Financial Advice for Sports people – it’s never too early to start
High-earning sports people are not normally the ones that spring to mind when we think of the financially vulnerable. Yet the years following retirement from any successful sporting career can often be marred by financial difficulties.
Much attention has focused on footballers, not least due to the high salaries of a minority. But headline figures often disguise a much more varied picture. Whereas the average weekly wage of Premier League players was £64,000 in 2019, in League One it was £2,000. Even the small number on the highest wages need to remember that such high income levels are unlikely to last. According to the Professional Footballers’ Association, the average age of retirement is 35. By no means all players are likely to play even to that age, as the average career in football is just eight years long.
While earnings are good, spending of course increases, and not necessarily just on the obvious. As well as having their own (short-term) mortgages, many high-earning sports people also choose to support family members financially – with mortgages or otherwise. However post-retirement, financial problems can arrive quickly. Previous research suggested that a third of footballers divorce within a year of retiring, and up to 40% of footballers have declared bankruptcy within five years of retiring. Nor are the problems limited to football. A State of Sport survey by the BBC in 2018 that also investigated rugby and cricket players found that just over half of respondents reported financial difficulties in the five years after stopping playing – and this figure came before the impact of the pandemic.
Retiring from a sport a person loves at a relatively young age can certainly be emotional, stressful, heartbreaking even. Add to that financial pressures and it is clear that athletes are going to need support. Ideally this should start way before retirement. That is why, at WAY Investment Services, we have recently launched the Pro Sports Trust.
The Pro Sports Trust enables sports players to set aside some of their income during higher earning years. Assets are held in Trust and invested according to the risk profile of the investor, ensuring the investments are suitable for their needs. Trusts have long been a stable and appropriate way to preserve wealth over the long term, for the benefit of the settlor and their loved ones. Overseen by a Professional Trustee, funds in the Pro Sports Trust can grow and then potentially be distributed in later years as needed – either to the client or to named beneficiaries such as family members. Unlike a pension, the client will not have to wait until age 57 (from 2028) to access funds
The Pro Sports Trust makes use of the normal expenditure from income exemption, meaning payments into the trust are also immediately exempt from inheritance tax providing they are made from net income, are intended to be made regularly and do not reduce the standard of living.
Find out more at the Pro Sports Trust website.