Allen Iverson Financial problems: the cost of not planning

For many, especially athletes, future earnings are typically projected at a very high level over a short duration. The concept of the traditional income stream - from entering the workforce to retirement - that is at the base of client planning assumptions is often useless as a guide for these individuals.

Once their prime earning career ends, future income will often be modest, perhaps even nonexistent. This requires a different perspective on savings, retirement planning and other planning topics.

Athletes are also more likely to suffer a disabling injury that could cut their careers short. While this risk varies depending on the sport, it is far greater than the risk faced by most clients, and the consequences are far worse.

Insurance is only a partial answer to hedging this risk. In addition, while it might be logical to increase the client's current savings, that strategy may conflict with the need to accumulate retirement savings during a potentially short period of high earnings.

The nature of the assets that most athletes and celebrities own is often unique. Their biggest asset tends to be their earning power and, for some, endorsements and other intangible rights. They tend not to have built the asset values in business endeavors that other clients have, unless their investment ventures have already taken them down that path.

A major factor for many of these clients is lifestyle risk. They often face tremendous pressure to keep up with their peers.

Many stars and athletes have entourages that include manipulators and predators seeking to take advantage of their wealth. A high rate of divorce and the probability that family members or friends will seek their financial assistance, leaning on them emotionally to lend or provide money, all add to the pressure cooker.

All told, celebrities and athletes run a dramatic risk of financial ruin from the costs of an extravagant lifestyle, needs or demands of family and friends, legal entanglements, bad investments and a lack of financial planning. 

Lack of financial planning put Allen Iverson and other athletes and celebrities in a bad financial situation.

No one tells a multimillionaire that he can't buy fine jewelry for his wife, family, and friends, and friends of friends. 

Should I save money? Invest money? Realize that a childhood friend may not be the best source for sound business advice? These questions don't seem to require answers when the money's rolling in. 

Traveling to road games with a personal hairstylist -- as Iverson reportedly did -- doesn't seem so outrageous when you're the NBA's scoring leader.
Then the buckets -- and the buckets of money -- stop coming.

Fact is, living beneath your means isn't enough. You have to live beneath your future means -- and save enough along the way. 

www.MintcoFinancial.com 

Asset Protection, Financial planning for athletes. Contact us: http://www.mintcofinancial.com/contactus.asp

Wealth Management in Florida: Why you need a wealth manager

Wealth managers do a lot more than pick stocks. They can help you plan your total financial life. And you don't need to be rich to use one.

For starters, wealth managers are actively involved in their client's retirement planning. This can mean, among other things, updating and changing your client's investment profile based on where they are in their life cycle, with older customers being moved into more stable investments.  

While asset allocation is a fairly basic concept in any sort of financial planning, wealth managers also coordinate clients with accountants and attorneys. In addition, they help with trust planning, insurance requirements and managing clients' risks.  

In comparison, most employees who work at large financial institutions, aka wire-houses, are typically not going to get involved with their client's financial planning to this extent.

Such help is especially important now because in these days of disappearing pension plans we are all required to become our own defined benefit plans. We have to also figure out what our own liabilities are. One problem is that few people look at their retirement nest egg in the proper light. Some see it as an ATM to draw from before retirement, others see it as something to chip away from once their work is done, but the real necessity is to get people to understand that they need this money to produce income during retirement.

There's a complete disconnect with what the public understands between wealth management and investment management. And individuals can definitely go out and buy some no-load mutual funds and probably do as well as most professionals. Wealth management is not only about picking investments and making sure the allocation is consistent with time horizons. Monitoring to make sure the management stays intact. If it changes, to make changes in who you choose based on your life cycle.Also, determining what the allocation should be. And also, coordinating that with accountants and attorneys, and making sure that the investments are made in the right structures. If you have trust accounts, retirement accounts who the beneficiaries are and everything related to it.

Mintco Financial is a "boutique" wealth management company serving  retirees, business owners and families structuring their finances to grow and protect their wealth. 

Mintco Financial considers each client situation as unique.

Contact us for a first analysis or a second opinion:

http://www.mintcofinancial.com/contactus.asp