It's the largest Mega Millions in history, with the jackpot at over $1 billion for tonight's drawing.
This leads to the age-old predicament: how do winners manage the sudden influx of cash? True Capital Management, which manages over $1 billion in assets, started in 2006 as a wealth management platform designed for professional athletes. The firm also has clients who come across sudden wealth, including two lottery winners - each of them scoring over $100 million. TCM President and Chief Operating Officer Heather Goodman compared the way pro athletes and lottery winners think about their vast fortunes. While the firm takes a personalized approach for each household, its underlying philosophy remains constant: you won't be able to make this amount of money ever again so don't squander it."
Once professional athletes retire or finish playing, they're never going to be able to recreate that salary in another profession. You have to recreate the income stream from existing assets. For our lottery winners, they've got a lump sum of money, and we work with them to create whatever they decide. But it should be income generating from assets rather than depleting," Goodman told Yahoo Finance.
TCM represents 220 households, 85% of which are current and former players in the NFL, MLB, NBA and WNBA. The San Francisco-based firm also works with several tech entrepreneurs who hit the proverbial jackpot when they took their companies public. Like any wealth manager, TCM makes money by charging a percentage of assets under management on a quarterly basis.
Pro athletes and lottery winners are both notoriously bad at holding onto their wealth. Within five years of retirement, 60% of former NBA players go broke. And a reported 78% of former NFL players have gone bankrupt or are under financial stress just two years after retirement. Lottery winners are more likely to go bankrupt within three to five years than the average American. But Goodman said her clients who won the lottery are actually smart about their sudden windfall, mostly because they recognize they haven't earned it.
"Lottery winners know this is their one shot. Athletes don't know how short their potential time frame may be. It's hard to think when you're a No. 1, or No. 2 pick that this may only last for five to eight years," said Goodman. "[Athletes] tend to be younger and have complexes of immaturity, invincibility and immortality."