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The podcast by NFL players for NFL players. Each week, we break down the biggest events in football and how they directly impact a player's career and money.
Join Former NFL Veterans Sam Acho (Bills, Bucs, Bears & Cardinals), Zach Miller (Seahawks & Raiders), Jeff Locke (Vikings, Colts, Lions, 49ers), and college coach, Riccardo Stewart, for a raw and unfiltered conversation about the game, the business, and how players can achieve generational wealth.
Riccardo Stewart: Hey, I wanna
welcome you guys back to another
episode of the A-W-M-N-F-L Podcast.
My name is Ricardo Stewart, and I'm
your host, and I'm joined with my
friend, the professor, the mayor,
and the truth, also known as Jeff
Lock, Sam Acho, and Zach Miller.
Guys.
Today I want to tackle something
that many people are a part of.
But have no idea.
Right.
And primarily as it talks, talking about
investments and, and the, the topic I
want to talk about today is target funds.
But before I jump into that, um,
I'm gonna just start with the story.
Growing up, two restaurants we would
go to as a family if it was like a
birthday, if it was somebody got baptized
or some sort of like special occasion.
Two places we would go to as a family.
One is Sizzler and the next
one would be Hometown Buffet.
Right?
Would love to go to those places.
Two places the Stewart Family does not
go to now is Sizzler and Hometown Buffet.
Right?
And go, what the heck happened?
It was good for you.
Why is it not good for
your kids now, you know?
Growing up, we knew what, we knew
we had, the resources we had and
you know, we trusted the brand.
'cause no matter what city we
were in, we would find those two
places and we, we trusted the chef.
So we didn't think about what
ingredients were going in there,
where was this meat from and so forth.
But now, quite honestly, I know better.
And now that I know better and my
taste buds are a little different.
No shade, but we ain't
going there, you know?
Um, I say that to, to just kind of
introduce us to this, this idea or
this topic called target date funds.
And particularly as it relates to the
NFL athletes, because many are either
a part of it, um, and they have no
idea or they, they know it's a target
date fund, but they don't know if
there's anything that's best that,
that, um, that they could be a part of.
And so the questions I have
is what is a target date fund?
Um.
Who's it important for and so forth.
And so I'm gonna jump in with you guys.
And first Sam, when's the first
time you ever even heard of
something called a target date fund?
Sam Acho: Well, I'm a part of the, the
former group, Riccardo the first group
that you talked about, the group that
was going to Sizzlers and Hometown
Buffet and didn't know any better.
I played nine years in the NFL and
I don't remember even hearing about
what a target date fund, which
either means one of two things.
Number one, um, my advisor wasn't
sharing with me the information
or number two, I wasn't educated.
I didn't even know what they
may, they might say, yeah, yeah,
you're in a target date fund.
I'm thinking, okay, great.
You're awesome.
I trust you.
You're at this big firm.
Okay, thumbs up.
It wasn't until I joined AWM and started
getting some of this education from guys
like Zach Miller, the Truth, and Jeff
Lock the professor of realizing, Hey
Sam, this is what a target date fund is.
This is why you need to know about it,
and this is why I'm gonna be a part
of educating you on why it matters.
Riccardo Stewart: Yeah, so almost
three minutes into this podcast,
some of you might be thinking, okay.
Hopefully they'll even explain
what a target date fund is.
And at that, I'm just gonna go ahead
and direct it towards the professor.
Um, not the professor.
My bad.
The truth.
Zach Miller: There we go.
Riccardo Stewart: The truth.
What is a target date fund?
Zach Miller: So simply it's a
single investment solution, usually
in like a retirement account.
So think like your 401k,
maybe an IRAA lot of times.
Places they, they want you to
save for retirement and they don't
wanna just leave you in cash.
So that's happened when
I was an N-F-L-P-A guy.
Um, we voted actually to have.
The investments, the default option,
go into the target date fund rather
than just have it sit in cash.
'cause so many guys don't get
advised on their NFL benefits that
it's better for it to go into that.
And so all it does, it
automates those investments.
It kind of, as you get older.
That target date fund
I was in was like 2050.
As I get older, it's supposed to
convert that from stocks, kind of risky
assets into the more conservative,
uh, less risky assets like bonds.
As you get closer to retirement
and you don't have to do anything,
you just put it in that one fund.
Riccardo Stewart: I'm glad you
said that, that it was something
that you guys voted on because it's
better than just sitting in cash.
Because if I give the analogies of
Sizzler and then Hometown Buffet,
you might think, okay, this must
be the worst thing in the world.
And so Sam.
What are some advantages of
having a target date fund?
Sam Acho: of the advantages of a
target date fund is pretty much
what Zach just talked about.
It's this idea of setting it and
forgetting it, so it's very easy and
simple for an advisor to, uh, put it,
put money in a target date fund, and
then just not even think about it, right?
You put your money into a target date
fund, and then by the time you're 55
or 65, you're getting ready to retire.
You've had it there.
You don't touch it, you
don't think about it.
So that that makes it very easy for even
a group of advisors who say, Hey, we're
gonna put all of our clients' money in
target date funds, and then all of a
sudden I got all these clients and it
makes it very easy to try to manage.
Now, one, just quick aside, and, and we
talked about this a little bit offline,
is the history of a target date fund
Initially, Zach, you mentioned it.
The reason why target date funds
were even created is that 401k
providers were getting sued because
people's money was put in just cash.
They're saying, Hey, just cash.
I actually want to be able
to help my investments grow.
So Zach made that, that example of even
the N-F-L-P-A saying, Hey, let's do a
target date fund because it actually
allows a little bit of growth, but
it, but it protects the provider when
it comes to that idea of liability.
So there might be a better way to invest
your money, but the provider doesn't,
may not want to give you that better way.
'cause they don't want to
be liable for too much risk.
So that's why a target
date fund was created.
And earlier you heard about some of
the advantages of a target date fund.
Riccardo Stewart: Bad.
So there are some good, but as we
know, it ain't always good in the hood.
So the professor, what
are the disadvantages?
Jeff Locke: The one primary
disadvantage is just the cost of 'em.
So you're not the one picking all
the different investments within
that target date fund, right?
And some of those investments could
have really high fees, so you're kind of
stuck with whatever the provider decided
was gonna be in the target date fund.
Might not be best for you.
On that same line, like the
target date fund might not be
best for your financial plan.
For most financial plans we build for
active NFL players, the target date
fund doesn't make a whole lot of sense
'cause a lot of the investments you
have in the target date fund, we're
actually gonna invest in other types
of accounts that are more accessible
for some of the investments while
letting the money in the target
date fund account grow more rapidly.
So it's typically what you
give up is you give up growth.
By being in the target date fund.
Quick example is like say you have $100K
in your NFL 401k or some other account,
you're not touching this money till 60.
You got 35 years for this
thing to grow, right?
The difference in a 7% versus an
8% return is almost $500K A 7% to
a 9% return is almost $1 million of
difference in the actual growth you're
gonna get just by a 1% or 2% difference
in return in the account, and that's.
For having a team to customize
the investment, not just to
the target date fund can really
help you out in the long run.
Riccardo Stewart: Man, that's,
that's really helpful, especially
when you put the numbers to it.
Zach, when it comes to the target
date fund, is this something that
you have or you would recommend
to a high net worth NFL athlete?
Um.
Why or why not?
Zach Miller: Absolutely not.
I mean, you, you gotta start thinking
like you're gonna be worth tens of
millions of dollars and it would be
foolish to have a target date fund,
which they're not bad in themselves.
They're bad in the context of if
you're very wealthy, target date
is the opposite of what you want.
You do not want something that's
automated or not customized to you.
At AWM everything we do is customized,
so you wouldn't want something
that had bonds locked away from
you when you as an NFL athlete.
You need that protective reserve,
those bonds, those safe assets, you
actually need those in your taxable
account where you have access to them.
If they're locked away in a retirement
account where you can't even withdraw
that money without penalties till 55
or 59 and a half, that's you're not
setting yourself up for success and.
The problem is NFL guys, we, we just
have very different liquidity needs or
when we need our cash is way different.
Like careers are so much shorter.
We have way bigger, we need way bigger
amounts of, of kind of protective
reserve type money, safe money that
has to be accounted for outside of it.
And then you just cost
yourself a ton of growth.
You want those retirement accounts,
like Jeff just said, to be compounding,
to be growing as fast as possible.
So you've gotta load them.
With the highest expected return assets.
Think you're taking risk in the, in
the short term, but over the long
term, you're actually more risky.
If you had, you were too conservative
in those accounts, you need them
to grow, not just for your own
money, but for generational wealth.
If that's your goal, those accounts should
be working in the highest return assets.
So you want that customized with all
that, all your taxable money, all
your money you have in other accounts,
you want it actually to be, um.
Uh, in the same game plan and not
just running its own automated play.
Um, that an advisor's not even looking at.
Um, so for people without
advisors yes, makes total sense.
If you don't have an advisor and
you just have a retirement account,
then yeah, you can do it a target
date and you'll be all right.
But for someone with a kind of wealth and
NFL player does, just doesn't make sense.
Riccardo Stewart: Yeah, let me,
let me leave this with you guys.
Um, jump in free for all.
Whoever wants this question and that is.
If I, if I find out I have a
target, a target date fund, right?
I listen to this podcast and I go
back and I check and I go, I do.
What are my options?
Like, what do I even do with that?
Jeff Locke: I will go first.
Uh.
So if you're an NFL player,
you see the target date fund in
your NFL 401k or your cap plan.
Cool thing is that's a
tax advantaged account.
You could go in there, you can change
the investment, no tax impact, get it
ramped up for growth for the long term.
Easy fix, right?
You have a target date fund in
some of your other accounts,
maybe like a brokerage account.
One, if you're with an advisor, you need
to make a phone call and be like, why
the heck am I in this target date fund?
'cause now you gotta figure out.
The tax impact of getting out of it and
into something that's better for you.
So there's options to get out.
They're easy to get in and out of.
It's just you gotta start
asking the questions, especially
if you have an advisor.
Why the heck am I in these things?
Riccardo Stewart: Zach, would
you have anything to add to
that or is that pretty good?
Zach Miller: Couldn't have said it better.
Riccardo Stewart: I love it.
I love it.
So to wrap it up, target date
funds, there are some advantages,
there's some good things to 'em.
The reason why they came
about was for a good reason.
But if you are high net worth.
L athlete.
You gotta find things that are
customized to who you are, not
just what's good for the whole.
Sizzlers might have been a good thing
to eat when I was the four for the
14-year-old me, but for the 42-year-old
me, I know too much and I gotta have
something that's catered to what I like.
Right?
You like what you like.
Hey, if there's anything that
you heard today and you want more
information on, you would like to
talk with one of us, please just
send us a text or shoot us a call.
Our number is 6 0 2 9 8 9 5 0 2 2.