Advisor Tells What 2 NFL Players' Financial Plans Really Look Like

Q&A February 03, 2022 at 02:26 PM

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It's a sure bet that Super Bowl great Tom Brady, who just announced his retirement from the NFL at 44, has done plenty of smart retirement planning over the years.

The same can't be said for many current and former NFL players, who "don't know left from right when it comes to their finances," according to Jake Stoneburner, financial advisor with Stoneburner Wealth Management, in an interview with ThinkAdvisor.

A former NFL player himself, he retired in 2017, then fulfilled a long-standing plan to become a financial advisor.

Now he's helping athletes "navigate the post-football life," as he puts it.

"You get great money in football; but when you retire," he says, "it's like, 'Where's my next paycheck coming from?'"

In the interview, Stoneburner, 32, managing $250 million in assets and whose BD is Commonwealth Financial Network, reveals how he specifically helps two NFL clients.

One is a current player, Garrett Griffin, 27, with the New Orleans Saints, a free agent who hasn't a clue which team he'll be playing for next season. The other, Jake Ballard, 34, retired after five years in the NFL and is now a real estate agent. He played for the New York Giants, among other teams.

Though both men are set to be recipients of robust proceeds from their 401(k) plans and pensions, thanks to new NFL benefit programs, what they need is liquidity now as well as to build up a few other accounts to help offset taxes that will be due down the road.

Stoneburner has helped each build wealth in various tax buckets and set up accounts to provide liquidity so they're "not just sitting in cash but are earning a little bit more in an investment account," he says.

He also made sure they bought insurance policies, which "put a moat around" the money they've earned in the NFL, he points out.

The advisor's client niche is millennials, many of whom are current and former NFL players.

"[They] get real loosey-goosey with the money they have in their bank account," he says.

Stoneburner played tight end with a handful of teams, including the Green Bay Packers and Miami Dolphins, from 2013 to 2017.

Seeking a more stable lifestyle, he joined his father's nearly 30-year-old advisory the year he retired. He was a financial planning major at Ohio State University.

ThinkAdvisor recently interviewed Stoneburner, speaking from Dublin, Ohio, near Columbus, where his firm is based.

He often tells his football clients badly in need of financial and retirement planning: "You're wealthy today, but that doesn't mean you're going to be wealthy tomorrow.

"Long-term investing isn't sexy. It just takes patience."

Here are excerpts from our interview:

THINKADVISOR: Why are NFL players so in need of expert financial advice?

JAKE STONEBURNER: Football is really weird: You're one of the highest earners in any field — you may be making $2 million one year — but the next, you could get cut and make zero.

The challenge is: Do we want to invest, and how much should we invest? How much should we keep in cash?

How aggressive should we be, knowing that you could get cut and lose your job at any moment?

What makes you more qualified than most FAs to serve these pro athletes?

I'm able to help NFL current and retired players with their finances because I've lived it.

We're in this brotherhood that not a lot of people understand or have been through.

Just how knowledgeable are players about financial matters?

Guys in the NFL, seven-figure earners, don't know left from right when it comes to their finances.

I hate to use the term "financially illiterate," but that seems to be the case. A lot of them should have been doing things with their money that we're helping them do now.

I preach to players: "You're wealthy today, but that doesn't mean you're going to be wealthy tomorrow."

I'm trying to help them navigate the post-football life. You make great money in football; but when you retire, it's like, "Where's my next paycheck coming from?"

A number of pro athletes have had big financial problems after they retired, haven't they?

Fifteen or 20 years ago, the NFL got a bad rap because players were going broke or bankrupt after football.

But I think the NFL reversed the ship by making sure to take care of the guys in their retirement once they get vested, which is after four years.

Also, the NFL provides a pension: Every year after your fourth year of playing, a certain amount gets added to it.

And after your second year, they'll match what you put in your 401(k) up to 200%.

They also fund some annuities, which the guys get the longer they play: a fixed income annuity, to which 4% is added each year, I believe; and the other is an equity fixed indexed annuity, which grows with the market.

All that's a big help, no doubt?

Players can get real loosey-goosey with the money they have in their bank account. So this allows them to save money that they can't touch for [years].

The 401(k)s are great. But they don't have liquidity now for, say, buying a house.

I can't touch or roll over my 401(k) from the NFL till I'm 45.

Please tell me how you're helping a current NFL player.

Garrett Griffin is 27 and a tight end playing with the New Orleans Saints. He's in his seventh year [with them] and plans to play as long as he can.

Garrett is a free agent this year. After March, he can talk to other teams and potentially sign a new contract and potentially get a signing bonus.

But until then, he's in a gray area. And it's even grayer because his head coach just retired. That doesn't help.

What sort of financial planning do you do for Garrett?

It's planning around his income each year — but not knowing what the next year could bring.

So we need to build cash outside his portfolio because we don't know what the future will be.

Once football is no longer and he starts working, we can adjust where and how much we want to save because he'll be in a different stage of life.

We're trying to plan where he can invest and build on that $800 grand or $1 million or $2 million, but we also know that he might not get paid for a couple of years.

How do you get across to players that they have to plan for the long term?

We need to plan and build for down the road once that football money is no longer coming in.

Long-term investing isn't sexy. It just takes patience.

I teach players: "It takes a while, but you're going to have more money than you ever thought you'd have — even without playing football."

How do you address tax planning?

Garrett is in his highest-earning years. So we're making sure that in his brokerage and [other] taxable accounts, we're not incurring more taxes for selling — including long-term capital gains and short-term capital gains, which are going to be taxed at the highest bracket.

So we're doing some tax planning, where we can put a backdoor Roth IRA into that tax-free bucket, along with whole life insurance money.

How often do you review Garrett's portfolio and other finances?

Because football is very volatile [job-wise], I have a [comprehensive] review with Garrett annually.

We recap his previous year: how he got paid, how much he should contribute [to his 401(k), etc.], how much he should keep in cash in case he doesn't sign on to a team next year.

Do you discuss his future much?

Yes. It's forward-thinking: Over the next two to three years, if football doesn't work out, he wants to buy a home in Kansas City and move there.

So our goal is to start building cash for him in a conservative way, knowing that he's going to need that money but not knowing if he's going to get his next paycheck once the season is over.

Now tell me about a client that has retired from the NFL.

Jake Ballard is done with football: He's already retired and is a real estate agent in Columbus, Ohio. He was a tight end and played five years in the NFL. He won a Super Bowl with the New York Giants against the New England Patriots.

Now it's a matter of resetting his goals for [a different] lifestyle.

The situation with Jake is: You've played football for five years, and all of a sudden you'll never play again.

Maybe you're not making [millions] anymore, but if you save a couple of thousand bucks in certain accounts based on your income, you'll still end up pretty well ahead.

When he gets to age 60, he'll have a huge 401(k) and a very nice pension. But at 34 [his present age], that's not doing him any good in terms of where his money needs to be now.

We know his pension and 401(k) are going to be taxed. So to counterbalance that, our goal has been to build outside of that.

For Jake, it's more about flexibility and liquidity rather than building wealth like you do when you're starting your career. But he still wants his money to be invested and grow.

We wanted to start building other taxable and Roth IRA-type assets to spread his wealth across different categories.

So I did some tax planning for him by building wealth in different tax buckets, as I did with Garrett.

For both Jake and also Garrett, it's about building liquid wealth so they're not just sitting in cash but earning a little bit more in an investment account and having peace of mind that not every dollar they have invested they're [unable to access till] 30 years down the road.

They can have access to [money] now.

And since Jake is family planning, I helped him get some insurance [policies] set up.

Please elaborate on how you use insurance to help NFL clients.

Insurance protects the money you've already made. If you play eight years in the NFL and build up a big mountain of money, there's no reason not to put a moat around it and protect it with insurance policies.

Whole life insurance can build cash and provide a return on your cash outside of just sitting in a bank account, and you can get a death benefit.

The NFL doesn't cover long-term life insurance. We're firm believers that you should have some term life insurance and some whole life insurance.

So I got coverage for both Jake and Garrett. For family planning, we do a combo.

Why did you become a financial advisor when you retired from football?

I like finances more than football, to begin with.

At a young age, I started investing and buying stocks. I'd been planning to work with my father in his [wealth planning firm] since high school. And I majored in financial planning at Ohio State University.

I always knew that when football ended, I was going to join my dad's business. It was just a matter of when.

Football had a finite amount of time. But I knew that the longer I played football, the more money I could make — and then go into financial planning.

Why did you retire when you did?

In 2016, I was on my third team in one year and felt my football [career] was up. I'd been cut from three different teams. Honestly, I was tired of getting fired.

There was the constant pressure of "this could end instantly," and I'd have to move to another city to join another team. I was craving more stability.

Which brings us around to right now. What are your plans for watching the Super Bowl?

My first kid is due on Feb. 13, the day of the Super Bowl. I would prefer that the baby came later or earlier instead of on the day of!

So probably I won't be watching the Super Bowl — but who knows.

I'd love to watch it, but I won't get too hung up on that if I'm going to go and see my kid for the first time.

It will be pretty amazing.

Pictured: Jake Stoneburner