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All right guys, this episode, we’re talking to an Olympic gold medalist. Literally going from representing the country to now representing us all and telling the story of how they once had a lot of money and fell on financial hardships, but more importantly, has reinvented themselves and now teaching us actually what to do with it. It’s gonna be an action-packed episode. Make sure you tune in. Financial freestyle starts now.All right, I’m sitting here with the Lauren Williams and it’s amazing because you are a gold medalist, right? Both summer and winter games, but I actually want to dive into kind of your life, right? When you were at the, the height of your career, my understanding is you were making $200,000 but then at one point, you went from making $2,000,000 a year to making $12 an hour.Help us understand kind of what that gradual shift was. Was it kind of all, was it gradual? Was it, you know, all of a sudden? And more importantly, like, what was the overall shift in your life dynamiclike?
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As a junior in college, I decided, well, I didn’t really decide. it was decided for me, I was going to become a professional athlete because I won the NCAA championships in 2004, ran the second fastest time in the world, and was getting ready for the Olympic Games. So I immediately needed to turn my focus from being a college athlete, which was quite different at the time than it is now.Um, to giving up my eligibility and starting to make money. My baseline contract was at 2000, so I ended up actually making more than 200K per year because I did really well during the course of my career. Um, but as I was trying to figure out like what I wanted to do next, what life after sport looked like, um, which, you know, fast forward, that was around 2013, I realized I didn’t have a lot of work experience. Um, I did not have enough money to be able to retire.I had not managed what I earned well during the time that I was competing as an athlete because I worked with some advisors that didn’t, didn’t have my best interests at heart, you know, just to be quite frank. And so I found myself wanting to be in the financial industry, wanting to understand, um, my finances better and maybe possibly, I hadn’t really thought about it fully, but figure out how to be able to help other people with their finances andSo the only way to do that is like get your feet wet. And I was offered an internship for $12 an hour to kind of figure out, do I even want to be in the financial industry? What does that look like? And is there anything different out there from the financial advisors that I had worked with?
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I want to unpack something. You said that, you know,When you were making all that money, you had advisors that didn’t have your best interests. So let’s actually unpack that, right? Like, was it bad investments? What what what made you say they didn’t have your best interests inmind?
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There’s a lot of advisors in the industry that sell a product and earn a commission.And they’ve only been trained to sell a product to earn that commission. They’re not actually financially literate themselves, or they don’t have the deepest understanding of investments and, you know, the various products that they’re that they’re slaying, if you will. And so one advisor did, he put me in a million dollars of life insurance. I was paying.To my recollection, like $5000 or $6000 a year, I was 20 and single, uh, you know, they’re telling me what a great value, this investment was, um, and I just didn’t need that, you know, I don’t believe in whole life insurance, you know, in the present day for the majority of society. It’s not something that is a good tool for people.Um, but yeah, so I had a bunch of different investments that I didn’t necessarily need, and in addition, I didn’t understand what was happening in my finances. So I was frequently asking questions about like, what do I need to do? Um, how can I, you know, do things better? What does it mean to be able to buy a house? And all those questions fell flat with that first advisor. I didn’t understand the baseline adulting one on one of finances. And so when it came to the second advisor, I thought that was going to go better because they worked with a bunch of NFL players, um.It didn’t go better because that company ended up actually shutting down. It was like a CNBC 60 Minutes sort of deal, so they invested a bunch of, right, exactly. So they invested a bunch of NFL players’ money in a casino. The casino never opened, they all lost their money.I was fortunate in the sense that I didn’t have the millions that the NFL players have, so I didn’t get to invest in the casino, but I also was not well cared for at that place. So I basically paid $100,000 a year for bill pay services, um, learned nothing about my investments once again, and like I said, just had no financial plan, nor did I have any financial literacy by working with either of those advisors.
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And that’s what’s so interesting about the overall wealth management and uh financial advising world. Like, when I talked to people and they was like, should I get a financial advisor? I have no issue or quarrels with it. But I think it’s important that everybody knows exactly how they’re paid, right? It’s like if they’re, like quite often they’re being paid to put you in different investments. So, if there’s a new mutual fund, if it’s front load, they’re trying to see just exactly, oh, we might make 50 basis points, 0.5%.On, you know, anything over this amount, and so you got to truly understand the incentives as to why, uh, and a lot of people don’t understand that. That’s why quite often people are like, look, you’re probably better off just putting your own money in an index fund, which is, which has way less the expenses, because if my math serves me correct, your first advisor, when he puts you in a million dollars of life insurance, obviously some whole life, which makes more money for him than term life, he probably made like $25,000 on that, right? And so,What do you say toAthletes, right, in your shoes, when it comes to potentially picking an advisor, what questions should theyask?
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So one is, are you fee only? Fee only means that you only collect whatever fee you’re actually saying. So I charge XYZ dollars for this service I’m providing to you. There are noUnderlying commissions whatsoever, um, from the investments that I’m putting you in. So a fee-only advisor is thing number 1 for me. Number 2, you need to be a certified financial planner. And for me, this is important because there’s so many different certifications out there that will help people kind of understand, um, how to manage their finances. But with the CFP there is a level of ethics that you need to stay on top of, continuing education, you need to pass an exam.You need to have a certain amount of experience. It’s kind of like becoming a physician. You know, you don’t want your doctor just like, oh, I went to med school, and then I, you know, just started practicing medicine. No, they’ve got to go to residency for 3 or 4 years, you know, depending on what kind of thing they’re going to be practicing, they need to go to fellowship for a couple of years. You want them to own their craft before they become your attending doctor and say,You run out there and open up your heart or, you know, doing brain surgery. And so the CFP is the same thing for me, um, because there’s requirements on a regular basis that you need to uphold, and it actually teaches kind of the full scope of financial planning. So estate planning, taxes, insurance, budgeting, debt.Um, you know, investments, of course, in retirement. A lot of people only get investment expertise or investment education when they’re going out to get their licenses, and investing is a big piece of the puzzle, but it’s not the only piece of the puzzle. And you know, we’re here talking about financial literacy. Literacy is understanding how all the pieces of your financial life work together and how you can optimize those things. So, you need to be fee only, a certified financial planner, um, andThen you need to be fiduciary. Fiduciary meaning that they need to do legally what’s in your best interest, which is crazy to me that there are some people in the financial industry that don’t need to operate as a fiduciary. It’s like, oh, this is suitable for you. Kind of like that million dollars of life insurance. It’s like, I can justify this, you might die and somebody’s going to get this money, so it’s suitable. It was not what I actually needed. It was not in my best interest at 20 years old to have a million dollars of whole life insurance, soThose are my three requirements. One,
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I was a fiduciary back in my Wall Street days, so I definitely understand that, you know, the code of ethics and making sure you’re operate in the best interest of your client. But what, what I want people to know, like it’s not just financial, like it’s not just career agnostic, like understanding the incentives, like there are bad players everywhere. You can literally go to your doctor’s office and you’re going in for a headache and they say, well,Let’s actually run some tests. And to your point, like they’re getting paid on different tests that they’re gonna run, right? Different labs, different screenings, oh, let’s get a CAT scan, let’s get this, that, let’s get that, right? Those are different ways, same with a dentist, right? And so, I think, I love that you said that because it’s good to know how people are paid, that gives you the ability. I remember just every, what, 6 months or so, my car goes into the shop.They send me a report, Oh, do you want us to run this inspection? It’s going to cost this. I had my buddy who actually owns a shop. He’s like, bro, you don’t need that.And so, literally, rather than pay an extra $600 I don’t need that, so like, it’s good to know how people are paid, so that you yourself can always do the due diligence. But look, you also said something that, you know, you learned the hard way, right? You say you grew up, big family, didn’t know financial literacy, so let’s talk about some of the lessons you learned the hard way that now you kind of carry forward with you today.
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Like I said, not everybody who walks through the door saying that they want to help you, will help you, um, or it means that they will help you. And so I met a gentleman that was kind of like out in the world, kind of like, oh, I’m an investment, I own a NASCAR team, and he was just like a smooth talking gentleman. That’s that’s all I can say about him. He wasn’t a financial advisor.Um, and he was talking about some investments that he was getting into, and he seemed to look the part, you know, um, I had met him through a family friend, so he kind of came from somebody that I knew and I trusted. Long story short is this man took $100,000 of my money and ran off. Um, and it was actually not just like any $100,000 of my money, it was the money I had set aside to pay my taxes that year. So there was no real investment. Um, yeah, he ended up being a complete scam artist, you know, probably, you know, took care of his family for a year on my $100,000 or something. Um.But also, you know, above and beyond that, is like, I now had no money to pay my taxes. What did I end up doing? I took out a second mortgage on my home to be able to cover the taxes that year, uh, did have a financial advisor, so you know, to go back to them two duds that I told you about, um, one of them was actually my advisor at the time, and, you know, all this kind of slid under the radar, um, wasn’t asking me the right questions when I went to ask him about it, like I just, yeah, just, this was a mistake that I feel like I should not have made, but I did.Um, so one, distrusting people without, like you said, any proper paperwork, any real due diligence. I mean, this is really kind of like toward the beginning of my career. So the other thing, we’re talking about athletes and money here, uh, is that there’s some things you’re just not going to know because you don’t have experience. It’s not because you’re ignorant, um, or you don’t want to be educated. It’s just like you don’t have the life experience to even know what question to ask. And so like I said, Mr. Smooth Talker came and talked me out of my money.Um, now, you know, 40 year old Lauren would ask a whole bunch of different questions before I handed over a check like that.
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One, I’m sorry that that even happened, right? Because what people don’t realize is like it can happen at any realm, any point of your life, right? Obviously at 20, somebody kind of swindling you, but older people are getting swindled by.Online phishing scams. I’ve just seen a guy, you know, had a whole AI girlfriend that was paying the person, you know, like $600,000 to $70,000,000 or something like that, right? So like, when it’s all said and done, like it can happen anywhere, but what sucks was that it came effectively from a family friend, and so, it kind of passed an early due diligence check for you. So like, if you could do it over with that same person, like,And more importantly, because I think you said you showed whatever this supposed investment was to your FA, but like, what, what was the investment in like, um, kind of what should have raised red flags?
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Well, it was something overseas, um, so he had a girlfriend or a wife, I don’t remember which at the time, but she was from another country, um, and they were investing their money over there, and they were making quite a bit of money doing this.I honestly don’t remember at this point, I feel like I probably had like a mental block from the trauma. Like I knew a lot more details back then, but right, legit. Um, but there was something that was happening across water and they were, you know, making way more money over there because of the exchange rate, and yeah, it was just a it was a whole spiel that was put together pretty well. And I was like, and every time I did ask a question, he had kind of a response to it. So, the few questions that I did know to ask back then, I do remember him, and I’m like, oh, OK, this sounds really good. He sounds really educated about this topic.Um, but yeah, something that, like I said, there’s just no paperwork. I have nothing to prove that, you know, besides the check that I wrote, like what the investment was, when I was going to get my money back, like the sheer lack of paperwork was the biggest red flag for me.Um, like I said, but the smooth talking in the moment made me feel like, oh, you know, somebody put me down on game and I’m about to, you know, flip my money, and like I said, which is something that I think is very popular in the black community is, um, you know, this kind of idea of like, let me give you $500 and you’re going to give me back $1000.02 weeks later, doing some sort of foolishness. Um, that’s something that I feel like was talked about quite a bit during my childhood or my upbringing with people and various, you know, whether it was drug deals or what.Um, you know, people are always talking about flipping their money, and I thought that I was going to flip my money doing whatever this investment was. So.
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What was your best year that you ever made, and then kind of break it down in terms of like taxes, maybe agent fees, and then more importantly, what did you do with that money versus what you would do today, knowing what you know?
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I think my highest earning year was like 650.Um, it would have been contract money, and like I said, I’m shooting a little bit, I’m I’m estimating a little bit here, it’s been a while, I’ve been retired for 12 years at this point. But it would have been, yeah, it would have been about $25,000 of like baseline contract, and then like I said, I had a really good year, so $100,000 worth of bonuses, and then we got what was referred to as like appearance fees, so probably another, you know, $150,000 of appearance fees on top of that, um.And then there might have been other sponsors above and, so all that came from my shoe contract. So it’s like the shoe contract said that if you got this place at this race, you would get this extra money. If you ran this time, you would get this extra money. Um, you know, if you’re at the Olympic Games and you get a medal, then you get a, you know, $100,000 increase to your salary the next year. Things like that were written into the contract. So yeah, so, um, like I said, salary, uh, appearance fees, um.And then like as it relates to taxes, yeah, 20% went to my agent or fees that came off, 20% went to my agent, um, and then you paid regular taxes at obviously the highest tax bracket in that year because 650 is, yeah, it’s a good a good year of earnings. So, um, yeah, that’s kind of the layout.
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Well, look guys, we got to take a quick break, but when we come back, we’re gonna have more with the gold medalist, Lauren Williams.All right guys, welcome back. We’re talking to the gold medalists and more importantly, we’re talking about the relationship with money that she had at the height versus more importantly, how she’s talking to people about money. So Lauren, let’s actually talk about how kind of your new role and what you’re doing now. Yeah,
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so I decided, you know, after having two crappy financial advisors to, you know, it’s kind of cliche, but be the change I wanted to see. Um, and that actually wasn’t my initial plan.I found the CFP certified financial planning coursework by just simply doing a Google search. I was just like, what do you do when you’re trying to pay somebody to organize your finances, but you can’t seem to find any help. Um, and so just a series of different terms put into Google led me to the CFP coursework, and I was like, this sounds more like what I was trying to get from my advisor.And so I’m going to enroll in this and teach it to myself. Um, didn’t realize that there was like a whole another part of the industry, a whole different level of expertise and, you know, way of doing things, um, when I found that certification, but that was the catalyst for me actually wanting to start my company. So I did the CFP coursework, uh, got the $12 internship while I was doing the coursework.Um, found a company that I really loved working for, and I think that was the catalyst for me joining the financial planning industry.
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I love it.So now, right, you just had a big life event, uh, a couple of months ago, right? You just had a baby. So let’s talk to the audience of, you know, either the parents or soon to be parents or at some point they aspire to be parents. From a person with your credentials, right? From a certified financial planner.How should parents think about planning for their kids’future?
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Absolutely. So, one, an emergency fund, you know, you probably weren’t expecting that as an answer, but everybody needs one, because stuff can go left at any given point, and you’ve got to be ready to pivot, you’ve got to be able to move, you know, I live in Medellin, Colombia. I need to be able to get back to the States if one of my 5 sisters, 2 brothers, or my mother gets sick.Um, you know, and now I need to take this little one with me. Um, so just to be thinking about things that you’re not, that are going to come up that you’re just not going to see coming, having a baseline emergency fund is going to be important for any parent in addition to any person.Um, also the 529 plan. It’s still simple, easy way to be able to save for your kids’ education. Um, part of my expertise in now helping people with, like I said, financial literacy-based things is, uh, helping people figure out their federal student loan situation. The federal student loans, well, really the education system in America is very, very convoluted. Um, we need to do a lot, we need to make a lot of changes. But right now, a lot of people’s biggest struggle as adults is that they have six-figure student loan debt hanging over their head.The easiest way for you to be able to negate that as a parent is to start to save now. And you get to save a lot less on the front end for them to, you know, have a lot more on the back end. What we try to do is like, oh, they’re in high school now. Oh my God, what am I going to do? Now you only got 4 years to prepare, and you can’t make your money grow fast enough in 4 years. You can’t earn enough in 4 years, you know, you can’t.Take your lifestyle down enough to be able to pay for their college, and now you’re strapping your kid with debt. So start saving now because you don’t know what is coming down the pipeline, so that you have some room to be able to pivot, to wiggle. And a lot of the 529 plans they even offer state tax deductions as an example. So I would say those are kind of my two baseline things that you need as a parent.
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I love it. To the audience, emergency fund 100% non-negotiable. Make sure you get that about 6 months of your necessary expenses and put that in a high yield account. High yield account, you get access to it, you’re going to make, you know, 3 to 4% right now. And I love the 529. I have 3 kids, and all of my kids have 529s and what people don’t realize is thatIt’s so flexible, right? And in fact, you’ll have other people like, oh, you’ll need to just get your kid an IUL, get them a life insurance policy, and they can use that, and it’s so many different, but like, they’re, they’re.Some, I can make a case to get them one, and I can make a case not to get one. It’s just based on who you’re talking to, right? Um, but what people don’t realize it’s so flexible because you’ve got the ability to change the beneficiary at any point, but now they put in a new rule where you’ve got the ability to literally transfer over like up to 35,000 and make that their Roth IRA. Um, and so it’s a lot of different levels of flexibility, they just put in some new stuff where, um,Um, it could be, you know, it goes for, you know, the qualified education expenses, but I say it to say I think that is also, you know, a non-negotiable as well, uh, because what you have is, you have your family able to contribute to it, andIf you start looking at the numbers, because like you say, my youngest is 2 right now, um, and I know, and when they get ready to go to school, it’s a half a million dollars at this point, right? When we look at inflation, like inflation hits the hardest when it comes to college tuition. Hopefully, AI makes.They said, Well, you know, you don’t need to go to school and now the tuition can finally come down to make it, but like, when it’s all said and done, that is, it is, it’s expensive. So I love that. I also implore people to get them um just normal brokerage accounts, um, custodial accounts, and um.Kind of get that going. You know what’s interesting, and I’m curious, so, when you were 20 you got a whole life, did you just let that lapse or do you still have, um, have that as well?
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It lapsed. Actually, I think I waited, if I remember correctly, once again, this is way back in the day because I was 20 then, I’m 40 now. But um I believe I waited till the surrender time frame was up and then I surrendered it so that I didn’t have that big fee to be able to get out of it on the front end. But yeah, I, you know, cashed it in and shut it down at that point.
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There’s always an argument, because here’s the reality, term, whether it’s 1520, 25, 30 years.Only about 2% of term life insurance policies ever actually pay out, right? Most people outlive the term. And what ends up happening, say I get term life insurance at age 25 for 30 years, and I’m still alive, knock on wood, we all are at 55.At 55, you’re no longer as insurable, and if you are insurable, it’s gonna be a lot higher. So, the argument for getting a whole life is like, well, for the rest of my life, I’m, I’m guaranteed to have life insurance, right? And then you got the investments, the cash value, all that.The only caveat is that the cash value doesn’t grow at the same rate as what happens in, uh, the just the traditional stock market. But there, there’s an argument to be made because the average person’s health is going to deteriorate and it’s not a, uh, it’s not like, oh, we’re gonna for sure, um,You know, give you life insurance, so like I do love that.
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No, I love what you just said. The key piece of the puzzle there is accountability and discipline. Most people don’t have, you know, the accountability partner or the discipline to take, you know, let’s say the million dollars of term life insurance is $50 a month, and the million dollars a whole is $500. If you invest that $450 for the whole 30 years, you’re gonna be good.But what you do is, you know, you spend 200 of it on a steak dinner every month, and then you maybe invest 200 of it, and, you know, you’re not good 50 years from now. So if you know that about yourself, or if you’re doing your finances on your own, that’s where, like you said, the whole can play a role, because at least you’ve got something instead of nothing. But if you can if you can be disciplined, I’d say you don’t necessarily need the whole because you put it, you know, you use that money accordingly, or you invested that money accordingly.Um, you know, I talked about some of the things that happened to me today, but I want people to be able to understand those baseline financial pieces of the puzzle. And so, you know, we got yoga retreats, we got mental wellness retreats, all these other things. Like, why are we not doing financial retreats? So, come hang out with me in Medellin, Colombia. Next one’s coming up in July.Uh, spend the week getting your financial plan together, understanding the financial pieces of the puzzle. You can like, oh, I had a good time. I got to know a new country, I ate well, and I am more financially organized than when I left for this trip.
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Well, listen, man, on behalf of all America, thank you.Uh, for being one, a gold medalist, right? You represent the country extremely well. But guys, that’s it for this episode. Make sure you like, subscribe, tell an auntie and a cousin and a friend to watch this episode as well. Each and every week we’re here, it’s your boy Ross Mack. This is Financial Freestyle, only on Yahoo Finance.
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This content was not intended to be financial advice and should not be used as a substitute for professional financial services.