Broke NFL player says Don't invest in a 401k

[Clone]

Because professional athletes go broke, you should put your money into insurance products, sold by a NFL player who went broke.

Link to Article on CNBC.

Many commonly accepted financial strategies people are using, such as a 401(k), are in reality more myth than fact. If people really understood all the negative implications of delaying taxes, they might think twice about using a 401(k), which wasn't designed to provide lifelong income.

We have a retirement crisis in this country in which the current financial methods in the near future will possibly fail millions of people. There are going to be millions of people who will run out of money in the very near future unless they open themselves to new ideas.


— By Mario Henry, a former NFL player with the New England Patriots. Henry is a financial services professional with 18 years of experience in the industry and author of "How to Hire Your House."

As close as you get to a paid advertisement for annuities!

What we do not know and understand is that having a paid-off home effectively traps all the money that homeowners have given to the bank, plus appreciation in the house. The only way you can use it is to take out a loan and use the house as collateral, or sell the house outright.

Wall Street has absolutely zero to do with you having enough life-long income. Pensions are disappearing and now the middle class has to gamble on the stock market.

I'm glad I invested in my 401K rather than try to play professional football!

 

[pb4uski]

I'd be curious what background he has that qualifies him to be a financial adviser... he graduated from Rutgers but no idea what his major was or what other education he has.

 

[Walt34]

I'd be curious what background he has that qualifies him to be a financial adviser...

Simple - he has a business card with his name and "Qualified Financial Adviser" printed on it.

Easy to do. Somewhere around here I have a certificate that announces that I'm a Certified Elf Spotter.

 

[harley]

Simple - he has a business card with his name and "Qualified Financial Adviser" printed on it.

Easy to do. Somewhere around here I have a certificate that announces that I'm a Certified Elf Spotter.

Yeah, mine says International Man of Mystery, Soldier of Fortune. Amazing what you can do with $5 on Vistaprint.

As far as qualifications, going broke after an NFL career certainly would convince me to let him give me financial advice.

 

[RunningBum]

I'm having trouble finding his NFL experience. Finally I found an article that refers to him as being on the Patriots practice squad (meaning he did not suit up for games, ever, apparently), and playing some in the NFL Europe (not the NFL at all, but a "minor" league associated with the NFL). This is from an article on a more famous teammate of his:
https://www.si.com/2014/10/14/a-twist-in-irving-fryars-redemption-story

...Mario Henry, Fryar’s former business partner. (Henry, who spent some time as a receiver on the Patriots practice squad and in NFL Europe in the ’90s, says he dismissed Fryar as a spokesman from his mortgage assistance business...

So he's not really an ex-NFL player, which puts a dent in his credibility if he is claiming that. But it does make it easier to see how he went broke. Practice squad players make ~$100K now, I think, but I'm sure it was a whole lot less in the 90s.

 

[harley]

Yeah, but "Ex-NFL Player" sounds better than "Some guy who knew some NFL Players".

 

[pb4uski]

+1 looks like he played college ball and was a practice squad player... hardly and ex-NFL player if he never made a roster. I did see a video where he is portrayed in a patriots uniform but is wearing #12... towards the end of the video he catches a touchdown pass (or at least some player with Henry on his back does) from a QB with the number 16 (Matt Cassel or Scott Zolak?) perhaps in a pre-season game... but I can't find any NFL stats anywhere... so I'm skeptical that he is an ex-NFL football player.

 

[youbet]

Yeah, but "Ex-NFL Player" sounds better than "Some guy who knew some NFL Players".

Yeah...... Reminds me of folks working part time calling themselves "semi-retired" instead of "semi-working." In my case, I'm "long term unemployed" since being RIF'd in June, 2006.

 

[mystang52]

A financial adviser lied? I guess there's a first time for everything.

 

[Koolau]

Where to start?: I would agree that there are problems with 401(k)s (and tIRAs for that matter.) It's important to understand them and use them for your projected needs. I believe I put too much in these vehicles and am now paying the price in taxes. A better problem to have than being broke, obviously.

Clearly, lots of folks have made lots of mistakes in planning their retirements (duh!) Having a 401(k) in and of itself is not likely one of those mistakes.

With no attempt to reignite the "pay-off-the-mortgage-or-remortgage-and-invest-the-proeeds" argument, I submit that there ARE some advantages to having a paid off place that you live in (again, not trying to stir up an argument - only you can decided if the advantages outweigh the disadvantages.) The best argument I've heard was postulated by Kotlikoff and Burns in THE COMING GENERATIONAL STORM. In that book, they neatly showed that there were some potential advantages. I won't list them (memory is fading.)

I would agree that the stock market has elements of gambling, it can be used wisely (over long periods of time.) The so called "4% rule" is at least somewhat testimonial to the stock market's ability to smooth the ride through a 30+ year retirement.

I'm not too worried about the guy's lack of credentials. It doesn't take much in the way of credentials to sell stuff to your clients. Anyone can do it. After lots of mistakes, I've learned to trust my own judgement (or at least understand that I'm responsible for all my decisions - no mater what sales person is involved.)

So I see this as another fluff piece with little value other than to reinforce the cautionary tale that it's OUR money - be very careful if you let someone else tell you what to do with it. YMMV

 

[flintnational]

He might be one of the NFL players that sustained brain damage.

"401k bad, annuity good, ugh" "extended warranty - how can I loose"

FN

 

[JoeWras]

Yes, I understand the effect of RMDs on taxes. But there's also a part of me who wants to have that "forced 28%" bracket problem.

Kind of like AMT. In some recent years, I had an AMT "problem." Oh well!

Mr. NFL wants to put all his wealth in a leveraged home. You know what that gives you -- especially in some counties -- a real estate tax problem!

 

[jollystomper]

nfl.com maintains a player database for every player who ever appeared on a teams season roster. Mr. Henry is not in that database, so at best he played in exhibition games and was on a practice squad (which does not count as being on a team roster).

His linkedin profile hawks some "formula" he has discovered to unleashed the equity in your home and gain the hundreds of thousands you you be paying the bank in interest for yourself... which sounds a lot like "take out a home equity loan to purchase annuities from me".

Personally I think his advice is about as stellar as his NFL career was.

 

[pb4uski]

....Personally I think his advice is about as stellar as his NFL career was.

+1 or to state what you wrote mathematically, 0=0.

 

[ChiliPepr]

+1 or to state what you wrote mathematically, 0=0.

I like to say that as an NFL receiver he never dropped a pass!

 

[pb4uski]

and Eli Manning has one more win than Peyton Manning so far this season.

 

[athena53]

His linkedin profile hawks some "formula" he has discovered to unleashed the equity in your home and gain the hundreds of thousands you you be paying the bank in interest for yourself... which sounds a lot like "take out a home equity loan to purchase annuities from me".

Well, it's probably better than a reverse mortgage. Not that I'd ever do either of them.

 

[hilltide]

Where to start?: I would agree that there are problems with 401(k)s (and tIRAs for that matter.) It's important to understand them and use them for your projected needs. I believe I put too much in these vehicles and am now paying the price in taxes. A better problem to have than being broke, obviously.


Great post. Question on 401k's. What is considered too much in fees to be paying in 401ks? I checked my work plan. It has the fees broken up in different quarters. Not sure if that is because i changed my investments a few times or not. It looks pretty standard. .85 to 1.25% unless i am reading it wrong.

You are right. Each decision we have to live with! Love this site as there are so many different strategies. As many have said, it's nice to be able to discuss these things because it something you generally talk about around friends and especially family, lol.

 

[braumeister]

Those of us who actually figured it out in time and managed to achieve an early retirement (or are on track to) seem to be an endangered species.

 

[Senator]

I'd be curious what background he has that qualifies him to be a financial adviser... he graduated from Rutgers but no idea what his major was or what other education he has.

He graduated because he played football, not because he had the academic qualifications to graduate... And HS as well.

Most football players have the IQ of a dim light bulb.

 

[scrabbler1]

Most people have steady incomes which hopefully will gradually grow over their working careers. This makes it pretty tough to front-load spending even though many people run up lots of debt trying to do so (and become overwhelmed with it).


But pro football players often earn huge sums of money for a few years, like winning small lotteries in that time. They then spend way too much, not realizing (or ignoring) that those big incomes will end, often pretty quickly and often unexpectedly (i.e. from injuries). They then get saddled with the debts they ran up and can't repay, or with costly upkeep of expensive properties. Combine this lack of LBYM with the absence of common-sense financial advice and you have a recipe for financial disaster when it all comes tumbling down.

 

[athena53]

Most football players have the IQ of a dim light bulb.

It doesn't help that many high schools and universities supply the bare minimum "education" to their athletes. I once interviewed a candidate for an actuarial job who turned down one football scholarship because he wanted to major in engineering and they didn't allow their scholarship athletes to study anything that demanding.

There are exceptions, of course: the oral surgeon who placed my dental implants (and who will place any future ones I need if he's available) is an MD and a DDS who played football for K. U.

 

[pb4uski]

He graduated because he played football, not because he had the academic qualifications to graduate... And HS as well.

Most football players have the IQ of a dim light bulb.

Certainly a broad stereotype.... and true in some cases....but on the other hand, today's high end Division 1 college and pro offenses and defenses are very complicated so today's successful players, especially skill players, are actually pretty smart cookies.

Matt Patricia is a great example. He is the defensive coordinator for the 5-time world champion New England Patriots. He played on the offensive line at RPI and has a degree in areonautical engineering... a rocket scientist playing football. Similarly, I don't think anyone would term Tom Brady, Aaron Rodgers, Peyton Manning and the other marquee QBs as dim light bulbs and the same with many of the marquee middle linebackers, etc.

 

[Senator]

Certainly a broad stereotype.... and true in some cases....but on the other hand, today's high end Division 1 college and pro offenses and defenses are very complicated so today's successful players, especially skill players, are actually pretty smart cookies.

Matt Patricia is a great example. He is the defensive coordinator for the 5-time world champion New England Patriots. He played on the offensive line at RPI and has a degree in areonautical engineering... a rocket scientist playing football. Similarly, I don't think anyone would term Tom Brady, Aaron Rodgers, Peyton Manning and the other marquee QBs as dim light bulbs and the same with many of the marquee middle linebackers, etc.

Very true. Maybe only the professional football players that are felons have a low IQ... That's only about 30% of them.

 

[Huston55]

Certainly a broad stereotype.... and true in some cases....but on the other hand, today's high end Division 1 college and pro offenses and defenses are very complicated so today's successful players, especially skill players, are actually pretty smart cookies.

Matt Patricia is a great example. He is the defensive coordinator for the 5-time world champion New England Patriots. He played on the offensive line at RPI and has a degree in areonautical engineering... a rocket scientist playing football. Similarly, I don't think anyone would term Tom Brady, Aaron Rodgers, Peyton Manning and the other marquee QBs as dim light bulbs and the same with many of the marquee middle linebackers, etc.

RPI...that Division III ‘Liberty League’ football powerhouse where they learn to spell.