On average, professional athletes who manage to land big-figure contracts from teams looking to source their talent face the challenge of handling a large sum of money at a young age. Many times, you’ll hear about a young talent primed and ready to take the sport by storm, tries to hold onto a large sum of money, and ends up spending it in one go. One such example of this financial horror story is Shaquille O’Neal, who managed to spend an eye-watering $1 million within an hour of signing his first NBA contract. Today, the same horror stories have caused many young stars to seek more protection for the sudden bump in income they receive by enlisting a financial advisor’s services. Whether it’s protection from prying eyes of family members, “friends” with ulterior motives, or themselves, hiring a financial advisor acts as a defense from becoming the next “rookie horror story.” Although many professionals feel that they get to lessen their financial turmoil risk once they hire an advisor, the truth is quite the opposite because they still run into the risk of incurring major losses. This is because professional athletes are still at risk of choosing untrustworthy advisors who are keen on doing the exact opposite of what they promise. Common mistakes the athletes make when choosing an advisor The threat of financial experts with ulterior motives who prey on unsuspecting athletes in need of money management is larger than ever. According to a 2018 Ernst & Young study in 2018, professional athletes lost more than half a billion dollars between 2004 and 2017 in fraud-related losses. However, it’s worth noting that such problems take place because they make all-too-common mistakes when choosing their advisors. Fortunately, you can avoid becoming another victim by proactively avoiding these three common mistakes: Mistake #1: Failing to have an advisor sign a fiduciary pledge A fiduciary pledge is defined as an agreement or oath undertaken by a financial advisor to protect their clients from fraud, which is something that any unsuspecting athlete will need to capitalize on. The problem with most athletes today is that they lend themselves open to predatory advisors’ eyes because they aren’t aware that they need to ask for the document in question. Suppose you want to ensure that the expert protects your finances instead of the other way around. In that case, you’ll need to hold a potential professional accountable by making them sign a fiduciary pledge!
Mistake #2: Choosing a financial advisor solely based on testimonials With the age of the Internet, it’s clear that finding a trusted advisor is far more difficult than ever because anyone can create fake testimonials to mask the truth behind their practices. Many Financial advisors that target professional athletes as clients have become far bolder than ever because social media allows them to easily sway public opinion without accountability! Mistake #3: Opting for a financial advisor because they have a “sports division” No matter how interesting it may sound to deal with a financial firm that has a “sports division,” it’s crucial to understand that these are probably a ruse to lure in unsuspecting athletes. Typically, firms include this “section” to sound far more interesting than their competitors to lure athletes, only to upsell the additional services that they don’t need and can’t benefit from. If the “sports division” has a disclaimer that says “Services offered by duly registered individuals through (company name here), then they’re a facade used to disguise something that won’t work to your best interest. Conclusion As a budding professional who is about to get your first big paycheck, you may want to get far ahead of the curve by getting a financial advisor to help you out with your financials. Yet, some risks exist even when you have a professional in place. By taking the time to keep an eye out for the three common mistakes mentioned above, you can easily ensure that you aren’t prone to experiencing problems from an “advisor” who will run your account dry! We're one of the top professional athlete accounting firms in Fort Lauderdale, FL, that's guaranteed to accommodate any client with an ample amount of service. If you want to find a service provider who has your best interest and financial growth in mind as you embark on your professional career, get in touch with us today to see how we can help!