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June 25, 2013 at 11:47 AM
The NFL Players Association announced Tuesday that it has expanded its four-year-old partnership with Financial Finesse, the retirement and financial education provider, with the launch of a Financial Helpline service that NFLPA members can use.
In a webcast, Liz Davidson, founder and CEO of Financial Finesse (who also writes regularly for AdvisorOne) and Dana Hammond, director of player affairs and development for the NFL players union, spoke of the unique challenges faced by NFL players in managing their money, and the role that Financial Finesse has already played in educating players about not just the basics of money and investing, but also how to choose an advisor.
Hammond said that NFL players’ financial challenges starts with the fact that “We’re dealing with impressionable young men coming into the big NFL, playing out a lifelong dream.” However, “they’re often victims of financial advisors who are looking to separate them from their newfound wealth,” while “the requests they get from friends and family add to the pressures they’re feeling.”
In addition, players get only 17 paychecks a year, all paid out during the season, so the challenge for these players, Hammond says, is that “in that short time period, lots of money comes in quickly, and abruptly ends at the end of the season,” forcing the player to manage through the rest of the year. Then there’s the issue of whether the player will get “picked up for the next season,” and the overall short tenure of a professional football player’s career.
Davidson (left) pointed out that unlike most other working people, whose income tends to rise the longer they work, for NFL players, “so much of their wealth is up front; the reverse of most of us who gradually raise our salaries.” Moreover, Davidson says professional athletes also have to prepare for two retirements: from their playing careers and then when they stop working.
In 2009, the NFLPA retained Financial Finesse to help with its education program for current and retired NFL players. Hammond said the union knew it needed to help its players prepare for the likelihood of an owner’s lockout in 2011. “We sat down and put together a plan to address a crisis—players were facing a potential lockout in 2011, so we had two years for the players to save their money to prepare for the lockout, which could last an entire season.” A lockout would also affect the players’ health insurance coverage, a paramount consideration for people who make their living as athletes.
Hammond said that in addition to teaching players the importance of saving overall, and for the likelihood of losing their income during the lockout—urging players to “save 25% the first year, 25% the next year”—the NFLPA “wanted the guys to buy into this as leverage against the owners.”
The education program would have to take into account the youth of NFLPA’s current players, Hammond said. “We couldn’t do something text-heavy; it had to be user-friendly, and to be mindful of who we’re working with—players who have short attention spans.”
The program that Davidson and Financial Finesse put together played on the natural competitive nature of athletes, gave them anonymity so they could admit to ignorance of certain topics or having issues that they might be ashamed of, and used online contests and icons that provided education, and showed how far along the players were in preparing for the lockout. That was the Lockout Preparedness Score, which was displayed to the player after he answered 12 questions about his finances, and showed on a football-field graphic how close the individual was to full preparedness, shown as crossing the goal line.
