Private Banking -
Wealth management for professional athletes: when to start building a financial safety net
When should a professional athlete start building a financial safety net? See what our experts say about financial planning for elite athletes looking for a more secure future.
A professional sports career can be extremely rewarding, however, there is usually an earlier end point – or at least a pivot point – than with other careers.
Financial planning for the days where you are no longer earning as much from playing sports is essential for any professional athlete. It is something that should be discussed and planned for early in your career, not just when you are considering life after competing in your chosen sport.
There are also unique risks that come with a sports career, and the reality is that an unexpected injury or playing decision can completely change the trajectory of your career and income. This is another reason why it is so important to start planning as early as possible.
We can work with you and your wider advisory team, to plan for your financial future and help mitigate the risks that can come with a professional sports career. Leaving you free to focus on being a professional athlete.
Investing in your future
Due to the relatively short career span of professional athletes, it is important to put any excess liquidity to work early on to maximise this potentially limited earning window. Diversification across asset classes, including equities, bonds, property, and alternative investments, can provide stability and long-term growth for the future.
With a sports career, your wealth usually comes from income rather than equity, as would be the case with an entrepreneur or a business owner. Many professional sports players, derive significant liquidity through their income, and that can come with additional taxation. This is especially pertinent for players in the UK Premier League and Championship. It is also important to plan for this with longer-term financial planning and investments.
Creating strategies to generate income during time off can support you to leverage your brand and popularity to generate passive income. This could range from property investment through to branding and merchandising deals, endorsements, and sponsorship outside of competitive seasons.
It could also mean building up an investment portfolio that can provide an income without reliance on a sporting career.
Our experts understand the unique financial needs and constraints that come with a sports career and can help tailor tax-efficient investment strategies.
Protecting your greatest asset
Sports-related injuries are a significant risk for athletes, potentially impacting your ability to earn income during and after your playing career. It is easy to think that a playing career can go on for many years, even decades, but this is not always the case.
A long-term illness or injury can leave you without the support of a club, team, or sponsor, which can have serious implications when it comes to finances. The cost of medical expenses, including surgeries, rehabilitation and ongoing treatment can be significant. It makes sense to have the right health insurance and life insurance cover in place to provide protection against the high costs of care following a long-term injury or illness.
Securing comprehensive health insurance coverage is vital to mitigate the financial burden of medical expenses, including surgeries, rehabilitation, and ongoing treatment.
Typically, a comprehensive protection plan should cover life insurance, critical illness, and income protection. This ensures financial security for you and your family in the face of life's uncertainties for you and your loved ones, should unexpected events happen.
We recommend regularly reviewing your protection needs to ensure your cover meets the changing needs of your family and your situation.
Planning for life after sporting success
The average professional football career lasts just eight years and ‘retirement’ can arrive to players in their thirties or even earlier. By this point, they are likely to be supporting a young family and an expensive lifestyle – and still have 50 or more years of life ahead.
Once a player's career ends, it can be more of a challenge to maintain the lifestyle that they are used to. It is estimated that as many as 60% of footballers file for bankruptcy within five years of retiring, according to research by XPro. And many more struggle financially in later life – despite it being one of the highest paying sports in the world.
Footballers can go from earning the Premier League average of £3.6m a year to nothing, if they are out of contract.
Sam Green, Private Banker specialising in sports professionals:
“Professional football gives players a unique opportunity to earn life-changing money during their career. However, this window for players to maximise their earning potential is short. And the pool of other careers in football – whether through coaching, managing or punditry is very small – and may not be for everybody.
“This creates a real need for strong and honest planning to provide financial freedom for life after football. The end result should be security and freedom for ex-players, to not only have peace of mind for the future but a platform for them to find and follow their next goal in life.”
Retirement planning for athletes goes much further than merely saving money; it involves creating a comprehensive financial plan that ensures a comfortable lifestyle post-career. It also involves budgeting and expense management with a view to the future.
Our team of wealth planning experts can support sports professionals with these essential parts of retirement planning, ensuring they can maintain their desired lifestyle without depleting savings prematurely.
How we can help
At Arbuthnot Latham, our private bankers work with an array of sports professionals and recognise the broad range of financial needs that result from a successful career. We are experienced in advising and supporting sports professionals throughout the stages of their career from starting out, to follow-on careers and into retirement.
Here are some financial planning tips to consider:
- Start your financial planning as early as possible in your career.
- Maintain an emergency fund that covers living expenses for at least six to twelve months and ensure that this is accessible should you need it.
- Ensure that you have insurance protection that covers you in case of injury, critical illness or worse.
- Diversify your income streams beyond your athletic career.
- Manage your expenses and work within your budget.
For tailored strategies for managing your finances, retirement and future planning as a sports professional, get in touch with our sports banking team. This team specialises in advising and managing the wealth of sports professionals who are working and living in the UK, at every stage of their career.
Further reading
Sports, Media & Entertainment
We take the time to understand your circumstances, your ambitions and your short and longer-term goals. This allows us to develop and provide innovative solutions tailored to your needs. We delight in serving clients from all backgrounds and can help fashion introductions from our extensive network in this field.
Journey to the top: Choosing a bank as your profile and wealth grows
Receiving your first big salary is a significant milestone. Read our guide to choosing a high net worth bank as your profile and wealth grows.
Assembling an advisory team: long-term wealth management for entertainment industry professionals
Here is a breakdown of the professional advisers that high profile individuals in sports, media and entertainment should curate to set themselves up for sustained wealth.
Becoming a client
Take control of your finances today by completing our enquiry form. Alternatively, you can call us on the number below and one of our team will be more than happy to talk about your future.
Related services
Wealth Management • Wealth Planning • Borrowing • Private Banking • Investment Management
DISCLAIMER
This communication should be considered a marketing communication. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research. It is for information purposes only and does not constitute advice, a solicitation, recommendation or an offer to buy or sell any security or other investment or banking product or service. You should seek professional advice before making any investment decision. The value of investments, and the income from them can fall as well as rise, and may be affected by exchange rate fluctuations. Investors could get back less than they invest. Past performance is not a reliable indicator of future results. The tax treatment of investments depends upon individual circumstances and may be subject to change.
The contents of this communication are based on opinions or conditions as at the date of writing and may change without notice. To the extent permitted by law or regulation, no warranty of accuracy or completeness of this information is given and no liability is accepted for its use or reliance on it.