06/28/2016 02:37 EDT | Updated 06/28/2016 02:59 EDT

Empowering Athletes To Achieve Financial Peace Of Mind

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For many professional athletes the world of private wealth management has proven to be a ruthless jungle preying to dish out miserable consequence. Many examples exist of athletes being exploited out of their wealth by predators arriving at their doorstep with impeccable timing disguised in proverbial sheep's clothing.

This blog sets out to provide athletes with their own road-map that can greatly decrease the likelihood of their wealth being misappropriated. This empowerment is gained through education and a desire by the athlete not to be blindly dependent on others when it comes to the selection of their investment professionals.

Recognizing Blind Faith Syndrome (BFS)

Many athletes are faced with serious financial stress at some point during their playing careers while others encounter it following their retirement. Many of the victims simply prefer to focus on their craft and delegate the oversight of their wealth to certain people within their entourage. We term this kind of trust as The Blind Faith Syndrome or BFS.

The competition to become one of very few sports professionals anywhere in the world requires an incredible amount of dedication in the form of performances (i.e. games), practices and conditioning. At some point talented athletes capture the attention of certain interested parties vying to become a fixture in the athlete's trusted entourage - his very own "circle of trust". Athletes make themselves vulnerable to becoming subjected to criminal wrongdoing simply because they let down their guard. In many cases participants in the "circle of trust" can exude extraordinary influence over athlete wealth management decisions and they include:

  • Family members
  • Friends and teammates
  • Asset managers, agents; accounting, legal and banking professionals
  • Club management (including coaches)
  • Federation, league, players' and alumni association

When considering the multiple sources of possible deception that can arise from the "circle", it becomes a shell game to figure out who may be tempted to put their hand in the cookie jar. With the benefit of this perspective, it comes as no surprise to learn that several headlines exist that make reference to athletes facing personal financial calamity.

Rather than blindly depend on others to select managers on their behalf, the athlete should quarterback his own selection process from a list of investment managers that he has assembled. Once in the driver's seat the risk of malfeasance is greatly reduced simply by virtue of following a disciplined process.

Quashing BFS by Taking Charge

We are propagating that athletes transition their investment manager selection from one that is based on full "circle" dependence to one that is fully independent - a 180-degree shift! The proposed selection process is highly methodical:

Regulator Background Check - The athlete investor should perform background verification on the investment manager in addition to his associated firm. The check can be completed through internet searches (i.e. press releases etc.) in addition to the following:

United States:

  • Securities & Exchange Commission
  • Financial Industry Regulatory Authority

United Kingdom:

  • Financial Conduct Authority


  • Canadian Securities Administrators
  • Investment Industry Regulatory Organization of Canada

Professional Experience‎ - Wisdom comes with experience. At a minimum, ten years of professional wealth management experience should be sought because it would reflect the gained familiarity of servicing clients for at least one full business cycle.

Credentials - ‎First and foremost credentials represent a commitment to excellence through the dedication to follow rigorous study. Athletes should ensure that their investment professional have at a minimum:

  • An undergraduate university degree, and;
  • ‎The Chartered Financial Analyst designation (a globally renown, finance industry distinction from the CFA Institute of Charlottesville, Virginia) where all members have to abide by the highest standards of its Code of Conduct.

First Meeting - The first meeting provides the investment professional with the opportunity to learn about the athlete's unique financial circumstance through a series of related questions. Through this process the manager should form an opinion about the athlete's tolerance for risk and return. If the manager fails to ask these questions, there is simply no reason to be open to a second meeting. The athlete to be prepared to request or inquire about the following:

  • Client Statement
  • Fees
  • Service
  • Types of Investments
  • Conflicts of Interest
  • Investment Strategy
  • Working closely with accountant

Second Meeting -Once satisfied with answers from the first meeting, a second meeting should be scheduled. It is during the second meeting that the manager should provide the athlete with an investment proposal. A very good proposal is one where is is clearly evident that the manager listened and fully grasped the athlete's unique circumstances including his comfort for risk and his required return. The athlete's complete profile, including lifestyle needs, gifting and philanthropic objectives should be put into print. In addition, a comprehensive financial plan completed by the financial planner should be completed incorporating factors such as the forecasted returns, expenses and all tax implications.

As well, a proposed asset mix in addition to specific investments should be described. The athlete should conduct an investigation around whether the proposed portfolio actually achieved the types of 1, 3, 5 and 10 year returns that the financial plan assumes. Likewise, the 1, 3, 5 and 10 year returns of the related benchmarks should be analyzed with similar purpose. The most important takeaway is that the athlete must remain disciplined and committed to running the manager selection process.

Final Words

Financial malfeasance towards professional athletes has been present for decades. In fact, this pandemic has only gotten worse. This article provides the basics for the athlete to conduct his own manager selection process. It is now up to the athlete to dedicate himself so he can enter the jungle of wealth management armed and ready for the first and second meeting. After all, it is the athlete's wealth and no one else's. It behoves him to perform his own homework.

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