Advisor Today - July/August 2015 - (Page 32)

FINANCIAL PLANNING FINANCIAL PLANNING By Lee Rawiszer, CLTC Creating Irreplaceable Capital For clients who enjoy a high income for a short time, the key is to help them preserve their wealth. T he majority of our favorite professional athletes and entertainers will file bankruptcy once their careers are over. According to CBS News, 78 percent of former NFL players have gone bankrupt or are under financial stress due to unemployment or divorce within two years of their retirement from football. The same holds true for approximately 60 percent of former NBA players within five years of their leaving basketball. Professional athletes and other high-earning individuals become accustomed to a certain lifestyle during their period of high earnings, only to see the wealth expire as their income quickly decreases. Of course, one does not have to be a famous performer to go through a flux in income. The same scenario can be true for anyone who goes through a period of high-income and lavish lifestyle only to find the wealth is not sustainable. This is where the concept of what I call "irreplaceable capital" comes into play. For many who go through a period of extreme earning, bankruptcy can be avoided, and a desired lifestyle can be protected if they or their representatives recognize the irreplaceability of their current income and lifestyle. It's critically important that individuals in these positions take the time and energy to ensure that their current assets are preserved for the future. It can be challenging for people to think far enough into the future to establish a plan that will create income and support their lifestyles for years to come. For professional athletes, their profession alone makes planning extremely difficult. According to Sports Illustrated, the average NFL career is just 3.5 years. 32 ADVISOR TODAY | July/August 2015 © skynesher Managing irreplaceable capital responsibly could make all the difference for their future livelihood and legacy. Major League Baseball has the longest average career, at 5.6 years. This incredibly small window is when most professional athletes will make the bulk of the income that will carry them through the pursuit of further education, new careers, raising families and traditional retirement. But it's not just athletes. Take the entertainment industry. Those with the rarest of musical talent have careers that span multiple decades. Most musicians are lucky if they even create one successful album and are allowed to release a second, based solely on the popularity of the first. Even more are never able to get that big break, and the album deal they are desperately trying to secure never happens. The fact is that while the average person works for approximately 35 years, most athletes and entertainers will only have three to five years of great earning potential during which they will need to secure their complete financial future. Managing their irreplaceable capital in a responsible manner could make all the difference for their future livelihood and legacy, and those who have the foresight to plan and work with a trusted advisor have the best chance of success. At our firm, we take the time to walk through our clients' current financial landscape, as well as their plans for the future in order to properly manage their assets and irreplaceable capital. We call this process creating a "financial cocoon," which will help position them and their families for life after their sports or entertainment careers. How we manage irreplaceable capital Managing irreplaceable capital can be challenging because you often only have one chance to impress upon your prospect the importance of protecting his financial future. Several of our initial meetings with

Table of Contents for the Digital Edition of Advisor Today - July/August 2015

From The Editor
New Products
How Do You Create the Million-Dollar-Plus Practice?
Traits of Top Performers
The Business Benefits of a Pipeline Mentality
What Does It Mean to Act Ethically?
Variable Universal Life is Back
Sell More LTCI By Selling Less!
Overcoming the Most Common DI Objections
Divorce DI
Mitigating Retirement Risks with Life Insurance
Creating Irreplaceable Capital
Closing the Gap
Financial Future Less than Rosy for Boomers and GenX
Estate Planning and Annuities?
Ignite Your Sales Potential
A Closer Look at BTID
Upholding the Tradition
NAIFA’s Candidates for Election
Addicted to Rejection
What is Keeping Your Senior Clients Up At Night?
Advertiser Index
Back Page

Advisor Today - July/August 2015