By Caitlin Nish
A DOW JONES NEWSWIRES COLUMN
January 31 , 2012
--NFL hopefuls are vulnerable to scams
--Finra talked to college seniors at all-star games about fraud, debt
--Finra also explained the tactics used by con artists
NEW YORK -- The Financial Industry Regulatory Authority is trying to educate a somewhat unique group of future investors: college football stars, seen by the National Football League and Wall Street's self-regulator as prime targets for scam artists attracted by players' big contracts.
These prospective NFL players, usually between 21 and 23 years old, have just finished their college football careers and are hoping to hear their names called in the draft in April. Some may be on the cusp of signing multimillion-dollar contracts, making them magnets for requests for money and investment ideas by family, friends and predatory financial advisers.
Players are particularly vulnerable between the end of the college football season, usually in December, and the time rookie training begins about six months later, says Troy Vincent, NFL Vice President of Player Engagement.
"The least educated are those that are the most exploited," he says, adding that they "haven't spent much time in their college classrooms talking about debt and financial literacy."
That's why the NFL asked Finra's Investor Education Foundation to provide mandatory off-the-field training for the players in avoiding investment fraud and too much debt. It took place at the college all-star East-West Shrine Game and Under Armour Senior Bowl earlier this month.
The NFL conducts seminars on financial literacy for all drafted players at its rookie symposium in June, followed by more education for all rookies at the team level. But by then athletes may have a financial adviser or accumulated a substantial amount of debt for predraft training, a car or home purchase. The NFL wanted to reach the players sooner.
Vincent, who had a 15-year career himself, says athletes in general are living in a more predatory environment now than when he entered the league in 1992. One reason is the enormous amount of personal information about athletes available online. For example, anyone can look up the minimum base salary of an NFL rookie--now $390,000.
Players are "often targeted for scams because they are perceived to have a lot of money or access to a lot of money," says Gerri Walsh, president of the Finra Investor Education Foundation. In her presentations to the NFL hopefuls at the senior games, she detailed the tactics con artists use to persuade their victims to make emotional, instead of logical, investment decisions.
One tactic is to create a feeling of urgency or scarcity, telling people that an investment is available only for a short time and only to them.
"A real deal will be available tomorrow," she tells the players, and "there's no guaranteed returns on investments."
Walsh also warned the players that just because someone says he is a licensed adviser, wears a suit and drives a fancy car doesn't mean he is actually a financial expert. She stresses the importance of checking to make sure an adviser is licensed with Finra and the product being offered is registered with the Securities and Exchange Commission.
Walsh's presentations focus on basic messages: research a financial adviser before handing over money be careful about giving an adviser power of attorney, live within your means and lines of credit must be repaid. Some of the NFL hopefuls she spoke to will never even make a roster. For those who do, careers can last only a few years.
Patrick Conger, a financial adviser with LPL Financial in Nashville who works with athletes, stresses to young players the importance of saving.
Conger, who counts Cincinnati Bengals defensive end Michael Johnson and Green Bay Packers safety Morgan Burnett among his clients, likes working with players just starting their careers so he can help them mold good financial habits early on.
"I tell them "my goal is to work with you when you're out of the league,'" Conger adds. If you're a high school football coach sitting on a $10 million bank account, "that's when you know you've made it."
"While you're in your 20s, don't buy a nightclub or a clothing line," he advises players. "Your goal is to retire with a boatload of money--you can do those things later."
(Caitlin Nish is a reporter for Dow Jones Newswires who covers wealth management. She can be reached at 212-416-2076 or email@example.com.)