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Professional Athlete Issues

For a young professional athlete, the financial industry can be a scary and dangerous place. We have all heard the stories of the athletes who have been financial victims and research of those stories reveals some common circumstances that lead to potential problems. Making large sums of money at a young age and having many suitors with conflicting opinions on what to do, can lead to confusion and frustration. Confusion and frustration lead to rash decisions on who to trust, that are not based on the sound criteria that such a decision deserves. As stated previously, my service philosophy for professional athlete clients is about avoiding financial problems.

The following is a few potential major financial problems, unique to the professional athlete situation.


Problem 1 - Lack of Legal Protection in a Financial Relationship

Legal protection for a financial and investment client is provided by federal and state specific, regulatory organizations and securities commissions that are in existence to protect the investment public. This legal protection is provided through the specific licensing of your Financial Advisor. An investor operating without this legal protection could obviously be a devastating financial problem.

Federal - The federal regulatory organizations in the USA that offer a level legal protection are the "Financial Industry Regulatory Authority" (FINRA), and the "Securities Investor Protection Corporation" (SIPC).

FINRA www.finra.org
SIPC www.sipc.org

State Specific - Each US state has a securities commission that provides a level of legal protection. The "North American Securities Administrators Association" (NASAA) is a national organization where you can find access to the securities commission in your specific US state of residence.

NASAA www.nasaa.org

Many professional athletes are operating without this legal protection, by using Financial Advisors who are not properly licensed, in the financial jurisdiction where they reside and who are therefore not under the regulatory scrutiny provided be these regulatory authorities.


If, for example, you play your professional sport in the state of Texas, the potential problem of operating without legal protection is easily solved by working with a financial advisor that is:

  1. Employed by a firm that is a member of FINRA and the SIPC.
  2. Personally licensed in the US state where you reside.

Ensuring that you have legal protection in an investment relationship, is an example of "Eliminating a Potential Financial Problem".


Problem 2 - Paying Unnecessary Financial Fees to an Agent

Paying unnecessary financial fees to an agent can be a devastating financial problem because it systematically undermines the financial objective of an investor - to make money. Success in the wealth accumulation / investing business is measured in returns, stated as percentages and any percentage points deducted from the returns for fees, is negative to the objective of the investor. Many sports agents have brought an assortment of ancillary services (particularly financial) into their firms as an additional option for their athlete clients - at a price. They usually portray to their clients that this is a more sophisticated way to handle their financial affairs and a method that offers the convenience that the players need so that they can "focus on their sport". (It's a huge red flag if anyone tells an athlete to look the other way while they are managing their finances). The amount that many athletes are being charged for this service is exorbitant, and it is in addition to the fees that would be levied in a normal financial relationship.

Many professional athletes are paying these unnecessary fees.


The problem of paying unnecessary financial fees to an agent is easily solved by athletes hiring their own Financial Advisors, independently of their agents!

Ensuring that your agent's financial fees are eliminated from your financial relationship, is an example of "Eliminating a Potential Financial Problem".


Problem 3 - Paying Unnecessary Financial Fees to a Financial Planner

Similar to paying unnecessary financial fees to an agent, paying unnecessary fees to a financial planner can be a devastating financial problem because it also systematically undermines the financial objective of an investor - to make money. Success in the wealth accumulation / investing business is measured in returns, stated as percentages and any percentage points deducted from the returns for fees, is negative to the objective of the investor. Because financial planners don't usually sell investment securities, they are an extra layer that charges their clients fees for advice and then directs them to their recommended investment brokers, for investments (Sound familiar - see problem 2 above) . Unbeknown to most young athletes, the financial planners fees are in addition to the normal securities fees that are in place at the investment firm where the securities are bought and portfolios constructed and managed.

Many professional athletes are paying these unnecessary fees.


The problem of unnecessary financial fees to a Financial Planner is easily solved by hiring your own Financial Advisor independently of a financial planner!

Ensuring that a Financial Planner's fees are eliminated from your financial relationship, is an example of "Eliminating a Potential Financial Problem".