Due to COVID-19, no matter what MLB draftees sign for – the maximum amount they will receive in the first calendar year is $100,000. 

So, do you need a financial advisor?

After taxes and agent fees there can be as little as $30,000 left which will be used to live on. Nothing really left to invest. Seems like hiring a financial advisor can wait until next year.

If you’re only talking about investing, we agree. 

However, are any of the following “financial decisions” important to your family?

• How much money is enough to forego/continue your college education? 
• How is the signing bonus taxed?
• What strategies are available to minimize taxes?
• How to handle 1099 endorsement income?
• How to evaluate Team 401(k) options and individual retirement plans?
• Do you have that knowledge, skills and discipline for healthy money habits?
• How to protect your new net-worth from lawsuits and fraudsters?

If the answer is yes to any of these, that means you have a lot of work to do that has nothing to do with investing the money.

Most "financial advisors" reduce your life down to only the investments their company allows them to manage and charge on. Your expectation of a financial advisor should be that they should be able to provide advice on all your finances, not just on the investments that their company happens to sell. 

You don’t need an investment broker, especially one that gives you hitting lessons. What you need is a Certified Financial Planner Professional who manages your entire net worth.

You’re making the most important financial decision. Don’t leave it to chance. 

MLB Draft Podcast with Erik Averill, CPWA®, CFP ® and former MLB Pitcher, Travis Chick, CFP ®.

Episode Highlights

• New signing bonus structure (:36)
• When should you hire a CFP®? (2:35)
• College or pro? (4:01)
• The importance of qualified financial advice (4:34)
• What is an appropriate signing bonus number? (6:42)
• The value of human capital (7:27)
• Should you get qualified financial advice before the draft? (7:54)
• How to find an expert (9:28)
• Finding more resources on navigating the draft (13:03)
• Being proactive in your search (15:40)

You have worked hard for your money, which is why it never feels good when you see how much you lose to taxes. Unfortunately, most players neglect ongoing tax planning, which results in paying more in taxes than they should. 

Depending on your tax bracket, you can save paying 40% to 50% in taxes on a portion of your self-employment income (1099 income) or you can maximize the opportunity to grow your money tax free.

In this episode of the MLB Players’ Podcast, Erik Averill, CPWA®, CFP® and Travis Chick, CFP® break down everything you need to do before the December 31st deadline.

If you can answer no to any of these questions, you are missing out.

• Has your CPA® prepared a year-end tax projection showing you the projected taxes you will pay or be refunded for 2020?
• Have you opened an Individual 401(k) by December 31st?
• This is NOT your MLB Vanguard 401(k)?
• Has your Certified Financial Planner implemented the Back-Door Roth IRA Strategy?

Most Common Mistake We See

• Log-in to your account, do you have a SEP IRA?

The most common mistake we see is the recommendation to open a SEP IRA. This is a great tool for the mass affluent. However, if you are in the highest tax bracket it is not ideal for you. If you have a SEP IRA, it is a red flag that you advisor does not have the specialized expertise you need.

• Limitations of the SEP IRA
• The type of contribution you make (Roth or Traditional)
• The amount of contribution you make (excludes an employee option)
• Violates IRA aggregation rule, preventing the Back-Door Roth IRA strategy which limits your ability to grow your money tax free

Episode Highlights

• Differences between W2 and 1099 income (2:04)
• What is an Individual 401(k)? (2:36)
• The difference between an Individual 401(k) and the MLB Vanguard 401(k) (3:10)
• Options for draft players and minor league players (4:06)
• Why a SEP IRA might not be your ideal option (5:05)
• The difference between tax planning and tax compliance (6:05)
• The Backdoor Roth IRA (8:01)
• How much can you actually contribute? (10:26)
• Tips for agents and parents (12:37)
• Should you set up an LLC? (13:30)

On this week’s episode, we’re honored to be joined by Todd Seigler, father of Anthony Seigler – first round draft pick with the New York Yankees. We get to hear from Todd on what the draft process was like from the perspective of family members and in working through these areas together as a family.

As a parent going through the draft process, it can feel like everybody is painting a rosy picture about how perfect your son’s game is – it can be hard to sift through all the feedback using data to separate out sales pitch from reality. There are also challenges in setting good boundaries to maintain family bonds, and help to make intentional decisions about the long-term future that don’t rely solely on emotions or chasing shiny things.

Todd offers a lot of helpful insight into this process and throughout the episode, he covers topics such as:

• Going through the draft process from scouting during senior year season to draft day
• The potential of getting distracted by the wrong things that can seem like really good things
• How to have good family conversations to set healthy boundaries
• The importance of staying faithful and committed to your routines
• Avoiding “Draft intoxication”
• How they handled choosing the right people in their inner circle
• What draft day was like for family
• What the transition to pro has been like
• Looking back, what things he wishes he would have known going through the process as a parent