Fantasy Football 401(k)

Many American enjoy fantasy sports leagues like Fantasy Football. Hey, maybe you’re one of them! However, I’m am not. In fact, I derive zero enjoyment from them, and the thought of managing a fantasy team of athletes who I know nothing about is the opposite of a fantasy for me. It actually makes me anxious thinking about it.

“Mark, it’s just game. It’s for fun. Relax….” I know, it’s supposed to be a fun and something to do with your friends. However, I am very competitive and hate losing more than I like winning! It’s a trait shared by many high performing achievers.

Following professional athletes, their performance stats, and managing their weekly participation within the fantasy team come game day doesn’t benefit my clients or my family. It’s not something I really get excited about. If you aren’t passionate about something it’s probably best to step aside and let others who are have at it.

Does this mean I think fantasy leagues and the people whom really dig them are wasting their time? No, of course not. To each their own, and if they are passionate about it, then go get after it. I just know it’s not something I am comfortable with, and would bring more pain to my life than pleasure.

My First & Last Draft

It’s been nearly 20 years since I have participated in a fantasy football league. I remember my friends talking me into it. As I recall, I reluctantly joined their friendly league for the season.

Like many other American’s do each fall, we got to gather at a buddy’s house for a draft. They were all good sports, and even tried to advised me on making good player selections when it was my turn. However, I remember one of the guys kept chastising the others for helping me. It was comical.

Technology made it pretty simple. Even 20 years ago it was all done online. However, there were no smartphones to manage your team from anywhere. You had to sit you rear down in front of your PC. How barbaric it was relative to today’s standards.

It was a fun evening and a great environment. I probably had a few beers as well knowing the guys I used to run with. The draft night was a positive experience all around.

Are You Ready For Some (Fantasy) Football?

The first week was pretty good. I wasn’t in the lead. I didn’t expect to be. However, I wasn’t in last place either. For someone who didn’t know what the heck he was doing I was beginning to build a little confidence. Maybe I could handle this better than I thought.

By the second week, I was starting to get pretty sure of myself. My team was near the top of the league standings. Was it beginners’ luck, or was I really understanding how to play the game? I really didn’t know for sure, but I was beginning to think I had the hang of it.

By the third week, I am feeling like a pro! Look out. I am going to win this thing. Why not me? I was a smart guy, college educated & doing well in my career. How hard could it be to excel at fantasy football?

However, that was about the time the wheels started to come off the bus.

The Call: “What Are You Doing?”

I remember the phone call. It was my college friend Doug. He and I were tight. Throughout our time at Simpson College and afterward he was always looking out for me. During the fantasy draft he paid specific attention to my selections, and did his best to guide me. The days following the draft, he helped me decide who to assign for positions before the league began. He was more like a coach to me than he was another competitor in the league.

I’ll never forget the shock and disbelief in his voice. It was the Monday after week four of the season. “Mark, what are you doing?” I was at work so I told him so. He went on, “No, with your team.” I asked him what he meant. “You had three injured reserve players in skilled positions for last week’s game.”

To my defense, I had know idea what the heck he meant. That is until Doug went on to tell me that it was impossible for my quarterback, running back and kicker to score any fantasy points when they are sitting on the sidelines. I quickly understood his reason for concern. “Ohhh… I see now.”  

Where I’d Gone Wrong?

Once I made the initial selections, and assigned duties to my players I never went back to make any changes. After the excitement of the initial draft was done, and my friends were no longer around to coach me I didn’t have the confidence or the knowledge to make educated changes. This turned out to be my Achilles heel. I took a set it and forget it approach, and the results were less than to be desired.

I did with my fantasy football team what many people do with their 401(k) elections. I spent considerable time making the initial picks. I even sought more knowledgeable advice from others in my sphere of influence. Then I acted on what I knew at the time and set the team in motion. After that however, I left it as is and walked away.

Never considering that week to week, month to month, maintenance of the team was needed. Neglecting the entire team, failing to adjust as conditions evolved turned out to be disastrous in the end. Fortunately, I was only betting $20, not the future value of my workplace retirement account.

It goes without saying, I didn’t win the league. In fact, I came in dead last.

What Would I Have Done Differently?

If I were to join another fantasy football league today I would do a few things differently. First of all, I would hire somebody who knows what the heck they’re doing to advise me on how to select players and allocate them to the correct positions. I’d look to my hired gun to advise me on how to reallocate within the player options on my team for optimal performance ongoing.

I’d expect to spend little, to know time worrying about it. However, I would have the confidence knowing that I was getting professional advice that would likely give me the upper hand on my league peers. I’d increase my odds of winning, while simultaneously reduce the amount of time I spend thinking about it. If I had a poor performer, my advisor would prompt me to make a swap before it resulted in devasting losses.

Yes, then and only then would I consider joining another league.

Are You Playing Fantasy League With Your Workplace Retirement Plan?

Chances are you or someone you know has a workplace retirement plan. 401(k)s often steal the limelight. However, 403b, 457 plans, TSPs, and are a few other examples of employer sponsored workplace retirement plans known as defined contribution plans.

Defined contribution plans place all of the investment risk on the plan participant, a.k.a. you the employee. Unless you are an investment advisor, you’re probably extremely skilled at something other than managing your workplace retirement plan investment options.

However, as the employee plan participant you are responsible for determining how much to save, how often to save it, and what investments to choose. Ongoing allocation adjustments are on your shoulders too. Set it and forget it, and you might wind up like my fantasy football team. Dead last.

Not to mention it’s up to you to be responsible for distributing the plan assets throughout retirement. Imagine what will happen when your last paycheck cashes. How will you determine how to optimally distribute your retirement dollars? How will you make sure that you won’t run out of money over a multi-decade retirement?

It can be done, but it requires skill and care. Are you committed to the time and commitment it takes to become an expert in the field of retirement income planning? Do you really want to retire from one career only to take on a fulltime time job of managing your retirement resources?

Your Employer Is Receiving Fiduciary Advice. Why Aren’t You?

The plan sponsor (A.K.A. your employer) receives fee-based fiduciary advice from the plan administrator. Why don’t you, the plan participant, also receive fiduciary advice? Don’t you deserve unbiased fiduciary advice when electing investment options within your plan?

Under the current scheme of defined contribution plans the plan sponsor, the employer, receives fiduciary advice from the plan administrator of the fiduciary. Plan participants on the other hand do not receive participant level fee based fiduciary advice from the plan sponsor. The fiduciary relationship is between the plan sponsor and the plan administrator. The plan participant is left to make decisions about how to manage what could amount to be his or her largest retirement asset without any professional unbiased advice.

Often not properly prepared or possessing sufficient skills to make initial and ongoing investment allocation decisions based on global economic and geo-political conditions what happens is the plan participant either elects a target date fund or a basket of investment options during open enrollment and then never looks at it again. Out of sight and out of mind. Sounds a lot like my fantasy football experience doesn’t it?

Over Confident & Under Served 

Considering the bull market has been on a tear for over 10 years many folks have seen their workplace retirement accounts swell. Some more than others, but generally speaking everyone is doing better than they did during the last recession.

Many plan participants are even feeling pretty confident about their investment elections, and their investment prowess. Like week 1 thru 3 of my fantasy football league experience, they may be thinking, “I got this.”

That may all change during the next correction, or worse, a recession. What might happen when a few of investment options that they had allocated retirement fuds to ends up on the injured reserve list? Things might not turn out so well. With no one prompting them to make changes based on geopolitical and economic conditions how will they know what to do next quarter, or the one after that?

When is the next bear market going to come? No one really knows for sure. Just like no one knows when their fantasy quarterback, running back, or kicker will get injured. Unfortunately, by that time they figure it our it may be too late to take preventative action. Unfortunately for them, they may not have a friend like “Doug” calling Monday morning saying, “What are you doing?”

Take Back Control Of Your 401(k) or Other Workplace Retirement Plans.

“Investment Adviser Representative of and advisory services offered through Royal Fund Management, LLC, a SEC registered investment adviser.”

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