• About Us
  • Services
  • Advisory
  • Publications
  • Links
Advisory

By comparison to others, whose greatest earning power comes in middle age, the early achievers have certain disadvantages which help define their need for financial advice and other professional support:

They acquire wealth at an age when they have had little opportunity to develop the knowledge and skills to manage it or to handle the impact on their personal life and personal development Because of their early success, they are heavily dependent on agents and other professionals to look after their interests, both in the exploitation of their talents and in the management of their affairs Some are ‘in the public eye’, with a high media profile they are obvious targets for those who wish to take advantage of them As their early careers mature, they have to prepare for the future, which may be far more exciting with proper planning Most have to rely significantly on wealth amassed in their youth to provide for their lifelong needs. If they fail to get it right, they may never get another opportunity

Of course needs vary from one individual to another, depending on their abilities, personalities and tastes.

THE GOLDEN YEARS

During the ‘golden years’, the aspiring early achiever is dedicating himself almost entirely to success in his/her field, almost to the exclusion of everything else. He or she has a large support team to keep them at peak performance level, both physically and mentally and most need comparable support in looking after their longer-term life interests, both financially and otherwise. The key difference between an early achievers and most other successful individuals is that their earnings may peak in their twenties and early thirties.

He or she will probably need at least three main advisers, who ideally will work to together as a team:

MENTORSHIP

This will often be an informal role, but nonetheless highly important and perhaps the most important of all. Needs will vary, but it seems obvious that suddenly coming into large sums of money has a major impact on the lives of young people, which separates them from their peers. It changes the dynamics of personal relationships, interferes with the natural process of personal development and attracts numerous followers, motivated by their wealth and fame, as much as personal friendship.

An early achiever has to cope with wealth and fame with very little preparation and most will need a mentor and sounding board to guide them through all the choices and pitfalls which now lay in front of them.

The mentor will add perspective and context to a situation, to keep the sportsperson grounded when the media build them up to disproportionate heights and to be there when they face adversity.

As well as his or her career, the early achievers need to cope with other life events including relationships, marriage, births, deaths and sometimes divorce, all of which can be made more challenging because of the wealth or media attention. Spouses too can be affected by the wealth and publicity.

The mentor or life coach will also play an important role in helping the sportsperson prepare for a second career, helping them assess their strengths and weaknesses and suitability for a variety of possible occupations.

We provide Mentorship free to our clients

WEALTH MANAGEMENT AND FINANCIAL PLANNING

Long-term planning of finances is inextricably linked to decisions about career and lifestyle and too many early achievers have suffered from advisers who take only a partial, short-term view.

Most early achievers have only 10 – 15 years to convert temporary revenues into soundly based wealth which will help provide for themselves and their families for the rest of their lives and beyond.

At the most basic level this obviously requires some financial disciplines to avoid the temptations of excessive expenditure and to ensure enough is put aside to invest for the long-term. Whilst this is obvious, it is not always easy, depending on the reaction of the individual, his or her spouse and their circle of friends or associates, who may encourage profligacy.

The financial management needs fall broadly under the following headings:

Making long-term investments (mainly equities, fixed interest and property), to build a capital base which will provide for their financial needs when earnings have diminished
Managing, reviewing and administering the investment portfolio
Managing the risks (including insurance), particularly the risk of injury which may cause unexpected loss of income or, ‘in extremis’, a premature end to the career
Setting up appropriate holding structures for the assets to promote tax efficiency, whilst resisting the temptation of artificial tax avoidance ‘schemes’ (which may fail, resulting in heavy fines and adverse publicity)
Where desired and appropriate, to consider whether and how to allocate funds for participation in private ventures (including property) often brought to them by friends and associates (most sportsmen/women have no experience in this area, which carries considerable risk)
Where appropriate, to consider allocating funds to invest in building a platform for a second career.

In the most straightforward cases, the early achievers is an employee, but there is often significant additional income from other sources, which must be properly channeled and managed.

Where the early achievers is self-employed, there may need to be appropriate advice, structures (trusts and companies) and administration to support their activities, especially where those activities are cross borders, with income and costs arising in a number of different countries. This will range from setting up and running special purpose companies and overseeing tax affairs to sending out invoices, running banks accounts, and handling sponsorship arrangements.

For savings and investments, early achievers will be best advised to stick to conventional quoted investments and products, fully managed by professional managers. Others may have the desire and the capability to be a little more entrepreneurial allocating a portion of their wealth to direct property investments, private equity (non-quoted companies) and even private ventures. Some of these might also be linked to the exploitation of their own name, personality and passions, perhaps providing the foundation for a long-term career.

For those early achievers with entrepreneurial ambitions, who wish to use their name and their wealth to access direct business opportunities, their needs will thus be far greater. They will require the support of a wealth manager who has both the platform and the experience to help them build a business or a portfolio of direct investments, in which they become personally involved.

There are many examples of early achievers who become successful entrepreneurs, but even more examples of those who fail to make that transition. It is a key role of the wealth manager to ensure proper disciplines are put in place and to question and challenge every potential investment they consider.

Young early achievers generally have little or no experience of managing wealth but it is vital that they become fully engaged in the process so that they understand the implications of all the decisions being made, particularly the risks. Transparency and joint-learning are crucial to a successful, long-term, mutually beneficial relationship.

PREPARING FOR THE FUTURE

No planning, financial or otherwise, can take place without some consideration of the wider picture, including the longer-term future. As an early achiever’s career progresses, the need to think about what happens next becomes increasingly important and this may well have a significant impact on the management of his or her affairs.

It is not just the sudden loss of income. After coming off the adrenaline high and fame of success, the challenge of making a transition to a less intense, less focused and less high profile occupation can be quite daunting. This is especially so if the early achievers is suddenly on their own, without any of the large support team which has helped them through their career and upon whom they have come to depend.

Because the future plans will impact the wealth management objectives Because there may be a need to allocate funds to help finance this transition, especially if it involves setting up a business or participating in joint venture investments

CONCLUSION

Ideally, in making these major decisions, perhaps over a considerable time, the early achievers will draw on the collective experience of the mentor, agent and wealth manager, working together as a team, which will not only help plan the future, but support him or her through the difficult transition period.

For the reasons stated, there are very few people who have greater need than early achievers for ‘trusted advisers’. The precise definition of the different roles may vary in accordance with their capabilities and the particular circumstances of their client, but the central point is that none of them can operate effectively without understanding the whole picture.

For many early achievers, particularly those with complex affairs, the role of the wealth manager resembles the holistic approach of a family office, where looking after their arrangements goes far beyond the management of the money itself. The wealth manager needs a range of experience which not only encompasses financial matters, but supports the client in every major decision, as well as in the day to day demands of being a highly successful individual, with a variety of different interests.