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Here are the questions NFL rookies should ask prospective financial advisers

MARKETWATCH 9:10 AM ET 4/26/2017

NFL players offer financial advice to Myles Garrett and other incoming rookies

During this week's NFL Draft, many young men will achieve their dream of becoming a professional athlete. Some of them will also become instant millionaires.

There's no shortage of stories out there about professional athletes who make -- and lose -- millions of dollars. MarketWatch spoke with several current and former NFL players, as well as an accountant who advises professional athletes, and asked them what financial advice they'd give the 2017 crop of NFL rookies to help prevent them from being another cautionary tale.

"One minute you're bouncing a check at Pizza Hut, and the next you're cashing a check for $11 million," says former No. 2 NFL draft pick Ryan Leaf (https://www.si.com/nfl/2017/04/24/ryan-leaf-nfl-draft-1998-peyton-manning), describing how ill-prepared he was to handle the fame and fortune of being a professional athlete.

Leaf, who was drafted right after NFL legend Peyton Manning in 1998, struggled and wasn't the star in the NFL that he was in college. His rookie contract was the largest ever at the time: $31.25 million, with an $11.25 million signing bonus with the San Diego Chargers.

But two days before the 2017 NFL Draft, he said, "I left prison two years ago and couldn't rub two pennies together."

Drug addiction and burglary landed him in jail. Since he was released he has been doing well and is now the program ambassador and part owner of Transcend Recovery Community, a sober environment he calls transitional living -- between treatment and living on your own.

He is thankful that years ago his dad put some of his money away and he can't touch it until he is 65. And he also has money saved in the NFL's generous 401(k) and pension plans.

Save your money

"Don't imprison your future self by getting used to an expensive lifestyle. You'll end up a financial 'has-been' working at a job you hate for much longer than you ever imagined," said Patrick Kerney, who played in the NFL for 11 seasons and was NFC Defensive Player of the Year in 2007 as a member of the Seattle Seahawks. Kerney, now 40, is director of business development at National Fire & Casualty Investments. He got his M.B.A. at Columbia University after he retired from the NFL and was also vice president of player benefits at the NFL.

Also see:Take the same class the NFL taught its players on how to write a business plan (http://www.marketwatch.com/ story/take-the-same-class-the-nfl-taught-its-players-on-how-to-write-a-business-plan-2017-03-13)

Leaf, 40, recommends players take advantage of the NFL's 401(k) plan. For every $10,000 a player puts in, his team and the league each put in $10,000, for a total of $30,000 -- what he calls a "two-times match."

He says a lot of rookies don't want to set money aside for retirement though. "You feel invincible when you're that age. You don't get perspective until it's too late."

See:Financial advice from an NFL player whose mom demanded he give her $1 million (http://www.marketwatch.com/story/ financial-advice-from-an-nfl-player-who-lost-millions-2015-04-14)

See:Meet the awesome NFL mom determined to stop her son's finances from being sacked (http://www.marketwatch.com/ story/meet-the-awesome-nfl-mom-determined-to-stop-her-sons-finances-from-being-sacked-2016-04-06)

How to pick a financial adviser

"A financial adviser is not your friend. They're your employee," says Kerney. "If you don't know how to properly evaluate such an employee, you should place all of your money in a savings account until you do."

Kerney works with players at the NFL's annual Personal Finance Camp, and he also talks with NFL teams about the importance of personal finance. "Because we are a generally non-confrontational society we never ask about a financial adviser everything that they will know about us," he says. He tells players to ask advisers the following questions.

He tells players to open any meeting with a financial adviser by asking them to open their personal books. "If a financial adviser hasn't built any wealth for himself, why should someone entrust them to build wealth for them?"

And Josh Martin, a 25-year-old linebacker on the New York Jets who recently signed a two-year, $3.8 million contract, advised, "Surround yourself with financial professionals you can trust, never stop asking questions, and never stop educating yourself. If your financial advisers don't take kindly to you being critical of them, move on. I make it a habit to take calls from other financial professionals to ensure that I'm constantly building the plan and portfolio that is best for me."

Martin, who graduated from Columbia University, has attended the NFL's Personal Finance Camp for players each of the past three years. After attending the first year, he changed his accountant and adviser. "I learned what questions I should be asking," he said.

Players can also invest their money themselves in low-cost index funds (http://www.marketwatch.com/story/this-nfl- player-slept-in-a-utility-closet-in-college-to-save-money-2016-06-08), as former Green Bay Packers punter Tim Masthay did.

Also see:This is how the NFL hopes to keep its players from ending up broke (http://www.marketwatch.com/story/this- nfl-training-camp-turns-football-players-into-financial-stars-2016-04-06)

Stick to a budget

Accountant Steven Goldstein is partner-in-charge, sports & entertainment practice, at the firm Grassi & Co. His clients include current and former NFL players as well as some coaches. He spoke with three NFL clubs last season, focusing on helping rookies understand financial literacy.

"At the start of our financial literacy program, some rookies looked like a deer in headlights. During their college years, who educated these players on how to navigate the complexity of the business world, or understand tax compliance and budgeting? No one!" he says.

He works closely with his clients to help them with the "jock tax," which dictates that professional athletes must file taxes in almost every state in which they play. And he preaches the importance of keeping to a budget.

Here's a sample budget that Goldstein shared with MarketWatch for a rookie making the league minimum: $465,000.

2017 minimum rookie salary $465,000 EXPENSES Federal and State Taxes Effective Rate (45%) $195,000 Agents Fees $13,000 401(k) 2017 $18,000 Subtotal $239,000 ADDITIONAL EXPENSES TO FACTOR IN: Rookie Dinner $10,000 Therapies (message and physical), Gym Membership, Work-out Clothing, recovery $5,000Tax Free Gifts -- per person $14,000 Annual Apartment Rent[SG1] als $30,000 Miscellaneous Travel[SG2] during offseason $5,000 Game Day Tickets $5,000 Union Dues $16,500 New Subtotal $153,500
Also see:This is what a pro athlete's tax return looks like (http://www.marketwatch.com/story/the-jock-tax-and-why-a- professional-athletes-tax-form-can-be-as-big-as-a-bible-2016-07-27)

He says that players will typically receive 16 paychecks during a year -- one for each NFL game. "The issue then becomes, what should a player do to cover living expenses, training regimen, vacations, etc., when there aren't game checks coming in during the off-season? The answer is simple: Budget," he says.

When he has an initial meeting with a player, he talks about the cash required to pay all necessary living expenses. He works on a budget with each player and advises them to deposit whole game checks into the bank and only take a modest amount as salary for "special" purchases that are absolutely necessary. "We do not recommend the purchase of a mansion, expensive car or watch unless it's considered affordable and in the budget," he says.

Rookie salaries

The way rookies are paid is based on many factors. As Forbes (https://www.forbes.com/sites/jasonbelzer/2016/04/29/ 2016-nfl-draft-1st-round-rookie-salary-projections/#50a4146116b8) pointed out after last year's draft, it's based on how high a player is selected, how much the league's salary cap is, and how much money is in the rookie compensation pool, among other things. Last year's rookie pool was almost $1 billion, and the maximum contract length for rookies was four years. The No. 1 pick, Jared Goff, was given a contract of just under $28 million, including over $18 million as a signing bonus.

But the league minimum for rookies this year will be $465,000. And players who don't make a team but instead play on a practice squad make less. And the average career for NFL players is just a little over three years (https:// www.statista.com/statistics/240102/average-player-career-length-in-the-national-football-league/).

So saving as much money as possible is crucial.

See:\Why NFL player Ryan Broyles lives like he made $60,000 last year, and not $600,000 (http://www.marketwatch.com/ story/nfl-player-ryan-broyles-has-made-millions-but-still-uses-groupon-2015-09-17)

If you don't get drafted

Of course, many top college football players don't get drafted, or don't get drafted high enough to be guaranteed a roster spot.

Ryan Gilliam played college football for both the University of Oregon and the University of South Florida. He's from Tallahassee, Fla., and he and Antonio Cromartie were the defensive backs on their high-school football team. Cromartie was drafted in the first round in 2006 and went on to sign NFL contracts worth over $70 million.

When Gilliam graduated from college in 2007, he heard through a scout he knew that he probably wouldn't be drafted in the first seven rounds.

He was 22, married, and thinking of how to provide for his family. "I wanted a consistent job. I had offers to be an undrafted free agent, and I had a lot of friends who did that. But you have to go from team to team. And maybe play in Europe and Canada. I wanted to get paid every two weeks."

So he went to work at a financial firm and his goal was to make as much as at least the NFL league minimum paid. "I got a promotion at my first job in six weeks. I out-hustled everybody," he says. At another job, he made over $100,000 a year running a medical center.

At 25, he and his wife started a pediatric behavioral company. They now have 50 employees and do about $1.5 million a year in revenue. "Now I make just as much as NFL players," he says.

Did competing as a Division I athlete help him succeed in the business world? "I was extremely competitive. Still am," Gilliam says. "Seeing people I grew up playing pee-wee football with go pro motivated me to prove I had just as much value as someone drafted in the NFL."

-Steven Kutz; 415-439-6400; [e-mail]


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