By Iacovos Iacovides, APC Sports
Athletes particularly the most successful and famous ones have an army of advisers behind them, regulating their every move and advising them on various aspects of their lives ranging from investments to public conduct. Nonetheless, a certain degree of financial literacy is still vital irrespective of how many advisers an athlete has at their back or who those advisers are. At the end of the day, nobody cares as much about your future as you and you should never delegate the handling of your interests entirely to your advisers. Hence, the relationship between financial literacy and your team of advisers should always be seen as complementary and not as substitutive or mutually exclusive.
The accessibility to proper and all-encompassing advice of course depends on the athlete’s financial and public stature. Put simply, an NBA player will have access to prestigious advisers as opposed to a basketball player of a European country’s second division due to their financial resources and geographical location. Ideally, apart from your agent you also need a business manager, an attorney who specializes in business, tax and estate matters, an accountant/tax advisor, a financial planner or money manager, and an insurance specialist. Nonetheless, what we are trying to stress here is the fact that no matter the calibre of your advisers or how many of them you have, basic financial knowledge is vital.
There are several reasons as to why. Nobody cares about your financial well-being and future more than yourself. Financial advisers may harm your wealth either on purpose or by accident. We have heard of several cases where financial advisers cost their clients hundreds of thousands and even millions by investing recklessly; a lot of advisers work on commission and so may profit by the investment itself rather than the return. According to a study conducted between 2004 and 2017, athletes were defrauded of $500 million—a figure which is definitely understated.
Moreover, due to the lucrativeness of the sports industry, a lot of incompetent individuals have, and are trying to penetrate the market which can cause real financial damage to anyone who trusts them in the short-run. The reasons are endless but the conclusion is that to avoid all these, the athlete must be in a position to audit and question the adviser’s proposals and recommendations instead of just blindly following them. Given sufficient effort, the athlete may also be able to offer their input and even their own recommendations in financial affairs.
On the other hand, we should not overlook the salutary effects of professional advisers provided that the athlete is financially educated. Even if the athlete manages to become a financial and legal expert which is highly unlikely given that these orbit around financial and legal expertise and experience which takes years to attain, advisers can provide other benefits as well. For example, a legal expert can review your contracts, protect your intellectual property, represent you to the media, defend your assets and also act as a barrier between you and your friends and family’s “unique”, “amazing”, “once-in-a-lifetime” and whatnot business ideas or other financial demands.
You can think of financial literacy as a system of checks and balances which aims at limiting your adviser’s authority over you. When you make sure that you authorize but not delegate entirely and when you do not allow them to exercise a monopoly over your information then your advisers can be your greatest ally in your pursuit for financial security in the short-run but most importantly in the long-run. In other words, it will go a long way in ensuring your financial future when you view the relationship between your financial knowledge and your advisers as complementary.
For more information on the financial education programs for athletes you may get in touch with us at firstname.lastname@example.org and we will be more than happy to assist you.