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  • Writer's pictureBridget Sullivan Mermel CFP(R) CPA

How is Football Like Financial Planning? | Special Superbowl Episode!

Updated: Feb 20, 2023




Financial planning can be compared to playing football in many ways. Just as a football team needs both an offense and a good defense, families need financial equivalents with good investment and tax planning, plus insurance and estate planning.


Football teams often win ugly. They don't necessarily look great while doing it, or have a lot of excitement. It's important for them to stay on task and grind out victories.


Good football teams win the games they're supposed to win. That means taking care of the basics, while still keeping an eye out for current opportunities.


Finally, just as a football requires a team, most people use a team over the course of their lives to help them with the different aspects of their finances. And shameless self-promotion, football teams need to have a coach to guide and motivate them, individuals and families may benefit from working with a financial planner to help them reach their goals and make informed decisions about their finances.


John's firm website: https://www.trinfin.com


For advisors around the US: https://www.acplanners.org/home


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TRANSCRIPT:


John: At this time of the year, the football playoffs are in full swing. And as I'm thinking about teams getting to the championship game, it made me remember how financial planning is like football. That's going to be the topic of our conversation today on Friends Talk Financial Planning. Hi, I'm John Scherer, and I run a fee-only financial planning practice in Middleton, Wisconsin.


Bridget: And I'm Bridget Sullivan Mermel, and I've got a fee-only financial planning practice in Chicago, Illinois. And before we start talking football, please remember to subscribe. It helps us reach people with YouTube. So John, I'm going to pass it off to you.


John: Pass it off. I like that. Very nice hand off, Bridget😊 And of course, I assume that everybody thinks about financial planning when they're talking about football in the playoffs, right? So that's the way that my mind thinks, but it really is interesting. I think about what goes on, what makes these championship teams successful as the playoffs get closer and closer to the title game and you've got to be well balanced.


If teams just have defense or just have offense, they aren't the teams still playing at the end of the season. And that’s just like financial planning. We can't just focus on one area. That's why you and I do what we do with the holistic view. In football, you've got to have all three units: offense, defense, and special teams. In financial planning, you got to have offense and defense. I'm not sure about the special teams.


Bridget: There’s probably some special teams in there.


John: Yeah. But what does that mean? What are fundamental things in anything where there's outcomes, competition? From an offensive standpoint, in football, you need to be able to score points; get yards and put points on the board. What does that mean from a financial planning standpoint, though?


Bridget: A lot of times it's more like stocks. People say, “I need to invest.” And that's kind of what a lot of people feel like is the most fun. And watching your money grow is fun for a lot of people. You look at it once and then you look at it again and it's up. That's fun. And even if it's not up every time, it's kind of like a roller coaster and hopefully you'll get some ups. Yeah, it's kind of fun.


John: And if you think about football, you expect the offense to move the ball, but sometimes they go backwards. But the expectation is that you’re going to march down the field. Similarly, we expect our net worth to go up and our investments to go up, but that doesn't always happen. There are some setbacks on those things. And so often I find in financial planning that people focus on that offense, saying, “How do I get more investment return on those things?” That is important.


We’ve got to score points if we're on the football field, but then there's also some things that go with it on the other side that are just as important. I think this is more evident in football than it is in financial planning. And you and I might think a little bit differently. Offense sounds fun to you, but I think defense is fun: tackle people and do those sorts of things. That’s really clear in football. If you let the other team march up and down the field, there’s a problem. The defense says, “How can we stop them?” Asking how we protect things a little bit less self-evident, I think, when it comes to financial planning, but we still need to have the defense.


Bridget: Absolutely. So you want to make sure you have a diversified portfolio so that you're not just invested in stocks but that you have some bonds and interest earning. And I think maybe we should look at insurance and estates as special teams. Okay, so let's take a diversified portfolio as our defense. Now sometimes the defense scores when there's an interception or safety. So for instance, right now interest rates have gone up, and I bonds are making a lot of money. So actually the defense is scoring more than the offense for this short period of time. And so, it's similar to when defense wins games in football.


John: Well, I mean, a great defense is also a corollary to—and I've been thinking about it over the last year—just cash in the bank. Earning more interest is one thing, but cash sitting in the bank, even before the interest rates started going up, not earning very much interest, is not a lot of offense. Not very sexy with that. And boy, that's not a great place to have money, right?


Well, wait a minute when everything is going down. Stocks are going down. Bonds weren't doing very well last year either. Holding that offense at zero, holding that cash, can be a really good thing. Scoring points by not losing, right? I mean, there's a place for that. We don't often think about that when we're looking at scoring points. Defense, however, is a really important part of things.


Bridget: And I think the special teams are interesting. I was listening to a podcast recently about how typically the average point difference in the NFL is something like three points. And so, teams have invested more in special teams. The whole focus of this episode was that the person who catches the ball and places it is a specific person, and there're specialists in that one position and they're not poorly paid. They're not the highest paid on the team, but they make a significant salary.


John: And they don't get hit very often either. It sounds like a pretty good job.


Bridget: Well, how much they get hit has changed over the course of the last 20 years, but it's like an insurance agent, specifically like life insurance agents. So recently, because some specific things that happened to my firm, I needed to get some life insurance. That's kind of a special teams’ thing. And so, I had to call in special people to give me different advice on that because I'm an older person, and I'm getting life insurance. That's a special teams’ type of situation and those special teams can actually help you win the game.


John: Yeah, it's interesting. If you're a Packers’ fan, like everybody should be, the Packers’ special teams this year has made a big leap, and it's made a huge difference. And you think about what that means. And there's some statistic, I'm sure, but I would guess 80 or 90% of plays, the teams are either on offense or defense.


It's only like 5 or 10% of the time our special teams have a kickoff and those sorts of things, but that small percentage can be hugely important. Think about the insurance example. You talk about life insurance, homeowners’ insurance, car insurance, those sorts of things. Most of the time you don't need that. 99% of what happens in life does not involve those things, but when it comes into play, it's a huge deal and can really be a game saver. This is true from both the football and from a financial planning standpoint on things.


Bridget: Absolutely.


John: Yeah. And it's interesting as I think about this metaphor and just how some of the fundamentals of life apply in financial planning and in things like football. One of the phrases or things that I remember from my days of being in sports is that good teams can win even when they're not playing well. And I think about that from the financial planning standpoint. When stocks are going up and interest rates are high, anybody can throw a dart at the dart board, anybody can make money.


When everything is going well, it's easy. Bad teams can win when things are going in their direction. But what good teams do is when things don't go so well, when they don't get the bounces and they're not quite on your A game and they're not playing very well, the good teams are ones that find ways to win and squeak out those wins. A similar thing happens with financial planning. When things are going well, it's easy. It's what happens when we have years like last year, 2022, and the stock market goes down.


What happens when inflation kicks in? When things are going well, you don't need to have an awesome plan and things are all going to go well. It's when things don't go well that the plan really matters. Can you be a winner in your financial planning when things don't go the way that you expect them to go and the way that they go most of the time? Usually everything doesn’t fall against us, but when it does, are you in a position to win?


Bridget: Right. It reminds me of the quote by Warren Buffett: “When the tide goes down, the people who are swimming naked are exposed.” You know who's at the beach. And so, in years like last year, that's when you see who's taking more risk than they should be. For example, the people who are staying up at night, worried about the stock market. If that's you, maybe you're taking more risk than you really need to be or that you're really comfortable with. That's a sign. That's one of the things that we talk with people about: “How are you sleeping at night?”


John: Yeah, it just made me think, as you were describing that, the other thing is win the games you're supposed to win. Are you doing the things you're supposed to do—the low hanging fruit? Are you not getting into credit card debt? Are you saving money into your retirement plans? Do you have an emergency fund? You got to be able to win when you're not playing well and things go bad, but you also got to do the easy things too.


Bridget: Right.


John: You can do those things. They both contribute to winning.


Bridget: And I don't know about you, but I play tennis, and sometimes I'm facing someone who's clearly better than me. I think, “Huh. How am I going to win?” But the thing is that then you scratch your head, and you figure out, “Okay. They're better than me, but sometimes the better person doesn't win. I got to figure this out.” So even when you're facing a challenging situation, you can still pull it out. You can still win.


John: Yeah. That's great. Well, I think that's a great place to wrap things up here. And as you watch the football playoffs, think about how that relates. Watch your teams and think about what that means in your financial planning and how you can connect those things and have a well-set financial plan for the new year here. And so, I'm John Scherer, and I run a fee-only financial planning practice in Middleton, Wisconsin.


Bridget: And I'm Bridget Sullivan Mermel, and I run a fee-only financial planning practice in Chicago, Illinois. We're both members of ACP, or the Alliance of Comprehensive Planners. We're both taking clients in our practices, but if you would like a planner in your area, you can check out acplanners.org for a group of planners that think a lot like us.


John: That's right. And don't forget to hit that subscribe button.



At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.




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