The kinds of risk that athletes take on the football field or basketball court may not serve them as well when they are dealing with their finances. That means financial advisors face specific challenges while working with professional athletes on things like retirement planning and launching private foundations.
Paul Franklin, founder of Franklin Capital Strategies, a firm with offices in Ohio and Virginia, has worked with several athletes in the NFL and NBA on both activities. But he encourages athletes to focus on a financial plan to sustain them in retirement before a discussion about private foundations can happen.
Franklin notes that professional athletes tend to go overboard establishing foundations and tend to go broke. The operation costs to run these organizations are underestimated in the planning stages, and foundations require a solid and reliable staff to run properly. Once a foundation is planned, Franklin’s team comes in to assist in building a solid support staff.
As a high school football coach himself, Franklin sees similarities to coaching clients on their financial planning. He suggests that advisors working with athletes learn about their personalities and consider that some clients respond with accountability while others can’t face their commitments.
“Millennial and Gen Z athletes are more self-directing and in tune with their finances,” Franklin says. “Today’s younger athletes are investing in real causes and are aware of where their money goes and how it is impacting someone or something immediately.”
He considers the most responsible athletes to be the ones in tune with their finances 365 days a year, checking in with their financial team often. He finds that the most common oversight a young athlete makes is finding insurance to replace income if he or she becomes disabled or injured.
Franklin stresses, “Your tax advisor and financial planner will be with you with the rest of your life.”