Over 500 former football players have lost as much as £1 billion through poor investment and tax advice

The Guardian has reported that more than 500 former football players have lost as much as £1 billion through poor investment and tax advice, with a number of ex-players taking legal action against advisory firms.

An extract from today’s article in the Guardian says:  “One accountancy professional with detailed knowledge of many players’ financial problems told the Guardian that approximately 500 former players from the first generation to play in the Premier League may have lost up to £1bn because of disastrous investments, based on financial advice, and HMRC demands following their involvement in investment schemes promoted as tax-efficient.”

Whilst this story focuses on the vast quantities of money that football professionals have lost, poor financial advice and wealth management is an issue that can affect anybody.   When seeking out guidance and support it is imperative to look beyond the obvious. Wealth management is far more than what some, such as these unfortunate footballers, would argue is simply overpriced, ineffective investment management.  True wealth management is about handling taxes, mortgages, pensions, later life planning, finances after death. It is about guidance and counsel, project management, strategic planning, forecasting and looking at pitfalls as well as solutions.  Clearly it is also fundamentally about trust.

Having worked with Premier League clubs it’s easy to see how this happens.  I’ve seen players constantly targeted by financial firms promoting high risk schemes, often using players’ agents to get access to the them.

The benefits of employing the expertise of a trusted wealth manager are clear. There is strong evidence to support the use of wealth managers and financial advisors. Research shows that investors who take financial advice prior to investing funds, for the most, make significantly more than those who invest on their own. Returns will naturally vary, based on the performance of underlying funds and an honest adviser would never guarantee your return, none the less evidence shows that even when the additional costs of fees are factored in, people generally see their money grow faster upon the advice of a wealth manager.

It brings with it many other benefits as well, not least widening your financial knowledge so that together, with your advisor, you can make clear and defined goals and work out a realistic strategy to reach them, which compliments or works within your existing lifestyle. A wealth manager will constantly review your financial situation, keeping an eye on your investments rather than simply investing and forgetting. As markets change so too will their advice.  It is unlikely that you will have knowledge of the endless investment and pension solutions available but a financial adviser’s job is to do the time-consuming research for you and narrow down the range of investment options that are most suitable for your circumstances.

The point of a wealth manager goes beyond just advice, they are there to make your money work as hard as possible. They will seek out ways to minimise tax liabilities both in the present and in the future as well as in death. As such, one of the main priorities, when seeking out an advisor, should be a long term, solid relationship, because, in essence, they are there to protect you and your money as well as your family’s, for many years to come.

And protected you are. Whilst your finances may not be (a trusted wealth manager will always advise of the risks as well as the benefits) you do have recourse when it comes to bad advice, in terms of the Financial Services Ombudsman, which has the legal power to award compensation.

So, whilst every sympathy goes to these footballers, who have found themselves in financial difficulties, it should not and must not create an underlying feeling of fear.  As former Liverpool midfielder Danny Murphy says himself, when the independent financial advisors were swarming on them, they were “young lads with no idea of money or concept of what to do… So now we have got these problems.” By making the wrong initial decisions, and not researching or taking the time or personal responsibility to seek out the right advisor, the right relationship, the right wealth manager, they have ended up in a poorer position than ever.

For more information about our Wealth Management services contact us at hello@garbutt-elliott.co.uk