The complementary relationship between financial literacy and the athlete’s advisers

Athletes, especially the successful and famous ones, have an army of advisers managing their lives, investments, and conduct. However, financial literacy remains essential, regardless of the number of advisers or their expertise. At the end of the day, no one cares about your future as much as you, so don’t delegate everything. The relationship between financial literacy and advisers should always complement, not replace or exclude one another.

Access to comprehensive advice depends on an athlete’s financial resources and public stature. For instance, an NBA player has more prestigious advisers than a second-division European basketball player. Ideally, apart from your agent, you need a business manager, attorney specializing in tax, business, and estate matters, accountant, tax advisor, financial planner, and insurance expert. Regardless of your advisers’ calibre, basic financial knowledge is essential.

There are several reasons for this. Nobody cares about your financial future more than you. Financial advisers may harm your wealth intentionally or accidentally. We’ve heard of cases where advisers caused clients to lose millions by investing recklessly. Many advisers earn commissions and may profit from the investment itself, not the returns. A study from 2004 to 2017 showed that athletes lost $500 million due to fraud, which is likely an understatement.

Moreover, the sports industry’s lucrativeness attracts incompetent individuals attempting to penetrate the market, which can financially damage trusting athletes. The reasons vary, but the conclusion is clear: athletes must audit and question advisers’ proposals, rather than blindly following them. With sufficient effort, athletes can offer input and even make their own financial recommendations.

On the other hand, we shouldn’t overlook the benefits of professional advisers, provided the athlete is financially educated. Even if the athlete becomes a financial and legal expert, which is unlikely, advisers can still offer other advantages. For instance, legal experts can review contracts, protect intellectual property, represent athletes in the media, defend assets, and shield athletes from friends and family’s “once-in-a-lifetime” business ideas or financial demands.

Think of financial literacy as a system of checks and balances, limiting your adviser’s authority. By authorizing but not fully delegating, and avoiding monopolies over your information, advisers become allies in securing your financial future. Ultimately, seeing your financial knowledge and advisers’ roles as complementary is crucial for ensuring your financial success in the short and long term.