Bankruptcies are common among professional athletes, winners of the lottery, and celebrities in the public eye. Having large assets at one’s disposal at a young age can predispose an individual to excessive spending habits and the tendency to over-distribute funds to family and friends. This can result – and has resulted – in bankruptcy among some of the highest earners in society. There is no limit to the heights from which one can fall. So what are some of these heights? How can you turn these events into captivating stories that can convince a prospect to invest their money into what you are recommending?
Bring up these examples:
- Scottie Pippen spent $4 million on a private jet, and then had to spend another $1 million to fix it once it was discovered not to be working
- 72 percent of NFL players and 60 percent of NBA players file bankruptcy within 5 years of retirement
- Both Mike Tyson and Evander Holyfield declared bankruptcy on net worths valued at $350 million and $300 million respectively
- MC Hammer had 2 helicopters, 17 luxury cars, and 21 racehorses. The payroll for his 200-person entourage was $500,000 a month. He declared bankruptcy
These stories about legendary financial disasters may be enough to get clients to invest time and plan the investments and growth of their assets. With proper guidance from a financial advisor, they may not fall into any of these pitfalls, but instead may enjoy financial security throughout their lives. What are you trying to get your clients to do? These stories may convince someone who is on the fence to invest with you before they experience anything resembling any of these disasters.
A famous story of lottery winners who went off the deep end features Alex and Rhoda Toth, who won $13 million in a Florida lottery in 1990 before they filed for bankruptcy protection and were charged with tax fraud by the federal government.
And some more examples of household names who saw financial catastrophe?
- Mark Twain lost his fortune despite marrying an heiress. He made a series of poor investments, including a protein powder company, which led a lawyer to claim that, in business, he was just, “a big, overgrown boy”.
- Ulysses S. Grant went bankrupt after an investment in a bank flopped. Mark Twain later wrote his memoirs.
A good story is worth a lot. A good story about someone who lost a lot is worth a lot if you are a financial advisor. Telling spendthrift clients about any of these examples – all of them well-known, some of them household names – can help them learn by hearing about others’ mistakes. This is how telling these stories may prevent others from experiencing financial ruin.