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Why Specialize in Professional Sports?

Today's professional sports leagues have created a new breed of self-made millionaires. Though talented in their respective professions, many who receive this instant wealth are not as financially savvy as they need to be given the magnitude of their wealth. This disparity has resulted in a flurry of athletes who, despite earning millions of dollars, have found themselves bankrupt in a few short years.

Most financial firms service clients who have accumulated their net worth through entrepreneurship, inheritance and/or by holding executive-level corporate positions.  These individuals are able to be more risk tolerant because of their ability to generate high incomes for a greater number of years.  These individuals are also able to take advantage of many tax-reduction strategies, which are not afforded to high income W-2 employees (i.e. the professional athlete).  Many financial strategists do not take into account the limited number of years most professional athletes have to generate income, than that of the aforementioned individuals.  This leads players to have a false sense of security about their financial well being. This is one of the contributing factors that leads to 70% of professional athletes retiring from their sport financially depleted.  This is also the reason why PWMG was created.

Most athletes earn a vast majority of their income through W-2 wages.  Thus the tax strategies are minimal.  They do not have the ability to decide when and how they are to be paid.  This puts them into a high tax bracket.  Write offs do little by the way of reducing taxes because athletes’ salaries often exceed many of the thresholds allowed for deductions due to their extraordinary incomes.  Thus, PWMG is faced with the challenge of making the athlete’s after tax dollars work for them.  We do this by creating “Wealth Accounts” that will be used in future years to produce income, create businesses and transfer wealth tax-free.  PWMG clients can then take advantage of all of the tax strategies offered to those traditional wealthy individuals.

In the NFL, 78 players were defrauded for more than $42 million from 1999 to 2002. These trends, combined with the overall lack of education and understanding of investments provide PWMG with a tremendous responsibility to protect and educate these new investors and allay the fears they have of losing all they have earned in what tend to be relatively brief careers. A recent NFL Players Association Survey of 500 self-reporting players on the severance list from 1996 to 2001 indicated the following:

  • Only 25.7% of participants elected to retire
  • 33% of those experienced anxiety, depression, and feelings of loss in the first six months
  • 30% said it took over one year to find a job
The need to have high levels of unbiased financial assurance is at an all time high.

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