Basketball legend Kareem Abdul-Jabbar has a fascinating piece at Esquire.com this week in which he shares some of the advice he wishes he could give to his 30-year-old self. There are a lot of great nuggets of wisdom from the NBA's all-time leading scorer, including an admonition to learn French and to cook more often. What caught our eye, though, were his suggestions that he wished he'd become financially literate at a younger age.
"I chose my financial manager, who I later discovered had no financial training, because a number of other athletes I knew were using him," he recounts. "Consequently, I neglected to investigate his background or what qualified him to be a financial manager. He placed us in some real estate investments that went belly up and I came close to losing some serious coin."
As Abdul-Jabbar acknowledges, his experience is not unusual among athletes. Countless professional athletes have gone bankrupt after making tens of millions of dollars over the course of their careers; baseball star Lenny Dykstra and NFL quarterback Mark Brunell, for instance, were done in by unwise investments.
Why pro athletes seem to have a greater tendency to get taken in by such schemes is unclear. In his Esquire article, Abdul-Jabbar puts forth one theory: Athletes are used to trusting their teammates, so when one of them recommends a financial advisor, they take the recommendation at face value.
Whether you're a basketball star or an average Joe, you obviously want to do more serious vetting before you sign on with a financial advisor. There are lots of things you should know before choosing a money manager -- foremost among them, whether the person you are hiring is a broker (who only makes investments with your explicit approval) or an investment advisor, who may ask you to sign a contract agreeing to let him or her make investments without first consulting you.
One you've decided between a broker and an investment advisor, you'll want to ask your potential money managers some key questions and do a bit of research. For a rundown of what you'll want to know, see our guide to vetting an investment advisor. Then, consider whether he or she has the 10 habits of a good financial advisor.
Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.