Sports Wealth Management

(Sports Wealth Management – TRANSCRIPT)

A Guide to Successful Wealth Management for Professional Athletes

Financial Advisor for Athletes Keep Them in the Game – Financial Planning for Professional Athletes

Wealth management for pro athletes what you need to know,
advice, emotion investments, schemes…tax let’s get right into it right now.
[Music]
I’m I’m Rob Tetrault from
robtetrault.com
portfolio manager at canaccord genuity
wealth management
and the Tetrault Wealth Advisory Group.
Professional athletes have
serious serious targets on their back
all right if you’re a pro athlete and
you’re looking for wealth tips you’re
looking for you don’t know where to go
you don’t know where to look you’ve come
to the right place we’re going to give
you things you need to know
the investment management strategies the
tax management strategies the planning
strategies everything you need to know
as a pro athlete with respect to your
wealth.

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All right so you’re a pro athlete maybe
you’re a parent of a pro athlete so now
the concern is
all right what do we do so first things
first typically pro athletes they’ll
have an earning cycle that is
dramatically different
than most right most people they work
they get you know either they work a job
kind of their whole life and they slowly
increase their income over time or maybe
they go to school and they get educated
and they eventually have a stronger
earning power
in your case the earning power really is
the peak of your earning career and then
some trail on both sides of it typically
most pro athletes will earn the most
amount of wealth between the ages of 25
and 32 33
so that’s kind of the prime earning
years for you so there’s other things
with respect to those earning years
there’s problems there’s issues there’s
concerns so one of the big big things i
want to tell you right now is you need
to build a financial team
around yourself for your wealth okay
probably have an agent or you probably
have someone that you do trust right now
but we do know
for a fact that there’s a lot of rotten
apples in this circle not necessarily
the agents but just individuals that are
gonna try to take advantage of you
they’re going to try
for you to become their atm now that’s
the first tip i want to give you is the
emotional aspect of this so i would
suggest this to you when you get that
first contract and you get those first
dollars
i would suggest you to spend something
on yourself spend it spend something on
yourself that you’re going to be
thrilled with you’re going to be happy
with
a toy or whatever it may be but you do
need to put
a big chunk of that off to the side
right the emotional aspect so the
emotional aspect is the fact that people
are going to come out of the woodwork
cousins
friends girlfriends boyfriends spouses
whatever it may be they’re gonna come
out of the woodwork
to try to get a piece of you and a piece
of your wealth people
will have bad intentions here i can
assure you you probably have the best
intentions but i know that people are
going to look at you
with a big dollar sign on your face or
an atm machine
okay so the key is to build a team
around you because you’re good at doing
what you do which is putting the puck in
the net
hitting home runs crushing soccer balls
whatever you’re good at doing that’s
what you’re good at doing and you should
focus on that you do need a fiduciary
okay so a fiduciary is someone
like me like a portfolio manager that
can and must
always act in your best interest it’s a
fiduciary obligation
it’s a legal concept it’s a concept that
exists at law where the
provider of advice the professional in
this case me
or a portfolio manager must act in your
best interest
at all times guaranteed by law and
guaranteed by our investment
system so that is significant for you
because we all know what’s happened
we’ve read the stories you’ve seen
the newspaper headlines where
professional athletes are busy scoring
goals and then they’re then
told that you know someone on the back
end someone took advantage of them
someone gave them advice that wasn’t
in their best interest fiduciary it’s
key for you to work with a fiduciary
when it comes to your wealth
okay so your investment horizon you have
a very short earning window power
potentially if you’re an absolute
superstar
maybe you last 20 years tom brady is
playing in you know in his mid 40s
great good for him most people don’t
depending on the sport you’re in you
could have as little as a two-year
average earning window to a you know an
average of six or seven years but
regardless where you’re at in there
you’re earning power where you’re going
to be able to earn those millions of
dollars
is much much shorter than most right
you’re going to earn that for
maybe five years or 10 years maybe 15 if
you’re incredibly lucky and that’s
fantastic but remember
you’re also paying tax on that amount in
those years so
if you’re a canadian pro athlete that
means you’re likely paying 50
of that earnings every single year to
our government
in the form of personal income taxes so
the key is
you can’t spread that income out right
so you really got to be careful about
how we’re planning for those years for
the future
and not only that the investment
strategy so let’s talk about planning
the planning is definitely to protect
your earnings okay you’re going to be in
a position where you’re going to have
big earnings and you’re going to want to
have big spending okay so we want to
protect that how do we do that
we budget all right this sounds
ridiculous and it’ll sound like the most
simplest thing of all time
but budgeting for professional athletes
is critical now i don’t
mean to tell you not to go and not to
spend and not to do what you love doing
by all means do it but we don’t want to
live the michael jordan lifestyle
if we don’t have the michael jordan
income and even if we do have the
michael jordan income you’re not going
to get the michael jordan income for
your whole career right
it’s going to last for a while and then
that’s going to have to last for the
rest of your career
there are jobs that you could do after
being a professional athlete which are
going to be income
potential drivers for you you know
either in the real estate or in the
financial services world or you know in
the sales world
there’s going to be opportunities for
you in the future provided you know
you’re confident you could speak well
etc
but what if there isn’t right what if
there isn’t now you’re a mid 30s
with potentially no education so you
really need to make sure
that the money you are earning now one
is being compounded and two
is being protected and is growing so we
want it to compound grow and we want to
protect it so how do we do it
what do we do for that so with respect
to the investment strategy we talked
about budgeting with respect to the
investment strategy here’s what you need
to know
this money is going to have to serve you
for your entire life so we want it to
grow we want a compound so we want a big
portion of those assets to be invested
in
American global companies all right that
have a proven track record
of growing their balance sheets at 10 15
we want to generate that
all right we don’t want to reinvent the
wheel here and goes targets speculative
sectors
you don’t want to put your 5 million
bucks in a junior mining company and
then find out it’s going belly up or a
technology company and find out it’s
going belly up or even worse you don’t
want to take your five the first five
million dollars you make and give it to
a buddy who’s going to open a club
or give it to a buddy who’s going to
open a golf course right you have to be
incredibly careful with the first
dollars you earn once you earn more and
more and you get your second or your
third contract
now we can start thinking and looking at
the possibility
of divesting into private equity or
local private equity or private debt
that you might be able to do but for now
those first dollars they need to be
preserved they need to have a long-term
focus and they need to have a pension style
management approach to the wealth the
other problem you’re gonna have is tax
so one is we wanna preserve the capital
we wanna build it we wanna make sure
we’re compounding at ten percent plus
right so we wanna make sure that that
money is growing but
two we wanna think about tax because the
year that you are earning
two mil five mil 10 mil as a
professional athlete is also the year
where you’re taxed the absolute highest
right 50 so that means you have to make
sure that the investments that you own in
your portfolio are optimized
for tax efficiency so what does that
mean well first of all we want to focus
we want to stay away from
interest bearing instruments because
those are fully taxable so if you have a
four percent interest bearing instrument you’re
losing half of that gain to tax and if
you you’re paying a portfolio manager a
ton of money then you’re losing
maybe you’re left with nothing right so
you want to make sure
that your portfolio is optimized for tax
how do we do that we focus on
investments that have a deferred
gain okay so we’re not paying tax now
we’re not paying tax tomorrow we’re not
paying tax next year we’re deferring
that gain ideally we’re deferring that gain into
years where you will be retired we could
also look at having you know return of
capital investments
investments that have return of capital
built into them stuff like private real
estate okay so if we could buy
a piece you know a real asset a building
i’m pointing outside here but let’s say
a real building where you own a portion
of that through a limited partnership
or through you know maybe a private pool
or an equity offering
you now own a piece of real estate
incredibly stable if we can generate 10
12 with the real estate which is tax
efficient or tax free
you are miles ahead miles ahead because
then you can grow
compound without paying tax on it and
you can defer that tax
to in a year where you’re no longer
playing sports as a professional athlete
and your income is less so
tax is critical when it comes to this so
we talked about the portfolio
construction what do we want to own we
want to own quality companies that are
compounding we want to make sure we stay
away from speculative sectors we want to
make sure your first paychecks are spent
on quality assets private real estate private
equity maybe you know real estate
alternatives you’re going to get to the
point potentially where you have
millions and millions of dollars
and you’re going to want to make sure
that the assets are going to have a
multi-generational legacy
so maybe you have a family maybe you
don’t but let’s say you do have a family
hockey players professional athletes football players
you name it have had a long record of
not being able to plan for
multi-generational legacy
we want to make sure that the wealth
that you’re earning is going to be there
after retirement and for the next
generation so proper planning is key for
that insurance planning legal concerns tax
planning this is the kind of stuff that
we do here we focus on professional
athletes that’s what we do
we’ve been working with them for a very
long time we know the emotional hurdles
we know the investment hurdles we know
the tax hurdles we know the fiduciary
obligation is critical and we know that
you’re gonna get approached and you’re
gonna get asked every two weeks for a
new hot investment and you’re not gonna know
what to do with that that’s why you need
a professional in your corner and
you need a fiduciary and that’s what we
do here.

If you’d like to book a no
obligation consultation
we’d love to chat with you about this
specifically or anything else on your
mind if you’re a parent out there
of a profession a future professional
athlete or a professional athlete and
you need advice
on this by all means go to
www.speaktorob.com
we’d love to book a chat with you to
chat about this this
is what we do we want to protect your
wealth protect
your child’s wealth thanks so much for
tuning in I’m Rob Tetrault from
robtetrault.com – portfolio manager here at
CG Wealth Management
and the Tetrault Wealth Advisory Group.

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Sports Wealth Management