Build-out tax and legal advisory team
Budgeting and cash flow management strategies
Tax-efficiency via asset allocation and asset location
Estate plan coordination and execution
Heightening overall financial awareness via education
“Next phase” networking introductions
Off-Field Management for Lasting Wealth
After a lifetime of dedication and sacrifice developing both his physical and mental skills, a young man’s dreams came true and he was drafted by a professional sports team. The excitement surrounding this next phase of his athletic career was accompanied by the sobering knowledge that so many athletes before him have struggled to balance the professional sports lifestyle with a successful long-term financial plan. In order to maximize his new financial opportunities, we explained the right financial team was just as important as his sports team. Within the context of a comprehensive personal financial plan, we advised him to focus on accomplishing five primary goals:
1) To establish a budgeting and cash management process;
2) To understand income taxes and the power of maximizing overall tax efficiency;
3) To ensure his estate plan correctly addresses his financial and non-financial
4) To implement a coordinated investment plan that complements the unique benefit
package that his team and league provides;
5) To protect himself from financial predators through continuous education
The Fairhaven Solution
To help build out his “financial team,” Fairhaven worked closely with the athlete to identify a list of candidates both for his income tax and estate planning needs. To help educate him on the process, we coached him on the roles and expectations he should have of professional advisors. We then helped him take the lead in the interview and selection process.
We prepared a comprehensive financial plan that included an account structure to help execute and monitor monthly budgeting and cash management. Coordinating with the tax advisors, we recommended a bill payment process which includes a measured use of short-term debt. This was important for both establishing his credit history, as well as simplifying the monitoring of his expenses.
Working in a variety of states and having multiple endorsement deals meant his income taxes would be complicated. We coordinated with his team’s human resources department, sports agency and tax advisors to collect the necessary information to establish appropriate withholdings and quarterly tax payments. These income tax issues naturally led to discussions around strategies geared towards maximizing overall tax efficiency. Among others, these included the role of municipal bonds within a portfolio, and the benefit of a Roth IRA as a component of his personal balance sheet.
We helped guide the estate planning process by providing additional education on the roles played by the various documents. We worked closely with the estate planning attorney in explaining gift tax strategies, and how he could establish appropriate 529 plans for the athlete’s younger siblings.
To be prepared as family and/or wealth circumstances evolve, we discussed the role of life insurance and the relative advantages and disadvantages of term and permanent insurance. Similarly, we discussed the role of debt in the purchase of his first home. We prepped the athlete in handling investment solicitations from friends, family and even strangers by providing him a simple way to disengage from those discussions. Finally, we both encouraged and facilitated introductions to non-sports related businesspeople to help the athlete lay the groundwork for his post-sports career.
For more information,
Marc Horner, CFP®, CIMA® Wealth Advisor
President firstname.lastname@example.org 630.990.9000
This material has been prepared for informational and educational purposes for our clients and friends. Please consult your Fairhaven Wealth Management professional to discuss how this may impact your own financial plan and/or investment portfolio. This material is not intended to provide, and should not be relied upon for accounting, legal or tax advice or any other purposes. Neither Fairhaven Wealth Management nor its subsidiaries or affiliates provide accounting, legal or tax advice. Please consult your tax advisor or attorney for such guidance. Fairhaven Wealth Management is an SEC registered investment advisor. For a copy of the firm’s ADV Part 2 disclosure document please direct your inquiry to email@example.com.