Background Jerome Phillips is a young, Black, marquee professional football player living the dream. He is 26 years old and in the second year of a 4-year, $30-million contract. But Jerome has always been more than just a jock. In high school, Jerome followed a challenging, college-prep curriculum that included courses like physics, calculus, and AP history. In his own mind, Jerome was headed for admission to a competitive school. Even with all of the time spent on football practice, he not only got great grades, but also found time to play saxophone in the high school jazz band. Jerome's father was a professional jazz saxophonist who often struggled to make a living wage himself, but, nevertheless, passed on his passion for the instrument and the music to his son. Jerome's parents were supportive of his academics and his music, and when he picked up football in 8th grade, even tolerated that. Neither had attended college, but they had high hopes that their eldest child would graduate from a good four-year program and make something of himself as a teacher, a musician, or both. Unfortunately, Jerome's dad died as Jerome was entering his senior year of high school. The family was never well-to-do, but with both parents working, they were OK. When, during his junior year Austin, his parents encouraged him to decline the offer so that he could concentrate on his schoolwork and his music. They felt certain that, with a good package of loans, they could cover Jerome's college costs. After Jerome's father died, the family's financial situation changed dramatically. Money set aside for college was used for current living expenses. Jerome accepted the football scholarship As he and his family had imagined and feared, Jerome led an all-football life at UT. Time outside his classes was taken up almost entirely by football, and, with one excep- tion, even his choice of classes was directed by the coaches. As a result, many, and in some cases all, of his classmates were other football players. The exception was a survey class in English Literature. He loved to read, so this was his favorite class. It was also where he met Judith, the woman he grew to love and hoped to marry. His schedule never did permit a commitment to a jazz band, but Austin had lots of music, and a few of the regular house bands would let him sit in. Sports-wise, Jerome continued to lead a charmed life. He was a finalist for the Heis- man, and after his senior year at Texas, Jerome was drafted by the Pittsburgh Steelers and offered a 4-year deal worth $36 million, including a $23.9 million signing bonus tacked onto the $610,000 base salary he'll get for his first season. A 4-year, $36-million contract means a lot of money-basically instant wealth-but since leaving for college, Jerome had taken some pride in managing his financial life responsibly and independently. He knew what his monthly living expenses were and when he was able to earn money coaching at a nearby Middle School, he sent that money home to his mother. Jerome's "instant wealth" didn't change his relationship to money. Jerome wanted the management of his wealth to reflect his values-who he was as a person, and what kind of life he intended to lead. Jerome didn't want football to be his life, but he understood that, as a professional football player, the next 5-10 years would probably be the peak earning years of his life. Judith was a newly minted lawyer, earning $60,000 a year. Handled well, these years could be an investment that would pay off in more choices for the rest of their lives. However, Jerome was out of step with some of his teammates. For them, the path of least resistance was to play the star role and to spend the unimaginable money they 2 Loot, Inc. Case Study: I'm Rich! were earning on all of its trappings-entertainment, cars, clothes, and even beautiful homes. But when he signed his 4-year contract, Jerome and Judith felt the need for a larger sense of purpose. They would take care of his mother, and Judith's parents, of course, but what else? What did Jerome value most? What kind of person was he, and what kind of person did he want to become? Finding Balance Jerome and Judith are well aware of how financially fortunate they are. Jerome is incredibly talented and hardworking, but they see their instant wealth as a fluke of the world of professional sports, and they have decided that, when he retires from football, a were earning on all of its trappings-entertainment, cars, clothes, and even beautiful homes. But when he signed his 4-year contract, Jerome and Judith felt the need for a larger sense of purpose. They would take care of his mother, and Judith's parents, of course, but what else? What did Jerome value most? What kind of person was he, and what kind of person did he want to become? Finding Balance Jerome and Judith are well aware of how financially fortunate they are. Jerome is incredibly talented and hardworking, but they see their instant wealth as a fluke of the world of professional sports, and they have decided that, when he retires from football, they will donate 20% of their wealth to a nonprofit that is doing work they believe in Depending on when Jerome retires-after four or eight seasons--they estimate that they can make that 20% donation and still have enough to live a comfortable, middle class life. With Judith working, they even wonder if they could support Jerome's dream of becoming a professional musician. And where did their plans to start a family fit with any of this? They have read that the cost of raising one child from birth to 18 is $230,000, a figure that does not include the cost of college, Jerome and Judith are more than prepared to give up the idea of being wealthy, but they would like to live an upper middle-class life. If they have two children and live in a metropolitan area, they calculate they will need $300,000 a year. Judith is very supportive, but at present, Jerome sees himself as a man with three dif- ferent identities: family man, philanthropist, and jazz musician. He hopes a financial advisor can help him find a primary direction in one of them, without entirely losing the other two. hile in college, Jerome and Judith had moved in together. Their relationship is strong, and they expect to marry and begin a family as soon as Judith is established in her law practice. Jerome's mother is an independent woman who still works as a greeter at Walmart, but at 67, she doesn't have any retirement nest egg beyond Social Security. Jerome and Judith want her to move in with them, or at least have a home nearby. Jerome's younger brother, William, struggled all through school with severe learning disabilities, and now, at 19, he has a serious drug and alcohol problem. Jerome's mother is preoccupied with worry about what will become of him. Jerome and Judith think he needs a treatment program-something they would have to pay for. Loot, Inc. Case Study: I'm Rich! A Social Justice Warrior or Philanthropist? On the eve of signing his NFL contract, Judith showed Jerome a chart she'd found in the newspaper (see below). (Sometimes, she was his justice conscience.) They both knew first hand the devastation COVID-19 had brought to their family and friends, but neither of them had realized the wealth discrepancy between Americans was this deep and this pervasive. Jerome felt guilty Economic fallout from COVID-19 is having so much, while so many of his hitting lower-income adults harder friends and family were just making andemento at making them meet % saying. They or someone in their household has lost a job or taken a pay cut due to the coronavirus outbreak 32% Upper income Just making ends meet-or not making them meet. They know that they cannot remake the world, but it is this reality that led them to the decision to donate 20% of their wealth. 52 Lower income 100 42 Middle income They cannot pay all of their hills in full... In a typical month Upper income 7% This month Middle income 19 26 Lower income 44 53 A Jazz Musician? Judith is settled on a career in public service law and figures that eventually she can count on making $100,000 a year. Growing up, Jerome dreamed of being a musician like his dad. He thought he might have the talent to make it. He was sure he had the drive, but he knew well that making $80,000 a year would be considered success. Jerome has not let go of that dream, but how much would he and Judith have to be willing to give up in order to follow it when there are other ways he could earn more, and earn it more consistently? They have rainy day funds that would cover then expenses for three months in case of emergency Upper income Middle income Lower income 23 75% 48 Note Family mondjusted 2018 ning Source Survey of adults conduct A1202020 About Huol Law Income American Hortobe We Los Do COMO PEW RESEARCH CENTER Task You are a trusted friend of Jerome and Judith, and you have recently completed finan- cial planning for your own family. The couple turns to you to help them get started. They know they will need a financial advisor, but they want one who looks beyond the preservation or creation of wealth. They want an advisor who will help them make plans that fit who they are as people. Using the following resources, help Jerome and Judith become informed consumers of financial advice by: 1. Outlining at least one 10-year "launch" plan that might meet their needs. 2. Listing the trade-offs they would need to consider in order to make any plan a reality. In addition to the money the couple wants to donate, the trade-offs should include where to live and whether or not to have children. 3. Finding a financial advisor after investigating and comparing how three finan- cial firms represent themselves, the clients they serve, and the quality of their advisors. Terms - Trade-offs - Budgeting - Earnings - Financial advisor - Long-term goal - Retirement planning - Stages in life Resources Background Jerome Phillips is a young, Black, marquee professional football player living the dream. He is 26 years old and in the second year of a 4-year, $30-million contract. But Jerome has always been more than just a jock. In high school, Jerome followed a challenging, college-prep curriculum that included courses like physics, calculus, and AP history. In his own mind, Jerome was headed for admission to a competitive school. Even with all of the time spent on football practice, he not only got great grades, but also found time to play saxophone in the high school jazz band. Jerome's father was a professional jazz saxophonist who often struggled to make a living wage himself, but, nevertheless, passed on his passion for the instrument and the music to his son. Jerome's parents were supportive of his academics and his music, and when he picked up football in 8th grade, even tolerated that. Neither had attended college, but they had high hopes that their eldest child would graduate from a good four-year program and make something of himself as a teacher, a musician, or both. Unfortunately, Jerome's dad died as Jerome was entering his senior year of high school. The family was never well-to-do, but with both parents working, they were OK. When, during his junior year Austin, his parents encouraged him to decline the offer so that he could concentrate on his schoolwork and his music. They felt certain that, with a good package of loans, they could cover Jerome's college costs. After Jerome's father died, the family's financial situation changed dramatically. Money set aside for college was used for current living expenses. Jerome accepted the football scholarship As he and his family had imagined and feared, Jerome led an all-football life at UT. Time outside his classes was taken up almost entirely by football, and, with one excep- tion, even his choice of classes was directed by the coaches. As a result, many, and in some cases all, of his classmates were other football players. The exception was a survey class in English Literature. He loved to read, so this was his favorite class. It was also where he met Judith, the woman he grew to love and hoped to marry. His schedule never did permit a commitment to a jazz band, but Austin had lots of music, and a few of the regular house bands would let him sit in. Sports-wise, Jerome continued to lead a charmed life. He was a finalist for the Heis- man, and after his senior year at Texas, Jerome was drafted by the Pittsburgh Steelers and offered a 4-year deal worth $36 million, including a $23.9 million signing bonus tacked onto the $610,000 base salary he'll get for his first season. A 4-year, $36-million contract means a lot of money-basically instant wealth-but since leaving for college, Jerome had taken some pride in managing his financial life responsibly and independently. He knew what his monthly living expenses were and when he was able to earn money coaching at a nearby Middle School, he sent that money home to his mother. Jerome's "instant wealth" didn't change his relationship to money. Jerome wanted the management of his wealth to reflect his values-who he was as a person, and what kind of life he intended to lead. Jerome didn't want football to be his life, but he understood that, as a professional football player, the next 5-10 years would probably be the peak earning years of his life. Judith was a newly minted lawyer, earning $60,000 a year. Handled well, these years could be an investment that would pay off in more choices for the rest of their lives. However, Jerome was out of step with some of his teammates. For them, the path of least resistance was to play the star role and to spend the unimaginable money they 2 Loot, Inc. Case Study: I'm Rich! were earning on all of its trappings-entertainment, cars, clothes, and even beautiful homes. But when he signed his 4-year contract, Jerome and Judith felt the need for a larger sense of purpose. They would take care of his mother, and Judith's parents, of course, but what else? What did Jerome value most? What kind of person was he, and what kind of person did he want to become? Finding Balance Jerome and Judith are well aware of how financially fortunate they are. Jerome is incredibly talented and hardworking, but they see their instant wealth as a fluke of the world of professional sports, and they have decided that, when he retires from football, a were earning on all of its trappings-entertainment, cars, clothes, and even beautiful homes. But when he signed his 4-year contract, Jerome and Judith felt the need for a larger sense of purpose. They would take care of his mother, and Judith's parents, of course, but what else? What did Jerome value most? What kind of person was he, and what kind of person did he want to become? Finding Balance Jerome and Judith are well aware of how financially fortunate they are. Jerome is incredibly talented and hardworking, but they see their instant wealth as a fluke of the world of professional sports, and they have decided that, when he retires from football, they will donate 20% of their wealth to a nonprofit that is doing work they believe in Depending on when Jerome retires-after four or eight seasons--they estimate that they can make that 20% donation and still have enough to live a comfortable, middle class life. With Judith working, they even wonder if they could support Jerome's dream of becoming a professional musician. And where did their plans to start a family fit with any of this? They have read that the cost of raising one child from birth to 18 is $230,000, a figure that does not include the cost of college, Jerome and Judith are more than prepared to give up the idea of being wealthy, but they would like to live an upper middle-class life. If they have two children and live in a metropolitan area, they calculate they will need $300,000 a year. Judith is very supportive, but at present, Jerome sees himself as a man with three dif- ferent identities: family man, philanthropist, and jazz musician. He hopes a financial advisor can help him find a primary direction in one of them, without entirely losing the other two. hile in college, Jerome and Judith had moved in together. Their relationship is strong, and they expect to marry and begin a family as soon as Judith is established in her law practice. Jerome's mother is an independent woman who still works as a greeter at Walmart, but at 67, she doesn't have any retirement nest egg beyond Social Security. Jerome and Judith want her to move in with them, or at least have a home nearby. Jerome's younger brother, William, struggled all through school with severe learning disabilities, and now, at 19, he has a serious drug and alcohol problem. Jerome's mother is preoccupied with worry about what will become of him. Jerome and Judith think he needs a treatment program-something they would have to pay for. Loot, Inc. Case Study: I'm Rich! A Social Justice Warrior or Philanthropist? On the eve of signing his NFL contract, Judith showed Jerome a chart she'd found in the newspaper (see below). (Sometimes, she was his justice conscience.) They both knew first hand the devastation COVID-19 had brought to their family and friends, but neither of them had realized the wealth discrepancy between Americans was this deep and this pervasive. Jerome felt guilty Economic fallout from COVID-19 is having so much, while so many of his hitting lower-income adults harder friends and family were just making andemento at making them meet % saying. They or someone in their household has lost a job or taken a pay cut due to the coronavirus outbreak 32% Upper income Just making ends meet-or not making them meet. They know that they cannot remake the world, but it is this reality that led them to the decision to donate 20% of their wealth. 52 Lower income 100 42 Middle income They cannot pay all of their hills in full... In a typical month Upper income 7% This month Middle income 19 26 Lower income 44 53 A Jazz Musician? Judith is settled on a career in public service law and figures that eventually she can count on making $100,000 a year. Growing up, Jerome dreamed of being a musician like his dad. He thought he might have the talent to make it. He was sure he had the drive, but he knew well that making $80,000 a year would be considered success. Jerome has not let go of that dream, but how much would he and Judith have to be willing to give up in order to follow it when there are other ways he could earn more, and earn it more consistently? They have rainy day funds that would cover then expenses for three months in case of emergency Upper income Middle income Lower income 23 75% 48 Note Family mondjusted 2018 ning Source Survey of adults conduct A1202020 About Huol Law Income American Hortobe We Los Do COMO PEW RESEARCH CENTER Task You are a trusted friend of Jerome and Judith, and you have recently completed finan- cial planning for your own family. The couple turns to you to help them get started. They know they will need a financial advisor, but they want one who looks beyond the preservation or creation of wealth. They want an advisor who will help them make plans that fit who they are as people. Using the following resources, help Jerome and Judith become informed consumers of financial advice by: 1. Outlining at least one 10-year "launch" plan that might meet their needs. 2. Listing the trade-offs they would need to consider in order to make any plan a reality. In addition to the money the couple wants to donate, the trade-offs should include where to live and whether or not to have children. 3. Finding a financial advisor after investigating and comparing how three finan- cial firms represent themselves, the clients they serve, and the quality of their advisors. Terms - Trade-offs - Budgeting - Earnings - Financial advisor - Long-term goal - Retirement planning - Stages in life Resources