the NBA contract is over.”
To that end, Crittenden recommended that Simmons purchase a variable annuity product in order to guarantee income later in life. Simmons will not start taking income from the annuity until after he leaves the NBA. “Itâ€™s so powerful to sit down with your client and have them know exactly what income stream theyâ€™re going to receive in the future,” she says.
With regard to Simmonsâ€™ investments, Crittenden has built a strategy around having two distinct portfolios: one that is tax-oriented and another that is growth-oriented. “I tend to buy short-term, tax-free municipal bonds or tax-favorable instruments to pay taxes,” says Crittenden, “because the worst thing you want to do is tell a client in April that you made all this money and now you have a huge tax bill and you have to sell stocks to pay it.”
Simmons is in the top federal tax bracket, 35%, according to Mark Goldstick, a CPA and the chief financial officer of Priority Sports & Entertainment. Illinois, where Simmons resides, also has a 3% state tax. So every month, Crittenden uses the income thrown off by those dividend-paying bonds to fund Simmonsâ€™ considerable tax bill.
The other portfolio Crittenden created for Simmons utilizes a tried-and-true investment strategy: dollar-cost averaging, in which investors commit a set amount of money to the market on a monthly basis or at some other pre-determined interval. “It doesnâ€™t matter whether you can afford to invest $50 a month or $50,000, dollar-cost averaging is still the best way to invest,” she says.
tenden says Simmonsâ€™ overall portfolio is made up of 65% stocks and mutual funds and 35%
bonds and other fixed-income investments. “I pay a lot of attention to asset allocation too,” she says, adding that Simmons holds a broad range of domestic and international investments, including small-, mid-, and large-capitalization stocks in industries as diverse as pharmaceuticals, energy, and banking.
Since Simmons has a 7-year-old son, Crittenden advised him to open a 529 college savings plan that will provide fully for college expenses.
Part of Goldstickâ€™s job is to prepare the personal tax returns and ensure the proper tax compliance for Simmons and Priorityâ€™s other athletes, which he says, “keeps their name on the sports page and off the front page.” The head of Goldstick Tax Service L.L.C. in Chicago, Goldstick says that high-net-worth individuals, or those who come into windfalls, can sometimes minimize or delay taxes by deferring income, accelerating or deferring deductions, and buying financial products like tax-deferred annuities.
Besides giving investment advice, Crittenden tries to get clients to think critically about their spending. For instance, Crittenden and Simmons agree that luxury automobiles are one of Simmonsâ€™ favorite toys. “I always tell Bobby that itâ€™s his money, and that I just give advice,” she says. “But anytime he tells me he wants to buy a new car I say: â€˜OK, then which one are you going to sell?”
Besides purchasing high-end cars, Simmons — like other athletes with big contracts — has spent considerable money on close relatives. Susan Bradley, the