Dear Giants' Draftee Justin Pugh (and Other Lucky Youth): Here's How to Not Lose Your Wealth

Originally published on NY Business Journal, May 3, 2013.

The whirlwind ride for a young man drafted into the NFL -- we're looking at you, Justin Pugh of the New York Giants -- begins with a joyous phone call and the realization that he is about to become rich. Under the bright lights of NYC, though, that income can become destructive if not handled properly.

That's true of any young person who suddenly comes into money or gets a great job for the first time, so we talked to a number of financial experts about the dangers of sudden wealth, and how to avoid seeing it turn to ashes.

“You’re invincible, you don’t believe that it’s going to end,” Donovan Lazar, owner of Online Trading Academy New York, told me. “When you look at people’s wealth, most people take years to create it. They have time to make (and learn from) mistakes.”

The Giants took Pugh, an offensive tackle out of Syracuse, with the 19th overall selection last week. Pugh, who has already been warned by veteran teammates that his wallet is in their crosshairs, has prepared himself for his upcoming move to a new tax-bracket. “I have good people in my corner,” Pugh told me. “You need to be smart as possible with money and not part of the statistics.”

The statistics that Pugh is referring to include the Sports Illustrated report that 78% of NFL retirees are in bankruptcy. This number exists in part due to the temptations that dwell in major metropolitan areas, as well as the pitfalls that can prey on professional athletes across the globe.

David Rae, VP of Trilogy Financial Services in Los Angeles, is the son of an NFL veteran Mike Rae, who was the quarterback for the 1972 national championship team at Southern Cal and had stints with the Oakland Raiders, Tampa Bay Buccaneers and Washington Redskins. He told me: “I have seen all kinds of (expensive problems) from divorces, multiple kids with multiple women, drug use and everything else you can think of. I don’t think there is something more upsetting than seeing someone who worked their whole life to play pro football, and win a Super Bowl, have to sell their ring out of necessity. I feel lucky to have been raised in one of the minority of NFL families that didn’t go broke after the dream career ended.”

Rae agrees with Lazar’s assessment that the end of a career can sneak up on a player. “Once a lifestyle is established,” he said, “it can be very hard to cut back. Take someone like Plaxico Burress (former New York Giant star wide receiver). By shooting himself in the leg, he cost himself millions in lost salary. The average American doesn’t put enough money away for retirement, but they have 45 years or so to figure it out and play catch up. For NFL players in New York, they at most have a few years to play and earn this type of money. That doesn’t leave much time to play catch up (if they make a mistake).”

Michael Needleman, partner at Fusion Analytics Investment Partners LLC in New York, agrees. “It is never too early to start planning for retirement," he said. "The process needs to have a balanced approach that includes equities, bonds, alternative investments, real estate insurance as well as family planning. New York City offers many potential pitfalls because of all the movers, shakers and dealmakers that are fast talkers. Often times, deals aren’t always so legit but can sound very exciting to someone that is young with a large bankroll.”

Brian Saxton has spent 13 years as a financial professional in Morristown, N.J. Like Pugh, he entered the NFL as a member of the Giants. After a five year career, Saxton turned to his business degree and master's in human development, which were both earned during his playing days at Boston College.

“Be very conservative,” Saxton advised. “You want this money to be here the rest of your life. It’s easy to get into the trend that those size checks are going to keep coming. It's not like winning the lottery, he’s earned it, but that type of money creates a lottery-type sensation. You don’t want to make any really quick decisions.”

Like Saxton, Pugh began preparing for a life after football during his time in the classroom at Syracuse. “Going into Syracuse,” said Pugh, “I didn’t know I’d make it to the NFL. I got my degree in finance and I don’t want to blow this money. This is a once in a lifetime opportunity.”

Each of the financial experts I spoke with recommended that young athletes entering the costly environment of NYC do more than surround themselves with competent representation and wealth managers.

“Get some education in the markets," Lazar said. "The biggest challenge that these young people have is that they don’t know any better. (Athletes) are just writing checks.”

Pugh will begin managing his on-field future during next week’s rookie mini-camp which will be held at the Timex Center in East Rutherford.

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