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

On this week’s episode, Erik and Travis talk with Adley Rutschman, catcher for the Baltimore Orioles. Adley was selected by the Orioles as the first overall selection in the 2019 Major League Baseball draft with the highest signing bonus in baseball history. He joins us this week to discuss his time playing in college for Oregon State University, going into the MLB draft last year and making the transition from amateur to pro. Adley covers a wealth of topics in this episode including:

• How to handle public pressures of being a highly ranked athlete
• The important things to look at when choosing an agent
• Utilizing time in college to hone in and build up skills
• The mental development and other key contrasts that accompanies going from college to pro
• Walking through what draft meetings with scouts were like including some of the most unique questions he got
• Sharing how he maintained good family dynamics despite the high stress level the comes with the draft
• What it was like on draft day
• Mentally preparing for the back and forth of salary negotiations
• Advice for players and their families as they’re about to enter the draft

This week, Travis and Erik interview Bobby Stroupe, founder and president of Athlete Performance Enhancement Center (APEC). Bobby and his team started APEC in 2005 and it has grown over the years to become one of the most trusted sources for athletic performance improvement including accolades from and work with Nike. Bobby and APEC have trained some of the best athletes in the world including NFL MVP and Super Bowl champion Patrick Mahomes.

There is a lot of uncertainty for athletes in all sports currently as seasons are indefinitely suspended and training facilities can be inaccessible for many. Are there ways you should be utilizing this downtime to stay on top of your game – despite some potential difficulty in accessing facilities? In this episode, Bobby, Erik and Travis talk through this question and address other topics like:

• The importance of structure and consistency 
• Ways to focus on joint mobility and structural flexibility
• Being creative even with limited access to workout facilities
• The difference between success and results
• How to find a good performance coach including questions to ask and specializations to look for
• Resources to learn more on this topic

Are you familiar with the changes to how an MLB Draft signing bonus is paid out? Historically, teams have split the gross amount into two equal payments over two years, but due to COVID-19 have recently made some important changes that you need to know.

As a player, your ultimate goal is not the gross (before tax) MLB Draft signing bonus amount; rather, it is the net (after-tax) amount. In the past, how you structured your payments - whether they were uneven payments or not - was a huge opportunity for tax planning, but that option has now been eliminated. However, one thing that hasn't changed is how the signing bonus is taxed.

In this episode, Travis and Erik discuss what a signing bonus is, and how the recent changes might impact families and cover commonly asked questions like:

• What changes have been made to the signing bonus structure in 2021?
• How are signing bonuses are paid out?
• Are these true signing bonuses? Or are they wages?
• How does my residency impact the way my signing bonus is taxed?
• What is an abandonment clause and how might it impact my signing bonus?
• What happens when an abandonment clause is removed?
• Now that signing bonuses are paid out over 3 years instead of 2, what are the important implications and opportunities that families should consider?
• When should I start doing the tax planning?
• When is it important in the draft process to bring on certified financial experts?
• Why are players hearing the argument that they shouldn't bring on financial experts if they're only going to earn $100,000 in their first year - regardless of the size of their signing bonus?

You probably didn’t think we would be talking about disability insurance, right? So, do you need coverage? The answer varies for every individual. We are joined this week by former NBA player and current owner of Leverage, a disability and life insurance firm. In this episode, we discuss questions like:

• As a high school draft prospect, is disability insurance really necessary?
• Is disability insurance even worth it for me?
• If I am currently enrolled at a university, what should I do?
• Will my university pay for my disability insurance?
• What are my chances of getting injured and filing a claim?
• How much disability insurance should I take out?
• Does it just cover me on the field?

Who should I trust with my risk management?In episode six, we are going to breakdown disability insurance. We want you to be well informed of all your options. You have worked hard to get here-we want you to protect what you have earned and what you are going to earn in the future.

On this week’s episode of the MLB Draft Podcast by AWM Capital, we’re joined by Tyler Beede – pitcher for the San Francisco Giants. Tyler had the unique opportunity of being a 1st round draft pick two separate times. He turned down the first opportunity to pursue college at Vanderbilt and further hone his skills. He discusses playing at the collegiate level, on TEAM USA, and continuing on again to the MLB draft as a first round pick.

Throughout the episode, Tyler walks us through his career from high school to the major leagues and covers topics like:

• What it was like on draft night
• Advice from a major league perspective on what he relies on his agent for, how to be a good client to your agent, and some pitfalls to be aware of
• How to build a team who can help handle the business of professional baseball so you can focus on improving your game
• Navigating the draft process with his parents
• Discussing what he would have done differently during his college baseball career and the importance of enjoying where you’re at
• Reflecting on what it takes to be successful in the major leagues.