Football Financial Planning: Using the Gridiron to Understand Insurance, Investments, And Banking
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Football Financial Planning - Steven C. Roberts
Author
INTRODUCTION
UNDERSTANDING YOUR OFFENSE, DEFENSE, AND SPECIAL TEAMS
The game of football is a fascinating sport, and by far, the most popular one in America. Because of its popularity and the need for people to understand financial planning and financial products, I wanted to write a book that would use football metaphors to educate people on finance.
In high school, I played quarterback for our football team. My coach told me, Steve, as a quarterback, you need to make things happen, especially when a play breaks down.
The unique process of football financial planning is that you get to be the owner and quarterback of your team. An owner is the ultimate decision-maker for a football franchise; he or she can choose to be a general manager or hire one. In this book’s context, you are the team’s owner and its general manager as well.
You will be the one who decides which coach or coaches (financial advisors) to hire, and depending on how you set up your team, you’ll decide which players (products or investment vehicles) to draft as part of your team. Your salary cap is your income or financial resources and the amount of money you can pay toward each player.
To create a successful football team, you need many things, including coaches who can put a winning game plan together and players who can execute that game plan. The quarterback is the one who typically leads the team; he is the catalyst that makes the offense go, and in many cases, the team go. So as we proceed through this book, you will come to understand your role as an owner and a quarterback.
Your first step as an owner is to decide whom you will hire as a coach. In football financial planning, your coaches are your advisors. Some teams need a full coaching staff: head coach, offensive coordinator, defensive coordinator, wide receiver coach, running back coach, etc. Other teams may need only one or two coaches. Your game plan and need for coaches will largely depend on your financial resources. The head coach is the person to whom you give the most control over devising your game plan. This person could be an accountant, attorney, financial advisor, or insurance agent. It may even be a firm or company that has all these coaches in place. Later, as we look at the players involved in football financial planning, we will discuss the type of coaching staff you may need.
This book is divided into three sections aligning with the three phases of the game: offense, defense, and special teams. Part Three also deals with other aspects of the game such as coaching, turnovers, and different philosophies and systems that coaches use to put a game plan together. At the end of each chapter that discusses a player, you will be able to evaluate your current player. At the end of the book, you will put your team together to get a visual of what your team looks like. You can also go to FootballFinancial.com to get an online version of what your team looks like. Part One begins with defense, because most people are familiar with the first few players we will talk about, and it flows better as we then proceed to offense and you as an owner and quarterback.
Let’s briefly look at these first three parts before we begin breaking down the individual players and strategies needed to win in each chapter.
Defense
They say defense wins championships. As we go through our defensive players, you will come to see how this statement is true. If the other team does not score, you still need to score to win the game. Some of the players we will talk about on defense can score for you. Defense in football financial planning is primarily made up of insurance products. Insurance is something we buy to transfer risk to the insurance company. It allows us to pay a lower amount (called premiums) to cover us in case of accident or loss. In most insurance cases, if the need arises (accident, loss, etc.), the amount we receive is greater than the amount we paid. In football, the game begins at the line of scrimmage. Both teams come to the line, and once the ball is hiked, the action (life) begins. Our defensive line helps to protect us against those events most likely to happen to us that will also impede our financial gain or set us back financially. I will discuss defense from a 4-3 perspective (four linemen and three linebackers). The defense strategy in football financial planning is to protect your offense and team from losing yards, and in the end, from losing the game.
Offense
Offense in football financial planning is primarily made up of investments or products that bring a return on your money, or in essence, earn or make money for you. To win the game of football, you have to outscore your opponent. In football financial planning, winning the game, ultimately, means achieving your financial goals. To me, winning means becoming financially secure so you don’t have to worry about whether or not you can pay your bills, or whether you will have to work until the day you die. Notice I said have to.
For many people, the end of the game does not come until age sixty or seventy when they have scored enough points (accumulated enough money) to retire and not outlive their money or resources. Later in the book, we will talk about some strategies and products that will help us achieve this goal (of not outliving your money).
Coaches, Special Teams, and Systems
To win a football game you not only need players, but a coach that can put a game plan together that will maximize the talent he or she has to work with. The coach’s system or philosophy is how he or she uses players to help the team win. In football financial planning, coaches use systems or philosophies to help individuals and families reach their financial goals. We will look at some systems and philosophies that coaches implement, to help you better understand some potential uses of the various financial players available to you.
My hope is that you, the reader, will enjoy and, more importantly, benefit from the football metaphors I use in this book. My intention is for you to understand better the financial products and planning strategies that will help you reach your financial goals. Together, we will come up with a winning game plan to help you score enough points (money) to prepare you for your future.
May you make each first down count, and enjoy the game!
Steven C. Roberts
CHAPTER 1
DEFENSIVE TACKLE: AUTO INSURANCE
The first player we are going to talk about on defense is one of our defensive tackles. Most people have heard of Warren Sapp, Randy White, Merlin Olson, Vince Wilfork, and Ndamukong Suh. Why is it that we recognize defensive linemen more than offensive linemen? In my opinion, it’s because these men are very big, fast, and powerful for their size. They raise havoc on offenses because they are hard to contain. You can think of auto insurance as being like a defensive tackle (DT). If you drive a car, then the probability of an accident or loss occurring to your vehicle or to you is greater than the other potential losses we will talk about. Auto insurance is your first line of defense to protect you from having big gaps or asset losses from your team. In fact, the government is so concerned about the financial burdens that can happen to a person because of an automobile accident that it has demanded that everyone who drives a car have auto insurance. So let’s talk about a few options (abilities) and characteristics of our DT.
Each defensive tackle that is draft eligible has a limit. We can think of this limit as the player’s size. In Pop Warner (youth football), a 100lb defensive tackle may be very big and fast, but in the NFL, there’s no way a 100lb defensive tackle is going to cut it. The player’s size will determine how long he can play and take blows from the offense, so this limit is the furthest you can push this player, until he can play no more. With automobile insurance, each state that requires liability coverage requires a minimum limit (weight) amount. The minimum weight limit in most states is 25/50/15. The limit amount is the maximum amount of money the insurance company will pay out per person, per accident. An example of a minimum weight limit amount may be stated as bodily injury per person of $25,000, bodily injury per accident of $50,000, and property damage of $15,000, thus 25/50/15. Bodily injury liability coverage refers to damages suffered by the claimant (other party), such as medical expenses, lost wages, or other losses associated with an accident you are liable for (you caused). Property liability coverage refers to the property you damage, such as a car. In most cases, minimum weight limits are equivalent to using junior high football players for your defensive tackle. They’re just not big enough to handle a severe