Our staff here at The Wealth Conservancy understands the chaos that can come from instantaneous wealth, and the difficulty of trying to manage it. We’ve seen the myriad challenges that can arise from coming into sudden money and how easy it is for that wealth to disappear as quickly as it appeared. While TWC primarily works with inheritors who face these challenges, inheritors are not the only ones who find themselves in these circumstances. Young athletes face similar dilemmas, since many go into the NBA fresh out of college – or even high school – and start to acquire more money than they had ever dreamed of having.
Some of these young men and women may have never had the opportunity to save before, and might not understand the potential volatility that comes with managing significant funds. Back in July of this year, CNN Money ran an excellent article on NBA star Antoine Walker and the work he is doing with Morgan Stanley and former NFL linebacker Bart Scott to help young athletes avoid the monetary mistakes Walker and so many other athletes have made. If you are a basketball fan, you may remember Walker from his time playing for the Boston Celtics and the Miami Heat. He was a highly regarded player on both teams, and thanks to all of his success on the court, he made more money than he was prepared to handle.
By 2010, just three years after his retirement, Walker filed for Chapter 7 bankruptcy – even after amassing more than $100 million during his athletic career. “How is this possible,” you may be wondering? Walker created a luxurious lifestyle that was too much to maintain, a mistake he says that many athletes make at the beginning of their careers. When one comes from nothing, it can be easy to fall into the trap of buying all the things he/she previously couldn’t afford: jewelry, cars, homes, boats, etc. Not only that, but Walker admits that he allowed himself to become an open ATM for many of his friends and loved ones throughout his career; helping them into “better living situations than they had previously.” And of course, he never held any of them accountable for paying him back.
Walker also ran into issues with gambling, and on top of that, lost his entire real estate firm, Walker Ventures, during the Great Recession. With the mounting business losses, Walker put up his personal portfolio as collateral and had to pay $20 million back to the banks.
As Walker says in the CNN article, “My story is sad. It’s sad to see other guys work so hard throughout their life – and then they just lose it in two or three years.” Through his educational program, he hopes to help guide and educate working athletes so they can make educated decisions regarding their financial futures.
Stories like Walker’s are prime examples of the potential consequences that can come from sudden wealth.
We at The Wealth Conservancy want our clients to make confident decisions in the present, to ensure a solid financial future. With our dedicated wealth coaches, we walk our clients through how to integrate with their wealth, so that they can meet those long-term goals and not succumb to instant gratification. Life is seldom simple or easy, which is why TWC is here to coach and support you along the way!