Clinton Portis files for Bankruptcy

Two-time NFL Pro-Bowler Clinton Portis has just joined Mike Tyson, Warren Sapp, Sheryl Swoopes and many others on the list of professional athletes who have filed for bankruptcy. Although he made more than $43 Million in his professional career, according to USA Today, he only has $150 in his checking account. The bankruptcy filings state that Portis has nearly $5 Million in debts including debts for mortgages, gambling debts, child support, cars, and back-taxes to the IRS.
A working paper from the National Bureau of Economic Research states that approximately 15.7% (nearly 1 in 6) of NFL players go broke within 12 years after leaving the sport.

The common thread in many of these bankruptcies is that the athletes trusted their money with the wrong people. In Portis’s case, he connected with a group of financial advisors who were recommended to him by one of his college teammates. The advisors did not have his best interests at heart and he is now paying for it.

Although it is not easy to vet a financial advisor, you should do a minimum amount of due-diligence so you don’t end up like Clinton Portis.

The first thing to do is check whether they have the CFP (Certified Financial Planner) designation or the CPA/PFS (Certified Public Accountant – Personal Financial Specialist) designation. Financial Advisors who have this designation are regulated and must take mandatory classes on various aspects of financial planning.

You should also look to see if the Financial Advisor is commission-based or fee-based. The commission-based Financial Advisor makes money off of the products that are sold to the customer and does not charge the customer a fee for their services. The fee-based advisor charges a fee for their services. I believe it is best to go with a fee-based advisor because the goal of the commission based advisor is to sell you investment products which may or may not be in your financial interests.

  Finally, make sure to read any agreement that you would sign with the Financial Advisor. Make sure the words “fiduciary duty” are somewhere in the agreement. This means the Financial Advisor has your best interests in mind.

These tasks are very easy to do. Perhaps if Clinton Portis had done his due-diligence, he would not be in the position he is today.