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February 1, 2016

Do a quick online search for “footballer” and “bankrupt” and you’ll find no shortage of multi-millionaire athletes who have played, earned and fallen on hard times in only a matter of years.

It’s a heartbreaking story but one that seems to play on repeat, a clichéd version of life after sports.

“Athletes often make a ‘Faustian bargain’ in focusing on their sport at the expense of preparing for a post-sporting career,” explains David Lavallee, a professor at University of Stirling’s School of Sport in Scotland.

Lavallee’s research, which focuses heavily on transitions experienced by high performance athletes throughout their careers, has found that one in five athletes experience a distressful reaction following retirement from sport.

“Retirement is perhaps the only inevitability in sport, yet very few prepare for it – it is a very low percentage [of those who prepare], normally less than 10 [percent],” Lavallee explains. “There are a combination of factors, including the reason why they retire, the coping resources they have in their post-retirement environment and self-identity.”

But it also comes down to a question of earnings. On average, According to a Sportsmail report, Premier League footballers earn £2.3 million a year not including bonuses and sponsorships. For a career that lasts eight years on average, stretching those funds out is critical.

“Once you stop, or you're forced to stop performing at that level due to injury or simply you're out of a contract, your salary base immediately pulls back,” says Oshor Williams, a former footballer and current assistant director of education at the Professional Footballers’ Association. “Unless you’re a top player, it changes your financial circumstances.”

Develop a game plan while still on the field

Sustainability begins with asking what kind of lifestyle the athlete hopes to live when the game is over.

“Take time to really think about what you want from life – you should then work backwards from that goal making sure the investment and lifestyle choices made are aimed at achieving this,” says Sandy Swinton, Head of Sports, Media and Entertainment at RBC Wealth Management in London. “Some people may have ambitions to be a manager, pundit or go into business, everyone is unique but there is still the same planning methodology for everyone.”

A solid, robust financial plan and an advisor are must haves.

“Seek real wealth structuring and protection advice,” he adds. “Outline your goals – career, financial, family – and work with them to ensure the structures they deem suitable really meet your needs.”

A good offense is a solid defense

One element retiring pros often struggle with is pay control, says Williams.

“They are so focused on reaching their pinnacle performance that they put so many of their affairs into the hands of others – whether it be planning a trip abroad, their finances, hiring a car, buying a house, aspects of their wellbeing,” he says.

It’s club culture to take as much of the day-to-day responsibilities off the player so they can focus on performing at the highest level.

“That's great, until you no longer have the support group of the club and you've been asked to make these important decisions on your own,” he says.

That’s where trust structures and insurance can prove invaluable ways to make a salary last, says Swinton.

“But they could also invest in property to provide further income and asset appreciation and protection,” he adds. “Only earmark a portion of the disposable income to the athlete to play with, the rest should be set aside to protect the future.”

Trade long shots for good shots

While athletes have the luxury of earning a lot of money in a very short space of time, it does not follow that they should invest it in the same timeframe with a view to simply earning more, Swinton cautions. Careful planning and consideration of their goals, both personal and financial, should drive an athlete’s strategy, Swinton adds, with careful consideration to a long-term view.

The spike in earning in their early life, can also lend itself to a slightly higher degree of risk. But investment should be thoughtful.

“Don't rush into an opportunity, you have all your life to invest in vehicles to make more money but this time is really to invest in your career and seek advice to help protect and accumulate in a careful way,” he adds.

Stack your bench

As the support from the club and sponsors fades, athletes will need to look towards building a new team, one that can help them protect their finances.

“Engage the services of an experienced wealth partner who will have seen it warts and all who has witnessed the good and the bad times and the volatility that characterizes most asset classes,” he says.

Williams agrees, saying horror stories where athletes follow their teammates into bad investments or poor advice, are born out of a lack of their own due diligence.

“They need to think through investing prudently, seek the right kind of advice, and undertake their due research and intelligence,” he adds. “It may cost some money, but it may save them.”


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This publication has been issued by Royal Bank of Canada on behalf of certain RBC ® companies that form part of the international network of RBC Wealth Management. You should carefully read any risk warnings or regulatory disclosures in this publication or in any other literature accompanying this publication or transmitted to you by Royal Bank of Canada, its affiliates or subsidiaries.

The information contained in this report has been compiled by Royal Bank of Canada and/or its affiliates from sources believed to be reliable, but no representation or warranty, express or implied is made to its accuracy, completeness or correctness. All opinions and estimates contained in this report are judgments as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. This report is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Every province in Canada, state in the U.S. and most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, any securities discussed in this report may not be eligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment advice.

This material is prepared for general circulation to clients, including clients who are affiliates of Royal Bank of Canada, and does not have regard to the particular circumstances or needs of any specific person who may read it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. To the full extent permitted by law neither Royal Bank of Canada nor any of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copied by any means without the prior consent of Royal Bank of Canada.

Clients of United Kingdom companies may be entitled to compensation from the UK Financial Services Compensation Scheme if any of these entities cannot meet its obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered for up to a total of £85,000. The Channel Island subsidiaries are not covered by the UK Financial Services Compensation Scheme; the offices of Royal Bank of Canada (Channel Islands) Limited in Guernsey and Jersey are covered by the respective compensation schemes in these jurisdictions for deposit taking business only.


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