Products March 7, 2023

Financial Finesse to Launch Financial Literacy Certification Program for All US College Athletes

The program aims to help students maximize their endorsement deals, prepare for the future and navigate financial uncertainty.

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Financial wellness firm Financial Finesse announced Tuesday it is launching a new program called NIL Long Game, a financial literacy certification program the company will provide for free to all college athletes in the U.S. The program, including the acronym that stands for name, image and likeness, is designed to help student-athletes maximize their endorsement deals and avoid unexpected tax bills.

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In a virtual event, Liz Davidson, founder and CEO of El Segundo, California-based Financial Finesse, introduced NIL Long Game as a mission-oriented program designed for college athletes, helping them both manage financial gains and include long-term savings after their college careers. The certification program is approximately five hours in length, spread over several modules.

“You have athletes. You have everything free of charge,” said Liz Davidson, founder and CEO of Financial Finesse. The program is in the “absolute best interest of employees without product sales.”

In July 2021, various state laws went into effect, essentially forcing the National Collegiate Athletic Association, which oversees sports at most four-year colleges and universities, to allow college athletes to profit from endorsements and advertisements featuring their names, images and likenesses. Athletes such as Rayquan Smith, a two-sport athlete at Norfolk State University, had the opportunity begin profiting off of their personal brands. After receiving financial coaching from former NFL player J.R. Tolver, Smith said he felt more confident in his finances and had a competitive edge in pursuing brand deals.

“J.R. was teaching me all this stuff, and I didn’t know half of it,” said Smith, crowned “King of NIL” at a summer 2022 conference after agreeing to more than 70 NIL deals in the first year of their availability. “[After our conversation], I was better and smarter with the money I got. I’m 21, I started at 19, so I grew from there a lot.”

One-on-one coaching is not currently built into the certification program, but Financial Finesse said it is offering five years of unlimited financial coaching to athletes at 10 universities, for which it is currently taking applications.

An NIL Long Game contributor, Tolver said he wants to make sure student-athletes have the opportunity to become as savvy as they possibly can be. “If this was around when I was playing, I would have a tremendous opportunity to pursue revenue,” he said.

Reagan Bridges, a current soccer player at Florida International University who recently completed the certification course, said the program changed her college career for the better.

“I initially wasn’t pursuing NIL, because it was very daunting for me as a freshman last year [in 2021-22],” Bridges said. “But after taking this certificate course and receiving the one-on-one coaching, I feel like I’m set up for success when seeking brand deals. I created a separate bank account for NIL earnings. I realized I can use 45%, and I set aside 20% for taxes.”

While college athletes now have the chance to profit off their names and likenesses, many individuals were not prepared to navigate the terms of brand deals, according to Davidson. Without proper financial education, athletes can be left with unexpected tax bills and large amounts of debt. 

National Football League player Carl Nassib said he had his own financial missteps when he first got drafted. He made a deal to sign trading cards and was later met with a massive tax bill for which he was not prepared. Having been in the NFL for seven years, Nassib said he has heard “horror stories” of financial decisions made by fellow athletes. He is now an ambassador for Financial Finesse.

Closing out the virtual event, Smith had a few words of advice: “Don’t let Uncle Sam come get you.”

Client Service March 7, 2023

How to Guide Retirement Savers in 2023

Advisers and plan sponsors should encourage savers to focus on opportunities from the Secure 2.0 Act and on building up an emergency reserve, according to J.P. Morgan experts.

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2023 is no 2022 when it comes to the key focus areas on which retirement industry experts should be guiding savers, according to J.P. Morgan analysts.

Plan advisers and sponsors should be guiding retirement savers to start leveraging provisions of the Secure 2.0 Act of 2022, particularly the benefits available to employees of small companies and those paying off student loans. Savers should also build up an emergency reserve, to prevent dipping into their 401(k)s when faced with income or spending shocks.

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At a Monday launch event for J.P. Morgan’s 2023 Guide to Retirement, experts walked through the guide’s analysis of the most significant issues impacting retirement, advisers, their clients and DC plan participants in the years ahead.

Opportunities in Secure 2.0

The New York-based investment firm’s guide to retirement recommended people take advantage of opportunities in Secure 2.0 legislation, such as looking out for, or even requesting, retirement savings plans if they work at small companies which may not have been offering a workplace plan. For companies with less than 50 employees, less than 50% of private-industry workers have access to retirement benefits. Secure 2.0 aims to remedy the lack of access by encouraging small businesses to create retirement plans through increased tax credits, which can be an important benefit to workers, said Mike Conrath, chief retirement strategist and head of the retirement insights strategy team at J.P. Morgan Asset Management.

Through the Secure 2.0 Act, if an employer offers it, employees will also gain access next year to contribute to emergency savings accounts in defined contribution plans, up to a maximum account value of $2,500, something savers should start considering and advocating for, according to J.P. Morgan. Contributions that exceed $2,500 will spill over to the long-term retirement savings portion of the plan. Employers may automatically enroll participants at a rate of up to 3% of pay.

Also effective in 2024, another Secure 2.0 initiative intends to help families manage their student loan debt burden, Conrath pointed out. Employers will be allowed to make matching contributions to retirement plans for participants’ student loan payments.

“In essence, what this allows for is employers to make matching contributions on behalf of those employees who are making student loan payments, jumpstarting retirement savings that they otherwise would not have in place due to the burden of student loan costs,” Conrath said at the launch event. “There’s $1.6 trillion in outstanding student loans, so that’s a big provision there.”

Emergency Reserve

J.P. Morgan’s experts stressed the importance of building an emergency reserve. When people do not have liquidity, they often turn to their 401(k) and use it as a “piggy bank” to generate the cash needed to weather income or spending shocks, said Kelly Hahn, a defined contribution strategist at J.P. Morgan.

“The key implications when it comes to building an emergency reserve for the sponsors and advisers is, No. 1, to think really long and hard about leveraging the provision in Secure 2.0 to offer the emergency reserve within the DC for their participants,” Hahn said. “I think, more importantly, [No. 2] is to help educate the participants on the importance of having an emergency reserve and to help them think about how to leverage it so that they can keep the retirement savings intact for the intended use.”

If taking a loan from a 401(k) plan is unavoidable, the guide recommends lessening the impact by continuing contributions while repaying the loan. Employees should ensure that they continue to receive an employer match, if available.

Hahn said workers typically encounter spending shocks more frequently, about once every three months, compared to income shocks, which occur about once per year. Savers are recommended to set aside two to three months’ salary. Retirees come across more spending shocks in larger amounts than workers, likely due to unpredictable expenses such as health care. Retired savers are advised to set aside three to six months’ income.

“I don’t think there’s anything specific to this year to watch out for; I think the pitfalls are, I hate to say, somewhat evergreen,” Conrath said. “We see people kind of repeating the same type of behaviors, overreacting to markets. A big thing is folks don’t take full advantage of a company match on their DC plan. The evergreen concepts are still there, and Secure. 2.0 just shines the light that much more on the importance of what’s offered now, so you ought to take advantage of it to the extent we can.”

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