional athletes do not receive financial education before entering the industry, putting them at risk of mismanagement of their money. A lack of knowledge in this area has led to many players filing for bankruptcy within 12 years of retiring. Luckily, some sports psychologists can help athletes overcome their financial challenges by teaching them money management skills. 

Insurance

If you’re a pro athlete, you have probably heard about insurance for professional athletes. Although this type of insurance is not mandatory for all sports, it is essential for big names in the field to obtain. For example, athletes who do commercials for automobile dealerships must purchase auto insurance, even if they retain the title. Unfortunately, most sports insurance policies do not cover the costs associated with losing an athlete’s jewelry and the mysterious disappearance clause. Consequently, it’s important to find a policy to cover these expenses and any possible income loss.

It’s not uncommon for professional athletes to purchase assets in their names, such as a home or vacation cabin. But they should also have insurance to protect their assets and their families in case of an unexpected accident. For that reason, it’s important to discuss the details of your home insurance policies with a life insurance agent before signing any documents. A good insurance policy will cover your assets and cover additional living expenses during the repairs.