Facing your Fear: Preventing Fear-Driven Investing with Long-Term Planning

 

JD Asset TV 2-2016

John L. Diaz, CFP, the CEO of Premier Wealth Advisors, LLC, talks about the concerns he hears from his clients regarding the increased volatility in the market, and shares his strategies on allocating to both mitigate volatility and take advantage of possible upsides.

06 mins 26 secs

 

 

David Bowie Downtown Denizen and Financial Innovator

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Bowie martiak article

It was an early winter Monday morning in January, when I received word from my apartment that David Bowie passed-away, mere days after his 69Th birthday and the release of Blackstar. I was overcome by sadness and an obscure reality that my musical and creative inspiration since age 14 wouldn’t be accessible to me ever again, not that he ever was. Although, I wanted him to be, and yet I felt that his mystery should remain eternal.

My first Bowie exposure was to Hunky Dory and evolved into listening to Ziggy Stardust and the Spiders from Mars while adjusting to a new home in a suburban New Jersey town. Assimilating into my new high school, I felt that I had to establish my own identity as a person. I found that persona in David Bowie. He made it cool to feel creative and express a hip fashion sense in suburbia. In the mid-1970s, one could be categorized as either a ‘Nerd,’ a ‘Jock’ or a ‘Head’. I wanted to blend the latter two, co-existing among the students, athletes and partiers. It was the Bowie connection that gave me my edge.

Through the decades, I attended eight of Bowie’s performances and followed every move he made on and offstage. I felt inspired, searching for my own creative self whenever I listened to his music, and became transfixed on every new character he created for himself.  Back in the mid 90s, when Bowie and his wife Iman stopped me in front of my wife’s clothing store to ask for directions to a restaurant on Madison Avenue, I will never forget the coolness and unearthliness that they exuded. It was then that I understood why I was loving that alien after all this time.

Bowie was a collaborator (think Visconti, Rodgers, Fripp and Eno), glam rocker, gender-bender, Broadway thespian, Hollywood connector, massive concert producer, an alien fallen to earth and an established artist who got his financial due – ‘wham bam, thank you man’ with asset-backed securities. David Bowie’s insatiable need for creative self-invention and musical innovation attracted worldwide fame, making him one of the most-admired performers of his generation. Less well known was his trailblazing role in the use of IP (Intellectual Property).

In 1997, Bowie sold privately to Prudential Insurance Co. of America $55 million of what his financial advisors termed “Bowie Bonds” – 10-year securitized bonds backed by 25 Bowie albums recorded before 1990. He aimed to secure a “higher advance than possible from [a] new distribution deal with [his] record company” and “to buy back publishing rights in some songs owned by a former manager and invest in internet companies.” Bowie’s record company at the time was EMI Records, who had signed a $30m contract with him.

While Bowie was in his fifties, he was motivated by estate planning interests when he entered this deal. After he passed, his heirs would not necessarily need to translate his copyright assets into cash in order to pay estate taxes. Furthermore, when the music catalog passes to his heirs, they are not taxed on the appreciation of the bond.

Bowie Bonds were the first in a line of financial instruments underpinned by creators’ earnings, with coveters including James Brown, Marvin Gaye and others. The bonds allowed artists to monetize their work immediately, handing them investment cash up front to diversify their portfolios or make other large acquisitions. Such securitization continues within the creative sector. A recent example, reported by Variety in 2014, is Miramax’s $250 million securitization of its 700-strong film library to support its television and film ventures.

According to his final will and testament, which was filed in New York City, half of Bowie’s worth and his apartment on Lafayette Street went to Iman. The two had been married since 1992 and she has proven herself to be a savvy and successful entrepreneur. The other half of Bowie’s estate was divided into two parts, one for both of his children. The two will each receive twenty five percent of his net worth, while his daughter Lexi was also gifted a home in Ulster County, New York. Bowie bequeathed his longtime confidant Corinne ‘Coco” Schwab with $2 million and $1 million to a former nanny of his son Duncan.

The rocker asked that no funeral be held for him and that he be cremated, which the document filed says happened on January 12Th. He also apparently requested that his ashes be scattered “in accordance with Buddhist rituals” and then spread in the waters around Bali.

His latest album, Blackstar, was released just two days before he died. Once the news of his passing broke, its sales increased rapidly and it went on to become the singer-songwriter’s only number one album in the U.S. For the past few sales frames in the U.K., his name has been all over the top ten, with Blackstar on top for several weeks. Praise has come from every direction, making it clear that his artistic, business and financial legacies were understood during his life and celebrated now that he is gone.

David Bowie’s well-planned trust and estate plan should serve as a lesson for everyone else. Take my advice, follow Bowie’s lead – plan ahead and don’t be afraid to be different — like the young bloke from Brixton. Whether you’re a downtown denizen or from a suburban town, get your Bowie on – create something special, preserve it and transfer it to your loved ones. Much love, I will miss you deeply David.

Mark Martiak is a Contributor to Downtown Magazine NYC, a life-long David Bowie devotee and a regular guest on CNBC’s Closing Bell, FOX BUSINESS and Yahoo! Finance. Mark is an Investment Advisor Representative at Premier Wealth Advisors, LLC at a midtown registered investment advisory firm in NYC. Follow Mark on Twitter @premieradvisor and on his Blog at: www.markmartiak.com

Sources: The Man Who Sold Royalties and Brought Music to Bonds, by Alastair Marsh of Bloomberg Business: January 11, 2016; 

The Biography BOWIE 2014 by Wendy Leigh; 

Forbes Leadership Column: David Bowie and The Power of Leadership by Brad Grossman January 15Th, 2016

Jennifer Sylva, Bowie Bonds Sold for Far More Than a Song: The Securitization of Intellectual Property as a Super-Charged Vehicle for High Technology Financing, 15 Santa Clara High Tech. L.J. 195 (1999). Available at: http://digitalcommons.law.scu.edu/chtlj/vol15/iss1/7

World Intellectual property Organization: Turn and Face the Strange: David Bowie and IP Financial Innovation January 13Th, 2016

Securities offered through: First Allied Securities, Inc. A Registered Broker/Dealer. Member: FINRA / SIPC Advisory Services offered through: Premier Wealth Advisors, LLC. (PWA) & First Allied Advisory Services, Inc. (FAAS). Both Registered Investment Advisers, RIA’s.  PWA is not affiliated with First Allied Securities, Inc and/or FAAS.

What Can Curious George Teach Us About Finding Your Successor?

curious-george-logo2

He was a good little monkey and always very curious.

He came down from the tree to look at the large yellow hat.

 

Carefully George lifted the latch – and before he knew it, ALL the pigs had burst out of the pen, grunting and squealing and trying to get away as fast as they could.*

 

It’s not uncommon for me to hear business owners saying that finding a successor amongst their current staff is difficult.  I’m told that members of their team lacked the passion, or the initiative, or perhaps their employees couldn’t be trusted to make the right decisions. This very well may be the case. But ask yourself this question; how well did you do during your first year in business?  Were you trained properly or did you have to learn by trial and error? How long did it take you to  be confident? How long did it take you know what you know today? It didn’t happen overnight.

Psychologists call this forgetful state the curse of knowledge.

The curse of knowledge is a cognitive bias that leads better-informed parties to find it extremely difficult to think about problems from the perspective of lesser-informed parties. In plain English- once we master a skill, we forget how difficult it was to master the skill.

All you have to do is watch the impatient piano teacher work with a young student.  You can see the joy being sucked right out of the child. What a pity.

After a recent talk I gave on this subject of succession planning at NAMM (National Association of Music Merchants),  I spoke with an owner and key manager (future successor) of a music store. The owner was very excited about giving more responsibility to his successor and eventually passing the baton.

We sat down together and I could see the young lady was busting with ideas, so I turned my Curious George hat on and started asking her questions about her unique perspective. It was like I turned on the spigot to the fire hose. The ideas were rushing out faster than I could catch. Her passion was contagious.

She began to communicate very clearly what she thought were important opportunities for the store. She continued saying that pursuing these opportunities, in her opinion, would be vital to the future success of the business. A business she was 100% committed to. The business owner sat quietly with a big smile.

I explained to her the importance of writing down her ideas, and how this could help the owner, clarify his own strategic thinking. She agreed, and a few weeks later forwarded it to me. Upon reading it, I couldn’t help but share the same smile as the owner. Not because it was my place to validate her ideas. Without additional research on my end, the owner was much better qualified to opine. What was exciting for me was to see her passion for the business clearly articulated in writing, which is a key step in succession planning because:

  • 89% of business owners have no written transition plan
  • 49% of business owners have done no planning at all

It’s not surprising that only 3 out of 10 business owners are successful in selling their business. Benjamin Franklin was quoted as saying: “If you fail to plan, you are planning to fail!” For this post I would modify Mr. Franklin’s quote ever so gently- If you fail to have a written plan, you are planning to fail.

Dr. David Chinsky, the author of The Fit Leader’s Companion, A Down -to-Earth Guide for Sustainable Leadership Success, offers a powerful suggestion.

So, every quarter I made a point to visit three or four of our regional offices. I’d spend an entire day in each regional office, and I would essentially conduct an account review. Everyone in the office was invited to attend this all-day meeting where we reviewed our relationships with all of our clients. It gave everyone in the office a chance to talk a little bit about what they were working on, and it gave me an opportunity to ask questions and to share my observations.

Business owners are  busy.  Often they don’t have time to sit down with their key managers and talk, listen, train, and mentor.

Take a tip from Curious George. Curiosity fuels conversation, and  impactful conversations builds confidence. Writing it down facilitates the succession planning process.

When you are CURIOUS you find lots of interesting things to do. Walt Disney.

* Curious George is a  copyright of Houghton Mifflin Company

Market Month – January 2016

The Markets

For equity markets around the globe, the start of 2016 can easily be described as rocky at best. The volatility has been fueled by continuing uncertainty and worries over the effects of declining oil prices and a plummeting Chinese stock market. While these issues have been around for quite a while, it almost appeared as if the the turn of the calendar rekindled a fear driven market correction, similar to what we experienced in mid 2015.

As a result, the new year began with stocks hitting the skids in a big way.  We did see a late-month rally that was fueled by a bounce in oil prices, favorable corporate earnings reports, the prospect of further stimulus from the European Central Bank, and Japan dropping interest rates to negative numbers.  This helped move stocks higher toward the end of the month, but unfortunately,  not enough to lift each of the indexes listed below out of negative territory for the month.

The Russell 2000 and Nasdaq still have the most ground to make up to get to even, while the large-cap Dow and S&P 500 were down about 5.0% off their values at the end of 2015.

The close of January saw bond prices rise as yields fell, evidenced by the 10-year Treasury yield which dropped below 2.0%. The price of gold (COMEX) increased by month’s end, selling at $1,118.40–about $58 higher than December’s end-of-month price of $1,060.50.

 

Market/Index 2015
Close
Prior Month As of 1/29 Month Change YTD Change  
DJIA 17425.03 17425.03 16466.30 -5.50% -5.50%
Nasdaq 5007.41 5007.41 4613.95 -7.86% -7.86%
S&P 500 2043.94 2043.94 1940.24 -5.07% -5.07%
Russell 2000 1135.89 1135.89 1035.38 -8.85% -8.85%
Global Dow 2336.45 2336.45 2177.64 -6.80% -6.80%
Fed. Funds 0.50% 0.50% 0.50% 0 bps 0 bps
10-year Treasuries 2.26% 2.26% 1.92% -34 bps -34 bps

* Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. 

The Month in Review

Employment:

The labor sector has remained relatively strong as non-farm payrolls increased by 292,000 in December, while the unemployment rate held steady at 5.0%. According to the Bureau of Labor Statistics, the number of unemployed persons is 7.9 million, while the labor force participation rate for December is 62.6% (+0.1% compared to November) and the percentage of the total U.S. working-age population (age 16+) that is employed is 59.5%. The average hourly earnings for all private-sector employees fell by a cent to $25.24 in December. By the close of January, there were 2,268,000 continuing claims for unemployment insurance, as the insured unemployment rate hovered around 1.7%.

FOMC/interest rates

Citing slowing economic growth since its last meeting, the Federal Open Market Committee voted to maintain interest rates at their current level. While noting positive economic trends in labor, household spending, and business fixed investment, inflation remains below the FOMC’s target rate of 2.0%, while net exports continue to be soft.


Oil:

Oil prices fell significantly during the early part of the month, dropping below $30 per barrel (WTI), likely influencing equities markets, which seemed to follow the downward trend. Nevertheless, despite a surplus of reserves, oil prices surged toward the end of January, closing the month at $33.74 per barrel. The national average retail regular gasoline price decreased for the fourth week in a row to $1.856 per gallon on January 25, 2016, $0.058 below the prior week’s price and $0.188 under a year ago.


GDP / budget
: 

A strong dollar and lower oil prices slowed growth in the fourth quarter of 2015 to 0.7% following 3.9% and 2.0% growth in the second and third quarters, respectively. Three months into the U.S. government’s fiscal year, the government’s deficit is on the rise, up 22% at $215.6 billion for the month, according to the U.S. Treasury report for December. Part of the increase is due to the timing of outlays, without which the deficit would be up about 5%. However, disbursements for Medicare and Social Security are up a combined 7.1% compared to this time last year.

Inflation: 

With oil prices remaining low and the dollar strong, inflation remained below the Fed’s stated target rate of 2.0%. The Producer Price Index, which measures the prices companies receive for goods and services, fell 0.2% in December, dragged down by energy and food prices. Producer prices were down 1.0% from December 2014–the 11th straight year of decline from the prior year. The Consumer Price Index declined 0.1% in December. Over the last 12 months, the all items index increased only 0.7%. Retail sales also fell in December, down 0.1% from the prior month. For retailers, total sales increased only 2.1% for 2015, the smallest gain since 2009. The core personal consumption expenditures, relied upon by the Fed as an important indicator of inflationary trends, was down less than 0.1% in December.


Housing: 

The housing market has been relatively strong for much of 2015. The latest figures from the National Association of Realtors® show that sales of existing homes rebounded in December by 5.46 million–an increase of 700,000 over November, making 2015 the best year of existing home sales since 2006. The median price for existing homes in December was $224,100–7.6% over December 2014, marking the 46th consecutive month of year-over-year gains. The number of new home sales in December increased 10.8% compared to the number of sales in November. The median sales price of new houses sold in December 2015 was $288,900, while the average sales price was $346,400, compared to $297,000 and $364,200, respectively, in November. Housing starts, on the other hand, fell back a bit in December, coming in at an annualized rate of 1.149 million–2.5% below November’s figure.


Manufacturing:

Manufacturing and industrial production continue to be relatively weak sectors in the economy. The Federal Reserve’s monthly index of industrial production declined 0.4% in December, due in part to drop-offs in utilities and mining. Business inventories fell 0.2% in November from October and sales dropped 0.2% during the same period. In addition, the latest report from the Census Bureau shows orders for all durable goods decreased $12.0 billion, or 5.1%, in December compared to November. Not surprisingly, inventories are up 0.5%, commensurate with decreased demand.


Imports and exports:
 

Global trade continued its slow pace as foreign markets are still affected by the strength of the dollar, which has driven up prices for foreign buyers. Based on the latest information from the Census Bureau, the U.S. trade balance narrowed by $2.2 billion in November, as exports fell 0.9% in the month to $182.2 billion, while imports also dropped 1.7% to $224.6 billion. Year-to-date, the goods and services deficit increased $25.2 billion, or 5.5%, from the same period in 2014. Exports decreased $99.0 billion, or 4.6%, while imports decreased $73.7 billion, or 2.8%. Import prices fell 1.2% in December, the largest monthly drop since August 2015, while exports fell 1.1% in December, and 6.5% for 2015–the largest decline since 1983.

International markets: 

Amid an apparent economic slowdown, China’s equities markets were slammed earlier in the month as money left the country, prompting the government to take steps to discourage the monetary exodus. The rest of Europe withstood China’s lagging economy, helped by the prospect of more stimulus offered by the European Central Bank.


Consumer sentiment: 

While the equities markets experienced a tough January, consumer confidence did not wane. The Conference Board Consumer Confidence Index® stood at 98.1 in January, while the University of Michigan’s Index of Consumer Sentiment fell to 92.0 in January compared to 92.6 in December, primarily due to stock market downturns during the first month of 2016.

Eye on the Month Ahead  

As discussed, January was a tough month in the equities markets, both domestically and globally. Much of the early market decline has been in reaction to China’s apparent economic slowdown and falling oil prices. While these are valid concerns, we believe the negative affect on the US economy is over stated and since the market activity has primarily been fueled by headline driven fear, short term speculators and traders, we believe this decline has been more technical than fundamental.  We are confident it will pass once we begin concentrating on actual economic fundamentals, opportunities, and value.

We are in the midst of corporate earnings releases which so far have been positive and they should continue to help provide more clarity on the state of the US economy. The market did begin to rebound at the end of January following a bounce in oil prices, however, we anticipate additional volatility since market corrections normally take some time to work through.

As always, we are here to answer any questions you may have.

 

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

 

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

 

Market Volatility – Our Thoughts

I would begin by saying Happy New Year but, unfortunately, in the financial world this new year has been anything but happy. US equity indexes are off to their worst start in history, with the S&P 500 Index down more than 8% since the ball dropped in Times Square less than 3 weeks ago.

Similar to what we experienced in late August 2015, we believe this volatility is a continuation of a technical market correction, and not a bear market. It is important to understand the stock market is not the economy, and the economy is not the stock market. You will likely hear rumblings of a “looming recession”, as the media tries to decipher each days’ volatility. This is understandable because, historically, markets have been considered a leading indicator of economic health.

The problem with that thesis is that times have changed. Today’s global markets are more correlated than ever, and (unfortunately) day-to-day activity is primarily dictated by speculators and short-term traders. Electronic algorithms trigger buy/sell programs, or large global institutions hedge commodities or currencies exposure, etc. Add some economic uncertainty, a little CNBC drama, and you get the fear-driven environment we have today. Bottom line: We believe there is a complete market disconnect from current economic fundamentals.

This is not to say there are not headwinds, or issues we are concerned about, and watching closely. However: The world is not ending, and I am confident this will pass. Markets will return to concentrating on actual fundamentals and value. We just need a little more clarity—hopefully pending corporate earnings reports will help.

I have been in this industry for over 28 years, and have seen this many times. It’s crucial to remember that most “investors” are not traders, and it’s important to filter out the noise. Never act on emotion, and maintain a disciplined, diversified investment strategy. Volatility and market corrections are normal, and very often represent opportunity—perhaps to put long-term money to work, take advantage of overreactions, or re-balance portfolios to meet future objectives.

Understandably, investors become nervous when volatility spikes like this. We are watching it closely and making adjustments to improve our investment models, where applicable. Below are our thoughts on some of the questions we’re hearing.

OIL – when will prices stabilize and at what level?

No one can say for sure, but when consider that Brent Crude Oil began dropping in June of 2014, when it was at approximately $115 a barrel. It closed this past Friday Jan 15, 2016 at $28.55; I have to believe we are close. There are already a lot of negative expectations priced in.

The general consensus among “experts” is that because of oversupply, expected additional oil from Iran, and the forecast of a continued slow down in China, there is a good chance oil prices will remain low for quite some time. It is important to note that there are many variables with a commodity like oil (i.e.; geopolitical risk, weather, etc.) and therefore, price forecasting is not a perfect science. Things can change, and often do, very quickly.

Now, let’s look at the positive side of lower oil prices. The media seems to enjoy focusing on the negatives, but while low oil prices impact energy-sector companies, let’s not forget the tremendous benefits lower fuel costs have to consumers, and companies worldwide that count fuel as an operating expense. At some point, extra cash in everyone’s pockets translates into increased spending on other goods and services.

In this recent market sell-off, fueled largely by dropping oil prices, think about this: Does oil have anything to do with the many sectors of our economy that are doing well? Sectors such as health care and pharmaceutical companies, telecom, software and technology, etc. The answer is not much, yet they have all dropped dramatically, in step with oil. Again, there is a disconnect from fundamentals, and for this reason we are confident the technical market event will pass.

How quickly—and by how much—will the Chinese economy slow, and what impact will that have on the economies of other countries?

The slowdown in China is not a new story by any means, and has been the main catalyst of the oil/commodity price collapse. Before the “great recession” of 2007-2009, China was the biggest purchaser of commodities and natural resources. For years, China fueled their internal economic growth by borrowing and increasing its manufacturing capacity.

Over the past few years, China has been transitioning from a manufacturing, export-driven economy, to a more internally-driven, consumer-based economy. This change has directly impacted all global industries that previously supplied those resources. China is the world’s second-largest economy, so this transition will take some time, but the end result should be a much more stable and balanced economy. It’s also important to note that just this past Tuesday, China reported real GDP growth of 6.90% (source: Bloomberg). That’s not exactly slow growth, by any standard.

While China’s economic changes have negatively affected global energy and commodity sectors (and the corresponding countries that supply China), how does that really impact the US economy? Actually, not that much. The real impact of China to US GDP is not as big as the media would have you believe. The US only exports approximately $120 billion worth of goods to China. This equates to only 0.7% of US GDP (As of 2014, source: World Bank).

What should you do right now?

Everyone is different, but the most important factor right now is the question of liquidity needs and investment time-frames. First, review your income and liquidity needs for the next year—if you know for sure that you will need a lump sum from your invested assets, then those funds should not be invested in the markets. I anticipate that we will continue to see increased volatility, both up and down. There is no reason to risk funds that you will need in the near term.

If your invested assets are earmarked for the future, and therefore have a longer-term time horizon, you probably should do nothing with regards to changes. However, you should still review the holdings with your advisor and consider re-balancing the portfolio so that you are well positioned to potentially benefit from the eventual recovery.

As always, the Premier Wealth Advisors team is here to answer your questions, and help guide you through this challenging period.

Wishing you and your family a very healthy, happy and peaceful new year

John L. Diaz, CFP

 

 

From Riches-to-Rags: Why 1 in 6 NFL Athletes End Up Bankrupt

Did you know one in six NFL players end up bankrupt?Footbal image article

Hard to believe, right?

According to a recently released study from the National Bureau of Economic Research, they found that 16% of NFL players end up filing for bankruptcy within 12 years of leaving the league.

A secure, comfortable retirement is every worker’s dream, but for many former NFL players – who are usually out of the game by age 30 – that dream may be farther out of reach than they thought.

The paper, titled “Bankruptcy Rates Among NFL Players with Short-Lived Income Spikes,” points out that NFL players do not follow the traditional model of consumption soothing. In this model, people try to balance their consumption over their lifetime and save for the future, instead of simply consuming more in proportion with their current income.

According to the NFL Players Association (NFLPA), the average NFL career lasts just over three years and translates into average career earnings of $4 million after taxes.

The NBER study ultimately shows that the financial rewards of a professional football player often vanish all too quickly. But how? What causes many NFL players to go bankrupt despite their lofty salaries?

Financial planning (or more precisely a lack of it) is the main reason.

Here are some key contributing factors:

1. NFL careers and peak earning years are short

2. Getting used to a certain lifestyle (extravagant spending)

3. Disregarding valuable investing advice, while taking bad advice and making bad decisions

4. Injuries – players often become crippled, both mentally and physically 

Athletes hit their earning peaks almost immediately after school, while young. However, they retire young as well, and most will never again earn at the same levels, while their extravagant spending habits remain the same.

Eventually, most professional athletes will have the same financial needs and challenges as the men and women sitting in the stands. They need opportunities to grow their assets and have their money work hard for them. In addition, they want security in a retirement that comes all too soon for them.

While the NFL Players Association (NFLPA) started a financial wellness program, too many players either do not take the advice or do not fully understand it. It is hard for an NFL athlete to fully grasp the fact that his career is short-lived and that he must plan for the future.

Early financial planning is key. Professional athletes need their financial advisor the most at: 1.) The beginning of their careers, when tempted by lavish spending; and 2.) In their retirement, when athletes must often adjust to living off their interest income and capital gains.

As a NFLPA Registered Player Financial Advisor, when players ally with me, I guide them with sound planning strategies focused around their risk tolerance. It starts with a thorough understanding of a player’s financial goals, lifestyle preferences, managing investment risks and time horizons. The NFLPA prescreens me and takes my credentials and experience very seriously.

Big paychecks don’t equal financial security, so it’s crucial that NFL athletes understand how to make their high but short-lived earnings last a lifetime.

I’d love to hear your thoughts or answer any questions you may have. Please don’t hesitate to reach me at mmartiak@pfawealth.com or on Twitter at @premieradvisor. 

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