uing their financial advisor who put them in hedge funds, private equity funds, and alternative investments where they have experienced large losses and today cannot access their funds. As Larry Swedroe points out in "Invest Smarter Than an MLB Star" posted at Arianna Capital's site, "Working with an advisor you can trust is important but shouldn't replace your own education on financial matters."
Neagle signed for $51 million in 2000. Swedroe lists a number of other big time athletes who blew their fortunes because they were financially illiterate. Here's the rub, at least to me - it is not difficult to gain financial knowledge. It's a hell of a lot easier than walking to the mound in Yankee Stadium in front of 57,000 screaming maniacs with the bases loaded in the bottom of the ninth.
For example, these athletes could have saved millions by spending a weekend reading Millionaire Teacher (available at $11.49 used on Amazon) or a similar book. The advisor wouldn't tell them this. Quite the opposite - he would emphasize how difficult investment management is and, in the process, build up his importance and rationale for a huge fee.
Most people reading these books are learning how to build their wealth. These books are also valuable, however, for those trying to understand how to manage risk and preserve wealth--which is a big part of the game. It's a mistake to automatically assume that, because you are well off and have a high-priced adviser, you don't need this information.
My question, though, has to be on what the advisor's motives were. Advisors know that accounts of this size don't come along often and are literally a gold mine. There never is a need to try to hit the ball in the upper deck (to use a baseball pun), but especially with an account of this size. Was the advisor that greedy? I'm not naive - I know about Madoff et al. - but it does puzzle me!
Swedroe also points out that financial illiteracy is not just a problem for high-priced athletes. A large percentage of adults admit to pretty much being clueless when it comes to their investments.
The sad part, IMHO, is that it isn't difficult to remedy a large part of the problem. But until steps are taken, stories like the Neagles' will, unfortunately, be all too common.
If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at http://www.rwinvestmentstrategies.com. If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.