Athlete Wealth Management: How to Keep What You Earn

Athlete wealth management is a branch of financial planning and wealth management specifically designed to cater to the unique needs of professional athletes. Athletes face a distinctive financial landscape, with factors such as high earnings at a young age, a short career span, and the need to maximize earnings.

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When it comes to wealth management for professional athletes, there needs to be a 360-degree approach. Athlete wealth management goes beyond simply budgeting and includes tax planning, investment management, insurance planning, and estate planning. Athletes can ensure long-term financial security and make the most of their hard-earned money by taking a proactive stance toward their financial goals.

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Why Is Wealth Management for Professional Athletes Important?

Athletes and entertainer wealth management helps them with the unique challenges they face in sports and entertainment. This will enable them to navigate the unique tax implications of playing in different states or countries.

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Plan for a Short Career Span

Professional athletes wealth management can help athletes plan for the future. Athletes typically have a short timeframe to earn significant income. To secure their financial future beyond their sports career, they need to find ways to invest their income. Working with a certified financial planner will allow them to organize their finances strategically, ensuring long-term financial security well into retirement.

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Wealth management for athletes helps them to plan for lives after their sports careers end. They possess the expertise and knowledge to guide athletes in exploring potential businesses. Athletes often face unique challenges when transitioning out of sports, including adjusting to new lifestyles, managing finances, and identifying viable investment strategies for retirement.

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Build an Efficient Tax Plan

Navigating the complex tax landscape is daunting for athletes, especially those competing in multiple states or countries. However, with the right advisor by their side, minimizing tax liabilities becomes an achievable goal. For instance, athletes can take certain deductions as itemized or business expense deductions. To determine the most advantageous method, consulting with a certified public accountant (CPA) is highly recommended.

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Create a Budget and Manage Cash Flow

Athlete wealth management services can help athletes effectively manage a sudden surge in cash flow. It can be tempting to finance lavish lifestyles and indulge in extravagant spending. Establishing concrete budgets will accommodate a desired lifestyle and promote savings and investment. These athlete wealth management advisors possess the expertise to guide athletes toward making sound financial decisions, ensuring long-term financial security and stability.

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Put a Risk Management Plan in Place

With high-profile status and lucrative contracts, athletes are often targets for legal action. Athlete wealth management firms help them with proper insurance coverage and employ asset protection strategies to safeguard their wealth and reputation. By taking proactive measures, athletes can reduce the financial and personal consequences of unexpected events, ensuring their long-term success both on and off the field.

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Establish a Team for Contract Negotiations

Pro-athlete wealth management firms have a distinct advantage with comprehensive guidance on legal negotiations. These teams possess the necessary expertise in wealth management strategies and have valuable connections with skilled legal professionals. Their combined knowledge and network can give clients the utmost confidence and support throughout the negotiation process.

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Create a Foolproof Estate Plan

Ensuring the seamless transfer of wealth for athletes is not just a matter of following their wishes but also optimizing the process to minimize tax obligations and avoid probate. Probate is a public process; notable figures may want to ensure privacy. It also avoids the unnecessary hassle of court disputes between beneficiaries and heirs. 

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Personal relationships can become tricky for athletes without wealth management to ensure the correct beneficiaries get what they are entitled to. The right strategies will safeguard hard-earned assets and ensure they are distributed in a tax-efficient manner.

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How Much Money Do You Need to Go to Wealth Management?

No definitive amount is set in stone when hiring a wealth management firm. However, Bankrate considers the range of $2 million to $5 million assets as a sensible threshold. Within this range, seeking the services of a wealth management firm is worthwhile for individuals looking to effectively manage their wealth.

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What to Consider When Choosing Athlete Wealth Management Services?

When selecting wealth management for athletes, you need financial advisors with expertise. Asset Preservation Wealth and Tax handles various financial needs or has a network of experts in tax planning and legal affairs. This way, you can ensure that all your financial requirements are met and receive comprehensive assistance. As fiduciaries, our legal obligation is to work in your best interests.

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Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.

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