Welcome to the league: a wealth playbook for newly drafted professional athletes

Being drafted marks the beginning of a life-changing journey. After a handshake with the commissioner comes fame, opportunity and financial complexity. For newly drafted athletes, this moment represents the culmination of years of dedication. But it’s also the beginning of a critical financial game plan that, if executed well, can secure wealth for generations.

The smartest players aren’t just thinking about the next season. They’re thinking decades ahead.

Here is what a recently drafted player should consider from a wealth management standpoint, and why having a seasoned advisor to quarterback your financial team can be beneficial.

1. Understand the financial reality of your earnings

Most rookies are excited—and rightfully so—about their new contracts. A top 10 pick could see guaranteed earnings upwards of $20 million over four years. However, it’s important to understand how quickly that number can shrink without the right strategy.

Between federal and state income taxes, agent fees, union dues and living expenses, a player might see only 40-50% of their gross salary land in their respective accounts. And that’s before considering lifestyle inflation, family obligations and unexpected expenses.

2. Quarterbacking the right team

A common mistake among young athletes is trying to manage everything independently, or leaning too heavily on one wealth advisor for everything. That’s not sustainable. Many successful athletes treat their wealth like a business, with a specialized team around them.

The wealth advisor acts as the quarterback, coordinating between your:

• Sports agent or business manager: Aligning short- and long-term income, endorsement deals and off-court opportunities.
• Attorney: From reviewing contracts to structuring trusts or LLCs, legal counsel is vital.
• CPA or tax strategist: Designing plans to minimize income, estate and gift taxes—often using multi-state planning and advanced deductions.
• Insurance specialist: Evaluating risks and protecting your income, assets and health.

3. Start with a tax plan, not an investment plan

Before jumping into stocks, real estate or private deals, you should consider tax minimization. Why? Because taxes are your single largest lifetime expense.

It would be smart for athletes to use structures such as the following:

• Deferred compensation plans: Ideal for smoothing income into retirement years.
• Multi-state planning: If you’re playing in a high-tax state, such as California or New York, explore residency strategies or charitable planning in low- or no-tax states like Florida or Texas.
• Charitable foundations or donor-advised funds: These not only support a cause players care about, they can also reduce taxable income and enhance public image.

For example, a client in his second year used a charitable lead trust to fund his family’s foundation. The strategy reduced his taxable income that year by over $1 million and allowed him to support youth basketball programs in his hometown.

4. Estate planning now – not later

Even in your early 20’s, it’s not too early to create an estate. Why? Because you now control significant assets, and life is unpredictable.

A comprehensive plan includes:

• A revocable living trust: to avoid probate and keep your affairs private
• Powers of attorney: in case of injury or incapacity
• Guardianship instructions: especially if you have children or dependents
• Asset protection trusts: to shield assets from potential lawsuits, creditors or divorce claims

5. Lifestyle management and budgeting: saying "no" the right way

Sudden wealth invites pressure—both internal and external factors. Families expect help, friends ask for favors and business opportunities seem endless.

The key is to have a structured, flexible wealth allocation plan that gives each dollar a job:

• Fixed expenses: housing, transportation and daily living
• Discretionary spending: travel, gifts and entertainment
• Investments and reserves: short- and long-term goals
• Family assistance pool: separate account with pre-set limits

For example, one client created a $250,000 “family fund” per year with oversight protocols. He supported his loved ones while avoiding unstructured handouts that could lead to resentment or guilt. It was one of the most emotionally stabilizing moves he could have made.

6. Insurance: the underrated safety net

Most players insure their bodies in college, but don’t update those insurance policies after being drafted. Professional athletes have access to customized disability, life and umbrella insurance solutions that go far beyond traditional coverage.

Athletes might consider:

• Replacing or supplement league-provided disability insurance
• Securing private life insurance with estate tax advantages
• Establishing captive insurance arrangements for business ventures

These strategies are about protecting what you earn, so that it becomes what you keep.

7. Think long-term, play long-term

According to a 2013 study done by Sports Interaction, the average career of a professional athlete in major sports is less than six years. But the financial opportunity can last a lifetime, if managed well.

Top-tier clients often diversify early, investing in:

• Private equity or venture deals (with thorough due diligence)
• Real estate holdings (with passive income and tax benefits)
• Franchise ownership or startups (only after the right mentorship)

The key is patience. Some athletes have jumped into six-figure investments with friends and experienced issues after the first six months. Conversely, athletes who waited, learned and built a disciplined allocation plan have ended up enjoying eight-figure portfolios, and the freedom to pursue life after sports without financial stress.

The difference between fleeting riches and generational wealth can come down to discipline, education and the strength of your advisory team. A wealth advisor who knows this world, the world of professional sports, can help you avoid pitfalls, protect your future and maximize the once-in-a-lifetime opportunity you’ve earned.

This isn’t just about numbers. It’s about building a life, a legacy and a future that lasts well beyond the game.

If you're a professional athlete or represent one, now is the time to build the right financial foundation. Connect with our team to learn how we can help you navigate this next chapter with clarity.

This information does not constitute investment advice and is not an offer to buy or sell a security. The material is provided for general information and educational purposes and is based on information provided to us by sources deemed to be reliable. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. Past performance is no guarantee of future results and asset values will fluctuate with changing market conditions. There is no guarantee that the views and opinions expressed in this document will come to pass. Investing in the market involves gains and losses and may not be suitable for all investors. All investments are uninsured and can lose value. AI (artificial intelligence) was utilized to assist in the creation of this marketing piece.

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