More than half of all professional athletes will be financially broke within 5 years of finishing their playing careers. According to Sports Illustrated, 78% of NFL players go bankrupt or nearly broke just two years into retirement and among NBA veterans, 60% fall into the same predicament after five years. Sure some make illegal, immoral, or ill advised decisions — the ones we all hear about in the daily news, but the vast majority of professional athletes often make good decisions, based on poor advice from uninformed or improperly educated advisors.
Having interfaced with the majority of the top financial institutions, the reality is that none have a financial or retirement model appropriate for the professional athlete. All of the ”traditional” calculators and models financial advisors typically pull from aren’t relevant to an athlete’s financial circumstances. It is truly scary to think some advisors might be shoving a round peg in a square hole or simply “winging it;” and even scarier to suspect some simply take short-term advantage of young, often financially inexperienced, high net wealth individuals.
That said, there are many incredible financial advisors who have helped players secure their futures. We have spoken to, and worked with, many of them and have developed a very rigorous process for vetting their performance for our clients. Unfortunately, we have also worked with players dealing with the consequences of advisors on the other end of the spectrum.
Choosing an advisor blindly based on the recommendation of a sports agent, teammate, relative, friend, etc. is a likely recipe for ending up in the same situation as more than half of all professional athletes. The only way for professional athletes to ensure their long-term financial well-being is to ensure their money is working for them, not that others are working for their money.
Here is a recent Wall Street Journal Article that explains how to pick the right financial advisor.