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It’s not reported often, but a fair number of professional hockey players end up in the red once they retire or need to leave their profession.

Mike Jaczko, partner and portfolio manager at K.J. Harrington Investors Inc. in Toronto and co-author of SkateGuard: Advice for Surviving and Thriving in Professional Hockey, works with hockey players and believes a financial game plan needs to start early with young athletes to set them on the right path for life.

Globe Advisor spoke recently with Mr. Jaczko, partner and portfolio manager with K.J. Harrison & Partners Inc. in Toronto.

You often see glamorous events and dinners on social media involving hockey players. Does that make it hard to make the case for financial planning?

We call that the entourage effect. Players have to be deliberate in not creating an expectation of things such as picking up the dinner tab for family and friends after every game. It can lead them down the road of unrealistic, unsustainable spending habits. Social media makes it difficult because people post videos of high-end entertaining and the pressure to do something similar is high. Meanwhile, the average hockey player lasts just around four years in the National Hockey League (NHL).

Just four years?

Yes. Some will play shorter and others longer but no one knows the fate of every player. So, along the way, they need to save money because their time in the NHL likely will end sooner than they think. They will want to have something to show for it financially … have a nest egg to use as a springboard to give them some options once hockey is over.

How do players determine who they can trust?

Money doesn’t change people but does reveal who they really are. So, players need to be extra careful when picking an advisor because many make promises and aren’t in a position to deliver. We point the families to professionals who have credentials, experience with athletes, and references that should be checked. Families will want to identify advisors who are willing to be collaborative and to work as part of a collective for the benefit of all the outcomes that a family will face in terms of risk. They should also be someone who is willing to pay attention to that young player and isn’t necessarily rewarded for having sold them something. They should take their time picking someone and not feel rushed by anyone into a decision – which is a bad sign.

What financial needs does a player have?

To start, professional hockey players have cross-border tax issues, so someone well-versed in tax obligations for states, provinces and different countries is a must.

Managing a five- or six-figure portfolio is different from managing a seven- or eight-figure portfolio. The level of knowledge, experience and credentials is vastly different. Sometimes, using dad’s guy doesn’t work because dad likely came in at a smaller salary and tax bracket.

I think fiduciary investment management has the most rigorous set of credentialing and the highest level of accountability to the client. That then frees the client to focus on what they do best and allows a discretionary portfolio manager to manage those financial assets.

What’s different about having a professional athlete as a client?

They’re on the road a lot and not accessible. When players play professionally, many decisions are made for them. Their day-to-day routines are set up such as, this is the time you eat, work out, need to be at the airport or on the bus. It’s a highly structured life and when they leave sports, all that structure is gone and they’re on their own. It’s a huge adjustment.

– Deanne Gage, Globe Advisor reporter

This interview has been edited and condensed.

Must-reads from Globe Advisor this week

How retirees are using reverse mortgages to downsize before selling their existing homes

Advisors typically view reverse mortgages as a last resort for cash-strapped homeowners to boost their retirement incomes. But some clients are using reverse mortgages increasingly for other reasons, such as securing that desired house or apartment earmarked for downsizing. Angela Calla, mortgage broker at Dominion Lending Centres in Vancouver, has found many retired clients looking to buy the new downsized property first before selling their current home. She says some want to hold onto the first house in case things don’t work out with the downsized home, or move out and renovate to get a higher sale price once they are out of the home. It can be harder for retired clients to get a traditional mortgage or secured line of credit because to qualify, they need to prove consistent income that qualifies with a stress test of more than 9 per cent. Deanne Gage has more.

Why this money manager says it’s not ‘hide in the bunker time’

John Zechner believes a near-term recession is unavoidable in North America, starting in Canada and then followed by the U.S. Yet, for the chairman and lead equity manager at J. Zechner Associates Inc., that likelihood doesn’t mean it’s time to stop buying stocks. Mr. Zechner’s firm has been adding more defensive companies to its balanced portfolio in sectors such as telecommunications, pipelines and technology based on recent market pullbacks and increasing its U.S. bond holdings. Brenda Bouw asks what he has been buying and selling.

Six year-end tax planning strategies that shouldn’t be left to the last minute

Every year, as the calendar turns to December, many advisors across the country scramble to implement year-end tax planning strategies for their clients. This year, consider starting the process earlier to maximize tax-saving opportunities, improve client service and benefit your business, say some advisors and tax experts. Alison MacAlpine provides more details.

Why advisors are using higher inflation assumptions in financial planning projections

FP Canada changed its official assumption guideline to 2.1 per cent for inflation projections – a small increase from 2 per cent last year. But Jason Evans, a fee-only certified financial planner at Evans Retirement Planning in Winnipeg, has opted to project inflation higher than the FP guidelines, at 2.5 per cent. He understands FP Canada’s assumption rationale over the long term but also wants to acknowledge his clients’ uneasiness in these unsettling times. Deanne Gage reports.

Also see:

How top advisors are building dream teams to meet client needs

Why this former Edmonton lawyer decided to retire at age 80

How advisors are engaging younger clients with fewer assets

How investors can get a taste of sustainable food systems

Building permits, trade and media earnings in focus in this week’s Advisor Lookahead

What you and your clients need to know

Richardson Wealth loses senior advisors to rival wealth managers

Richardson Wealth Ltd. has seen a flurry of departures of senior advisors and their teams, jeopardizing more than $1.4-billion in client assets that could go to rival wealth managers. The departures come after the third anniversary of Richardson revamping its business operations as a stand-alone wealth management company as it broke apart from former parent GMP Capital Inc. Clare O’Hara reports.

Do you have a spouse? Consider these FHSA strategies

If you’re a first-time homebuyer, make sure you open an FHSA in 2023. This is the first year these plans are available, and you won’t start to accumulate “participation room” until you open an account. So, even if you don’t contribute in 2023, open a plan. You can’t participate in your spouse’s FHSA; you each need your own plan. Tim Cestnick explains the strategy.

CRA penalty rate on overdue taxes will rise to 10 per cent, causing tax advisers to shift strategy

The Canada Revenue Agency’s interest rate on overdue taxes will soon rise to 10 per cent, tax experts say, making paying back the agency more expensive and a greater priority for many individuals and already-stretched small business owners. Until last year, the interest rate on unpaid taxes was low enough that it was not always a top financial priority, several accountants told The Globe and Mail. Since 2007, the rate has remained stable at 5 or 6 per cent, a manageable level for most people. Irene Galea reports.

Kids’ sports are expensive. How can you keep them from blowing the family budget?

A survey by banking app FlipGive and Scotiabank showed that almost 60 per cent of parents spent more than $5,000 a year on sports, with 41 per cent spending as much as $10,000. The main costs are registration and fees, travel and transportation, equipment, clothing and shoes. And it’s not just hockey that’s expensive; activities such as competitive dance and cheerleading each cost about $8,000 a year. For many families, this would be the biggest line item in the budget after housing, childcare and food. Anita Bruinsma has more.

– Globe Advisor Staff


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