How to Choose a Sports Financial Advisor: 5 Qualities to Look For
Professional athletes occupy a distinct place in the financial industry due to their high earnings, diverse revenue streams, and limited career length. A player’s income can derive from signing bonuses, salary payments, performance incentives, and endorsements which creates a dynamic financial picture. This means that athletes require a different level of guidance and expertise that can only be provided by an experienced sports financial advisor.
What Is a Sports Financial Advisor?
A sports financial advisor specializes in working with professional athletes to create a sustainable financial and investment plan. This includes budgeting, tax planning, investment selection, and wealth management. Because most athletes earn their maximum income before age 30, there is an urgency for athletes to work with a sports financial advisor as soon as possible. Your advisor will help you create a customized financial game plan that meets both short and long-term goals for you and your family.
While you may not be ready to choose an advisor, it is worthwhile to begin researching and evaluating the best available option for your situation.
5 Qualities to Look For in a Sports Financial Advisor
One crucial decision for a professional athlete is the selection of a sports financial advisor that has a breadth of expertise. With so many firms offering financial advice and services, you will need some criteria to guide your choice of an advisor. At a minimum, your financial advisor should have all of the following qualities:
1. Direct Experience With Professional Athletes
Start with an advisor that has a track record of working directly with professional athletes and who understands how players are compensated. They should also appreciate the financial opportunity that an athletic contract presents and how to maximize the growth potential for investments. This differs from traditional financial guidance for non-athletes that assumes steady income until retirement age, with incremental contributions to investment funds.
2. Established Name in the Sports Industry
Any quality sports financial advisor has strong brand recognition due to the number of high-profile athletes on their client list, and the firm’s longevity in the sports industry. Mainstream financial advisors will not have the unique requirements for advising high-earning athletes, so selecting an established specialist is necessary. A well-known firm will also allow you to seek references from current advisor clients that are professional athletes.
3. Strong Network of Specialists
It would be unusual for a single advisor to have the range of skills needed to guide an athlete’s planning. Any sports-focused firm has a network of specialists in each area including investment strategies, taxation, estate planning, insurance, and income management. As with many sports, advisors use a team approach to combine their skills and support the optimal financial plan for the individual athlete.
4. Understanding of Earning Potential
The hallmark of professional sports is the earning potential for an athlete early in life – their career largely occurs between the age of 20 and 30. As a result, earnings are concentrated over a very short period, and at a high dollar amount. This combination makes the selection of a sports financial advisor essential, as it's common for athletes to overspend and lose investment returns for the future. An advisor can also assist with different categories of income, such as endorsements, which can be treated as a separate business for tax purposes.
5. Operating on a Fee-Only Basis
Your sports financial advisor should act in a fiduciary capacity for their athlete clients, meaning that their advice is solely for your best interests. A fiduciary role is signified by the fact that they operate with a fee-only structure, and don't participate financially through commissions on specific investment vehicles. If an advisor is steering their clients to a limited number or single brand of investments, there may be some commission payment involved. A commission structure undermines the fiduciary role, as the advisor would benefit directly from investment choices.
Work With a Financial Advisor You Can Trust
Premier Sports Network partners with sports financial advisors that have deep experience guiding professional athletes. Our partners have all of the essential advisor qualities that you need to create a long-term financial and investment plan. With our holistic approach to player care, you will have a financial advisor that you can trust and rely on throughout your career.
Contact us to learn more about sports financial advisors and how they are prepared to assist you in reaching your goal of financial security and prosperity.
