Professional footballers, despite their prowess on the field, often face significant financial challenges off it. High-profile cases, such as those involving Rio Ferdinand, Robbie Keane, and Chris Smalling, illustrate the dire consequences of trusting the wrong financial advisers and the need for a new approach to financial planning.
The Professional Footballer’s Mindset
Professional footballers often find themselves targets for financial misconduct due to their youth, sudden wealth, and lack of financial literacy. Educating these athletes is crucial to preventing scams. According to an article this week in FT Adviser, Mark Tueart, managing director at LIFT-Sport, emphasizes, “The starting point is education. We are speaking to unsophisticated investors. They are young people that have potentially come into lots of money and are ill-equipped to handle that.”
Conrad Balatoni, associate partner practice at St James’s Place, adds that many players are unaware of the tax liabilities associated with certain investments, particularly property. “A lot of players speak to me about property but I don’t think they realize that actually, a lot of footballers go bankrupt because of the tax liabilities. I’m always educating them and explaining to them that these are the tax consequences of property.”
Both Tueart and Balatoni stress the importance of thinking long-term. Tueart explains:
“You are talking to young players and saying, ‘look, you and your mates and your family can party for a decade, or you can have a nice life forever.’”
The challenge lies in getting young players to prioritize their financial futures. As Tueart points out:
“A 21-year old player doesn’t always return my calls but when that player is 31, they’re ringing me every day because they’ve got two or three children, maybe in private school, their legs are starting to fall off and the contracts aren’t as good. They suddenly see that time is looming. And that’s when it really matters.”
For advisers, the goal is to plant the seeds of good financial habits early on to ensure these athletes can enjoy long-term stability and security.
Case Studies of Financial Misconduct
Kingsbridge Asset Management and Rio Ferdinand
Wayne Rooney and Rio Ferdinand, among other football stars, lost £25 million after investing in Kingsbridge Asset Management. The firm, which attracted £417 million from 589 sports stars, was investigated for fraud relating to property deals, including a holiday home development in Florida. Despite a two-year police probe, there was insufficient evidence to prosecute. Many victims, including Danny Murphy and Martin Keown, suffered substantial financial losses.
The Ponzi Scheme and Robbie Keane
Robbie Keane, along with up to 100 other footballers, was ensnared in a £30 million Ponzi scheme allegedly set up by a former Doncaster Rovers player. The scheme promised a staggering 20% monthly return, but instead, it led to individual losses ranging from a few thousand to over a million pounds. This case underscores the financial vulnerability of athletes and the need for vigilant financial oversight.
Chris Smalling and St. James’s Place
Chris Smalling, a former Manchester United player, filed a £750,000 lawsuit against Klipp Wealth Management, a representative of St. James’s Place (SJP). Smalling alleges that he was misled about the fees associated with two bond investments, resulting in significantly higher costs than initially disclosed. He claims that the promised 0% initial charge and annual management fees of 1.5-1.6% were not honored, leading to substantial financial losses.
Ex-Footballers’ Campaign Against HMRC
Former players like Andy Cole, Michael Thomas, Craig Short, and Martin O’Neil have campaigned against HMRC’s harsh tax collection tactics following financial scams. They argue that HMRC treats them like criminals rather than victims, exacerbating their financial distress. These players, among others, lost their pensions and life savings due to bad investments and are now fighting for fair treatment.
The Need for Non-Intermediating Financial Planners
To protect footballers from financial pitfalls, it is crucial to engage financial planners who are not also financial intermediaries. These advisers operate on a fixed fee basis and are not compensated based on the assets under management, ensuring their advice is unbiased and in the best interest of the client. This model eliminates conflicts of interest and focuses on providing transparent and trustworthy financial guidance.
Holistic Life Planning
Beyond immediate financial management, skilled financial planners should also serve as life planners. This involves helping athletes plan for their encore careers post-retirement. Aligning future economic activities with the athlete’s values and natural talents ensures a fulfilling and sustainable livelihood beyond their sports career. This holistic approach addresses both financial stability and long-term personal satisfaction.
Conclusion
The financial well-being of professional footballers can be significantly improved by separating financial planning from financial products. Financial planners that are not also financial intermediaries offer a transparent, fixed-fee service that prioritises the client’s interests. By focusing on holistic life planning and ensuring long-term stability, athletes can avoid the devastating consequences of financial scams and enjoy a secure future during and after their sports careers.
By learning from the mistakes of their predecessors, current and future athletes can take proactive steps to protect their financial futures. Engaging with non-intermediating financial planners who provide unbiased advice and comprehensive life planning is crucial. This approach not only safeguards their earnings but also helps them transition smoothly into fulfilling encore careers that align with their values and passions.
Q&A: Safeguarding Footballers’ Finances
Q: What are some high-profile cases of footballers falling victim to financial scams?
A: Notable cases include:
- Wayne Rooney and Rio Ferdinand: Both lost a significant portion of £25 million invested through Kingsbridge Asset Management in property schemes. Despite a police investigation, there was insufficient evidence for prosecution, and many victims, including Danny Murphy and Martin Keown, suffered substantial financial losses.
- Robbie Keane and Jimmy Bullard: They were part of a £30 million Ponzi scheme that promised 20% monthly returns, leading to individual losses ranging from a few thousand to over a million pounds.
- Chris Smalling: Filed a £750,000 lawsuit against St. James’s Place, alleging undisclosed fees on bond investments, resulting in higher costs than initially disclosed.
Q: Why are footballers vulnerable to financial scams?
A: Footballers often become wealthy at a young age but lack financial literacy. They rely on advisers, who sometimes recommend risky or unregulated investments, leading to significant losses.
Q: What is the main problem with the current advisory system for footballers?
A: Many advisers are compensated based on the assets under management or through commissions, creating conflicts of interest. This can lead to biased advice not in the client’s best interest.
Q: What is the proposed solution to protect footballers from financial scams?
A: Engaging non-intermediating financial planners who operate on a fixed fee basis and do not receive commissions or percentages of assets. This ensures unbiased and transparent financial advice.
Q: What additional role should financial planners take on for athletes?
A: Financial planners should also serve as life planners, helping athletes transition to encore careers post-retirement. This includes aligning future economic activities with the athlete’s values and talents for a fulfilling and sustainable livelihood.
Q: What is the benefit of separating financial planning from financial products?
A: It eliminates conflicts of interest, ensuring that the advisor’s guidance is solely focused on the athlete’s best financial interests, leading to more secure and transparent financial management.
Q: How can holistic life planning benefit athletes?
A: It ensures long-term financial stability and personal satisfaction by helping athletes plan for life after sports, including career and business planning that aligns with their values and gifts. This approach addresses both immediate financial needs and future aspirations.
Academy of Life Planning 