The two fatal mistakes athletes make are hiring the wrong advisors and trusting them far too much.
Earlier this week 60 Minutes aired “Thrown for a Loss” which shared the sad story of how several of the NFL’s biggest stars lost a total of $43 million in a risky venture brought to them by a financial adviser registered by their own union. Away from the NFL limelight, there’s mounting concern that young, rich and unsophisticated players in the league are falling through financial trap doors, often led by the very advisers paid to protect their new found wealth.
Investment fraud attorney, Chase Carlson “…estimate(s) athletes have lost $150,000,000 investing with NFLPA Registered Financial Advisors since the program was created in 2002.”
Earlier this year Ash Narayan, a former investment advisor and managing director of investment advisory firm RGT Capital Management was charged the SEC with secretly siphoning millions of dollars from accounts he managed for professional athletes and investing them in a failing online sports and entertainment ticket business, The Ticket Reserve. Narayan was an NFLPA Registered Financial Advisor. According to the SEC, he held himself out as a CPA even though he was not one.
Carlson wrote “according to court documents, Narayan directed more than $30.4 million into the ticket business from three current and former athletes: $15.1 million from Jake Peavy (MLB); nearly $7.8 million from Mark Sanchez (NFL); and nearly $7.6 million from Roy Oswalt (MLB). According to court documents, other players that invested in The Ticket Reserve include Jason Castro (MLB), Tyler Matzek (MLB), Austin Croshere (NBA), and Bryce Drew (NBA).”
It is very common for players to choose their representation or financial advisor based on personal recommendation or personal connection and as a result do not pay attention to the qualifications of the advisor or the nature of the company in which they work. They mistakenly believe personal connection guarantees great service and expertise.
“They hire these people not because of expertise but because they’re friends. Well, they’ll fail.” – Magic Johnson
In short, the term “financial advisor” means very little. The truth is that anyone can call himself a financial advisor. Very few are actually qualified experts.
The good news..? This doesn’t have to be your story. The first step is knowing the right questions to ask.
Download your copy of our guide, “25 Questions Every Financial Advisor Needs To Answer.”
Over the next few weeks we will be answering each of these questions in detail. Covering everything you need to conduct the proper due diligence to ensure you find a wealth management team with the necessary expertise, resources and independence to help you achieve lifelong financial success.