Professional Footballers: Engage Guide To Wealth Management…
Professional Footballers: Engage Guide To Wealth Management
Part 1: Future Cash Flow.
How wealthy are you really? That depends on how much you spend.
It is very easy to go up the expenditure ladder; it’s extremely difficult to come down. Expenditure reviews and management are key to keeping things on track. That’s why we take 6-12 months of bank statements from clients and prepare expenditure analysis to show them exactly what they are spending. They don’t tell us what they ‘think’ they’re spending. 100% of clients underestimate their spending.
Most people don’t love doing this exercise and it can be uncomfortable. But we pass no judgement. All we’re looking for is that all important figure - what you’re spending today.
In the end, we find most footballers really value the understanding of knowing what they spend. And there’s good reason for this.
“How wealthy you are isn’t about how much you earn but how much you spend. If you earn £10 million net you’ll be considered wealthy but if you spend £10.1 million, you’re broke.”
This expenditure figure can then inform the rate of savings, the investment options and the debt repayment strategy.
Finally, we assess the sustainability of this expenditure. And it’s this that will drive the financial planning. If a client spends £250k a year net and between husband and wife we assume a 40% overall tax burden, this equates to a gross annual income of £415,000. Again working backwards, if we used the much discussed 4% withdrawal strategy, a client needs circa £10million of assets to sustain this £415,000 income. Now there is likely to be property income, working income post football etc but this gives a quick (and very simplified) example of the cash flow element.
In the above example, is £10million of investment feasible? If not, then we need to have an honest conversation and model more realistic outcomes. We have to tell clients the truth, not just what they want to hear.
We try and preach the virtue of real expenditure management and finding the balance between living the best life you can whilst you’re young and financial longevity.
“ The goal is to be able to keep living the same lifestyle (or an even better one) after a playing career ends.”
I always try to tell my footballers that life after football doesn’t have to be worse. Building businesses and having the freedom to do as you please can be just as rewarding. It might not come with global stardom but there are pros and cons to everything. There are many ways to find purpose in this life.
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