One insight Dennis shared was on education and risk. He said:
“Teaching a child not to be afraid to release their money is so important to their success.”
That statement aroused our curiosity, so I asked him to elaborate.
Dennis explained that people who grow up without resources and only receive a limited financial education sometimes develop a strong tendency to hold onto what they have earned, rather than invest some of it.
Dennis’s observation reminded me of the book “What Got You Here, Won’t Get You There” by leadership expert Dr. Marshall Goldsmith. In this case, the “there” might be financial security, financial independence and/or retirement.
Powell’s point is powerful.
It is an enormous prize to put at risk and price to pay that is not necessary. It is precisely what makes financial education valuable. Financial education and exposure helps one gain knowledge so they are capable of identifying, assessing, managing, mitigating and overcoming risks. And the earlier the education process begins, the more opportunity there is to shape habits, attitudes, feelings and mindsets on money.
“If you have not heard about compound interest, how would you know to activate and leverage it?” advised Garrett. “If you are not familiar with risk in all its forms, how would you know placing all the money you hold onto into savings exposes you to the loss of purchasing power via inflation? If you have not been educated on stocks and mutual funds, why would you invest in them?”
“Every financial choice involves a tradeoff,” said Clements. “We get one thing, but give up something else. If we invest in stocks, we give up the safety that comes with a savings account or high-quality bonds. But if we opt for the security of a bank account, we give up the chance to earn far better returns. If you have a long time horizon and you’re looking to build wealth, putting too much emphasis on safety probably isn’t the smartest choice.”
Powell is not the only major leaguer concerned about financial education. There are others including the league itself.
Former Dodger Dennis Powell and a young Dodger fan poses for a photo at Viva Los Dodgers. Jill Weisleder/LA Dodgers
Motivated by being a victim of a financial scam, Cy Young Award winner Jake Peavy drew from the experience and through his foundation channeled energy into youth financial education.
In 2011 MLB Director of Retirement Services, Rich Hunt started the Savings and Financial Education Program also known as (S.A.F.E). Hunt supplemented SAFE with the Financial Fitness Challenge developed by San Diego headquartered Financial Fitness Group (FFG) to keep the momentum going.
The S.A.F.E. program covers MLB’s “central office” employees. The education for the players currently is limited two programs. For certain players, a Rookie Career Development program is held annually. Financial education is a component of the program. And last year, MLB started a program called Ahead in the Count. It is basically a very condensed version of the Rookie Career Development program. Ahead in the Count is aimed at those players who have just been drafted and signed. Last year the program was delivered to many minor league players who were part of the 2017 draft. During that program one of the presentations covered financial wellness.
And in 2017, MLB announced a partnership with Northeastern University in Boston to provide players with access to a host of higher-education opportunities that will have them better prepared to keep earning and sustaining themselves once their professional sports career has ended.
You can find my full interview with Dennis Powell on Centsai.com: Retired MLB Baseball Player Pitches Finances to Kids and Grandkids.