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