Professional athletes enjoy a life that most can only ever dream of. Considerable salaries, signing bonuses, endorsements, and fan bases are all the result of countless hours spent on the field, course or gym honing their craft to reach stardom.
When an athlete decides to go pro, they must make their first very difficult decision, who should represent them in their future negotiations. The agent’s job is to represent their athlete in all contract, brand, and opportunistic endeavors but as of late we have seen a large push from different agencies and agents to also control their finances and investments which is oftentimes not in the athlete’s best interest.
In this paper, we will outline why we feel a Personal CFO can complement your agent and add value to your long-term financial life.
Most athletes hope their retirement is something like that of Michael Jordan or Derek Jeter; their number is retired, shrines are made to worship their greatness, and their name is never forgotten.
Unfortunately, the end of most athletes’ careers in the eye of the public is almost synonymous with death. Think about some of the guys you have seen retire recently. They are basically given a retirement party at each visiting arena or field. The word “retirement” typically signifies the end of a career, which can terrify anyone that is not prepared for it.
When we look at the anxiety that is associated with an athletic career coming to an end, we can boil it down to the fear of two things:
- Financial stability post athletics
- Loss of purpose, identity, and/or significance
I do think it is important to note that often, your agent is not responsible for your financial success, nor your sense of professional fulfillment after you retire from athletics.
Addressing Your Fears
Prior to the 2018 NFL Draft, Bill Belichick attempted to trade Rob Gronkowski to the Detroit Lions. Gronk’s response was simple: he threatened to retire if he was traded.
When you are thinking about how you can create this type of freedom and security in your own life, you need to decide what your sense of purpose and significance will be in the next stage of your life. Making a decision about this can be difficult, but a strong financial foundation can open many doors.
The Importance of Competition
The success of the United States economically can without a doubt be attributed to one thing: capitalism.
Competition is the key ingredient of capitalism. Company A makes a product then comes along Company B, they make it better and sell it to the consumer for less. Then Company A goes back to the drawing board to figure out how to produce a better product for less. The cycle continues and ultimately, the consumer is the one to benefit.
I cannot speak for every agent out there, but there is an extremely high probability that your agent wants you to get the absolute best deal possible. He/she is financially incentivized for this to happen.
But the issue with using your agent’s affiliated firm to manage your money is that there is less of this same competition that ultimately benefits the consumer (you).
By using your agent’s affiliated firm, you are exposing yourself to the following:
Nothing lasts forever. Not even Tom Brady. Eventually, he will retire too, and so will you. Much like you have taken control of your athletic career thus far with hard work and discipline, you have the opportunity to control the outcome of your financial life.
What separates a strikeout from a homerun? The trick is to arm yourself with as much knowledge as early as possible and plan for the future while you are still playing.
Partner with a financial planning firm that has your best interest in mind and not their own. We partner with athletes to develop not only a sound spending and sustainable retirement strategy, but we will also be there throughout and after your transition.
We vet businesses and investment opportunities from an objective position which allows us to give you honest “straight-up” feedback. We help you leverage what you have built during your professional career.
We have all seen the documentaries and read the statistics; nobody wants to go broke. We safeguard and help you grow your wealth by designing a thoughtful financial program for you.
According to the dictionary, wealth is defined as “Having a great deal of money, resources, or assets.” In our eyes, the definition of wealth is the number of days you can survive without physically working and still maintain your standard of living – as you define it. It’s that simple. It’s not about what you can buy. It’s about your ability to sustain your existence without working.
I will close with this; a good friend of mine is also a very well respected Certified Financial Planner in the Northeast and also works with a number of professional athletes.
One particular client of his had been with him for 10 years. One day, after a 10-year relationship, he informs him that he was going to move his investments to his new agent’s Investment firm because the agent was able to secure him a new 2 year $10 million contract when he had previously considered retirement.
As a professional athlete, you should never be put into a position that forces you to move your investments to someone else in order for you to continue your playing career. It’s unethical, it’s a conflict of interest, and unfortunately, we see these types of conflicts way too often.
Your agent’s expertise is helping you create wealth – signing bonuses, increasing the value of your contract, endorsements, and personal brand.
Our expertise is guarding your wealth vigorously to protect you – from yourself, from family, friends, creditors, predators, divorce, and taxes.
Remember, it’s not just about what you make, it’s also about what you keep.