Since the typical athlete's prime earning potential lasts just a few years, it means he has to get conservative in his investments early on. Just because an athlete signs a multi-million-dollar contract does not mean he can put off saving and dive into high-risk investments. Dollar-cost averaging needs to begin immediately to build up the nest egg that will soon become his primary source of income.

We typically set our athlete clients up with a budget account in which their paychecks get deposited, with a certain percentage flowing into their investment accounts each month. We focus on safe, low-cost investments such as mutual funds to give them a slow and steady return.  We offer nine models for our clients to invest in ranging from very conservative to somewhat aggressive. The models that fall on the lower side of the risk spectrum consist of cash, international and U.S. bonds such as the Prudent Global Income Fund and Hussman Strategic Income Fund, and hard assets such as U.S. World Precious Metals. On the other side of the risk spectrum, we use a larger percentage of growth stock funds, and hard assets since we see the long-term outlook for gold, energy and natural resources to be very favorable. We also have balanced portfolio models consisting of funds such as the Ivy International Balanced and Fidelity Balanced Funds, as well as Leuthold Core Investment.

Second Career Planning
Because athletes retire at such a young age, it is crucial for them to start thinking about their second careers during their playing career. We like to call it planning for their "Next Game." We stress to athletes that if they have not finished their education, they should use any resources provided to them by their employers to do so. Many athletes, for example, get a scholarship program included in their first professional contract.

Athletes have a unique opportunity to make great business contacts during their playing days-contacts that can be invaluable to them when those days are over. One of our clients, Baseball Hall of Fame member Cal Ripken Jr., parlayed his business contacts into the eventual ownership of minor league baseball teams and the building of Ripken Stadium in Aberdeen, Md.

We also try to make the transition easier by having the athlete focus on a passion or hobby that can develop into a second career.  Some of our clients have become successful coaches, broadcasters, real estate developers and small business owners. Many times we suggest that they seek the guidance of a business coach.  

High Divorce Rate        
The professional sports industry, unfortunately, isn't always marriage friendly. Recent studies have put the divorce rate among professional athletes at about 60% to 80%. More than 80% of 178 athletes polled in a recent Rothstein Kass survey said they were concerned about being involved in either an unjust lawsuit or a divorce proceeding.

When a life event such as a divorce takes place, advisors need to help clients make the necessary financial adjustments. Lifestyle expenses almost always need to be adjusted downward. Divorce will touch not only property and investment accounts but retirement plans and pensions as well.  To help mitigate the potential conflicts, we highly recommend that a prenuptial agreement be executed prior to any marriage. Although this is a sticky topic, it is particularly important in planning for an athlete's financial future and we feel it is our duty to make sure it is at least considered.

If you've built a strong relationship with an athlete's family, you may be pulled in two different directions. You become, in essence, the mediator between the husband and wife, trying to help fashion a mutually agreeable resolution that is in the best interests of each party involved and their children.  Many times we assist the attorneys in drafting an equitable distribution schedule so that both parties understand how the assets will be divided.  In several situations such as these that we've experienced, both the athlete and the spouse have remained clients.

Gambling
A competitive nature is what propels a lot of professional athletes, but this personality trait can sometimes lead them astray. Gambling, for example, can be a problem among sports figures, as exemplified by the case of Pete Rose. The horrible impact gambling can have on athletes often gets overshadowed by performance-enhancing drugs. But gambling remains a significant problem in all of professional sports. By paying athletes' bills and monitoring their daily finances, we have the ability to spot excessive spending or payments that seem out of the ordinary.  The first step we take is to flag the clients' accounts and watch their spending closely. We may then let them know we have a concern and try to ascertain the degree of the problem. We stay in regular contact and if the gambling continues and becomes habitual, we refer them to a professional trained in addressing the issue.  

Impulsive Spending
The big leagues mean big salaries. These big salaries, however, can be squandered away fairly quickly-particularly by young athletes who've never had much money in their pockets. Spending, in fact, can become something of a game with athletes-a competition to see who has the best cars, houses and other expensive toys. This impulsive mindset is very prevalent among younger athletes' who have received their first big contracts.  They call us wanting to buy a brand new Denali, a million-dollar house or a $200,000 diamond ring for their fiancée. They aren't factoring in the carrying costs associated with owning an expensive home or the fact that they may not be in the house long enough to make the purchase worthwhile. The long-term view is missing. They often hear friends or teammates talking about "the next big investment" and immediately want to get in on it.  When we get these phone calls from clients, we run analysis and have long discussions about whether these are prudent actions.  We do the research on the "can't go wrong" deals and, almost every time, end up telling them to stay far away.