These rookie mistakes have cost athletes almost $500 million in fraud.
A large number of professional athletes, who often come into a lot of money at a young age, lose a great deal of it due to advisers who aren’t looking out for their best interests. A 2018 Ernst & Young Study found that between 2004 and 2017, professional athletes alleged almost $500 million in fraud-related losses.
Often, athletes also sign a power of attorney over to their financial adviser, granting them access to their money without having to ask for permission. This is how mismanagement frequently occurs and professional athletes often get scammed. A 2019 research report, “The Worst of Both Worlds? Dual-Registered Investment Advisers,” by Nicole M. Boyson of Northeastern University detailed these issues with financial advisers affiliated with brokerage firms. Several of those conflicts included selling affiliated mutual funds and mutual fund revenue sharing.
Mistake 4: Choosing a financial adviser or firm based on their current clients or through testimonials Due in part to the lack of proper financial education, most professional athletes can be a financial adviser’s client for years and not even notice what is going on behind the scenes.Another common and costly mistake professional athletes often make is to blindly accept a referral through a sports agent. While the service is usually listed on their website or part of the proposal, usually there isn’t a lot of research conducted on the agent’s part to vet the financial adviser.
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