Last Call from AFCA 2024 in Music City
December 30, 2023
Coaches, it was great to talk with so many old friends and to meet countless new ones over the few days that thousands of us spent in and around the incredible Opryland venue in Nashville in early January.
While talking to coaches of all types- high school, past and present “35 Under 35” honorees, and FBS and FCS assistants and head coaches- there were a number of themes that were the talk of the town. NIL and “The Portal” certainly drove most conversations and seem to be the most direct sources of stress for seemingly all levels of the college and even high school game. All involved seem to be learning and strategizing on the fly. These new factors in the game are significantly affecting roster construction for teams at all levels. With some noise about conference realignment and expansion on the radar again, the need to be successful has rarely been more urgent.
Stepping away from the non-stop tasks of roster management, team development, and recruiting new- and current- players, we also like to hear from coaches about the themes and concerns that many of you have on the personal or financial planning side of the industry. As such, here is some perspective on the topics that seemed to come up more often than others in our conversations in the hallways, exhibit halls, and watering holes in Nashville.
The Housing Decision and The Coaching Carousel
After the convention in Charlotte last January, we wrote about the drastic increase in interest rates on a 30-year fixed rate home loan from a low point of approximately 3.0% in 2021 to a rate of 6.0% to start 2023. Unfortunately, for borrowers, the interest rate on the same 30-year fixed rate home loan increased even further in 2023 to a rate of 7.52% in November 2023.
When combining the high borrowing rates with the elevated cost of a median-priced, existing single-family home, the ability to buy a home has rarely been more difficult. In fact, the “Housing Affordability Index” from the National Association of Realtors hit a low point in October 2023 and has not recovered much since (1).
The bottom line is it may not a great time to buy a house right now.
That is bad news for the families affected by the 7 NFL head coaches, 27 FBS head coaches, 27 FCS head coaches, 22 Division II head coaches, 15 Division III, and 4 NAIA head coaching changes to date this cycle (2). Not only are those coaches and families likely on the market for new housing arrangements, but the trickle-down effect that those job changes have for their staffs and their families is seemingly endless.
If financial conditions are prohibitive to buy a home, what does the environment for renting look like then? Well, as one might expect, it’s not a lot better. While the nationwide median rental rate fell by 0.8% in December, the median cost to rent an apartment in the U.S. is still almost 20% higher than what it was prior to the COVID-19 pandemic and subsequent boom in the housing market (3).
There is no universal solution to the buy-or-rent housing dilemma, and it is important that every coach and family considers the financial side of the equation as well as the variable of job security that is unique to every member of the AFCA.
Why a Season is NOT the Same as a Year
While presenting to the “35 Under 35” group in Nashville, we shared perspective on the intricacies of employer-sponsored retirement plans such as a 403(b) that most states, colleges, and universities offer to employees. One very important plan design detail is the unique vesting schedule included in every plan. Based on a recent survey of these plans by PLANSPONSOR, over 40% of plans in the Higher Education sector require participants to be employed for two years or longer before they are 100% vested in the employer’s contribution or match (4).
While two years at a job may be more normal for the general workforce, that tenure may be difficult for those working their way up the coaching ladder across all levels of football. That is why it is important to point out that the employer’s Human Resources team considers your date of hire and your date of separation when determining your length of employment, and, thus, your vesting status.
Considering the current schedule of completing a regular season in late November and the final College Football Playoff and FCS Championship games being played in early January, a coach may get hired at a job in January but find a different job in December of that same year or the following calendar year. That is why a “season” is NOT the same as a “year” in the eyes of the Human Resources offices.
So, when looking at your account balances in your 403(b) (or similar type of plan), we encourage you to look closely and only consider the “vested” balance in your financial planning and net worth calculations. Unfortunately, the entire account value you see of the front page of a statement may not belong to you.
2024 Market Outlook from Morgan Stanley’s Global Investment Committee
2023’s historic retracement of the 2022 bear market ended with a crescendo—and the S&P 500 up nearly 25%. While investors welcomed the Fed’s December policy pivot, aggressive repositioning left the market extremely expensive. But given unforgiving expectations, 2024 suggests new challenges. First, consider starting valuations; while valuations tend to be poor short-term timing tools, they matter in the intermediate term. Furthermore, despite a near-universal assumption of slowing economic growth, earnings are forecast to expand by roughly 10%, implying margin expansion amid assumed loss of pricing power and limited labor-cost declines. For the Fed’s part, despite signaling its intent to cut rates three times, futures are pricing more than six 25-basis-point cuts. Finally, liquidity and financial conditions—at their most accommodative since summer 2022—are set to retrace. For much of 2023, talk was cheap. In 2024, it’s show-me time for US markets. Consider shoring up portfolio balance and diversification, adding to non-Magnificent Seven stocks through the equal-weighted index or via active stock selection in the US. Equity and fixed income returns are both likely to be in the mid single digits, and non-US stocks should contend with US equities. Favor value over growth, and SMID and large cap over megacap. Our favorite ideas include financials, industrials, utilities, staples, REITs, health care and defense, especially until the first rate cut (5).
Final Words
With the convention returning to Nashville for the first time since January 2020- just weeks before the world as we knew it was essentially turned upside down- it is hard not to reflect on the changes in the football coaching world also. On some levels, the changes in your daily responsibilities in order to be successful may seem overwhelming and endless at times. While change is constant, not many would have predicted the near-simultaneous arrival of the Name, Image, and Likeness monster with the transfer portal and the non-stop learning and managing on the fly.
The successful programs seem to have the appropriate resources, infrastructure, and a well-thought out plan in place. That same intentionality and discipline can also lead you and your family to success on the personal side of life by working with a financial advisor who has best-in-class resources and is responsive to the constant change in your unique lifestyle and profession. We would encourage every reader of this article to develop a relationship with a financial advisor who can develop a plan to help you navigate the opportunities and challenges that you may face in 2024 and beyond.
Keith Norris
Matt Kuerzi
Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor
Keith Norris, Senior Vice President and Financial Advisor, and Matt Kuerzi, First Vice President and Financial Advisor, are co-founders of The Derby City Group at Morgan Stanley in Louisville, Kentucky. They have combined over 45 years of experience helping families with their financial planning*. Matt was recognized by Forbes in their first ever list of “Best-In-State Next-Gen Advisors” in 2019 and more recently as a “Best-In-State Wealth Advisor” in 2023. He can be reached directly at (502) 394-4094 or [email protected].
Forbes Top Next-Gen Wealth Advisors
Source: Forbes.com (Awarded June 2019) Data compiled by SHOOK Research LLC based on time period from 3/31/18 – 3/31/19.
Forbes Best-In-State Wealth Advisors
Source: Forbes.com (Awarded April 2023) Data compiled by SHOOK Research LLC based on data as of 6/30/2022.
Branch address: 4969 U.S. Highway 42, Suite 1200, Louisville, KY 40222
* Keith Norris, Senior Vice President, Financial Advisor, experienced in the financial services industry since 1997. Matt Kuerzi, First Vice President, Financial Advisor, experienced in the financial services industry since 2002.
* For more information, please visit https://www.morganstanley.com/articles/protect-retirement-investments-volatile-stock-market?cid=whmt-smfa-protecti-13292. CRC #5441939 (02/2023)
Footnotes
(1) https://cdn.nar.realtor//sites/default/files/documents/hai-11-2023-housing-affordability-index-2024-01-12.pdf
(2) https://footballscoop.com/news/2023-24-nfl-and-college-head-coaching-changes; as of January 18, 2024
(3) https://www.apartmentlist.com/research/national-rent-data
(4) PLANSPONSOR 2023 Defined Contribution (DC) Survey. Valid through December 2024.
(5) The Global Investment Committee (GIC) is a group of seasoned investment professionals from Morgan Stanley & Co. and Morgan Stanley Wealth Management who meet regularly to discuss the global economy and markets. The committee determines the investment outlook that guides our advice to clients. They continually monitor developing economic and market conditions, review tactical outlooks and recommend asset allocation model weightings, as well as produce a suite of strategy, analysis, commentary, portfolio positioning suggestions and other reports and broadcasts.
Please let us know if you would like a copy of the complete referenced Morgan Stanley GIC report which was published January 8, 2024.
Disclosures:
This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security/instrument, or to participate in any trading strategy.
The securities/instruments discussed in this material may not be appropriate for all investors. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Morgan Stanley Wealth Management recommends that investors independently evaluate specific investments and strategies, and encourages investors to seek the advice of a financial advisor.
When Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors (collectively, “Morgan Stanley”) provide “investment advice” regarding a retirement or welfare benefit plan account, an individual retirement account or a Coverdell education savings account (“Retirement Account”), Morgan Stanley is a “fiduciary” as those terms are defined under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or the Internal Revenue Code of 1986 (the “Code”), as applicable. When Morgan Stanley provides investment education, takes orders on an unsolicited basis or otherwise does not provide “investment advice”, Morgan Stanley will not be considered a “fiduciary” under ERISA and/or the Code. For more information regarding Morgan Stanley’s role with respect to a Retirement Account, please visit www.morganstanley.com/disclosures/dol. Tax laws are complex and subject to change. Morgan Stanley does not provide tax or legal advice. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a Retirement Account, and (b) regarding any potential tax, ERISA and related consequences of any investments or other transactions made with respect to a Retirement Account.
Equity securities may fluctuate in response to news on companies, industries, market conditions and general economic environment. Companies paying dividends can reduce or stop payouts at any time.
Bonds are subject to interest rate risk. When interest rates rise, bond prices fall; generally the longer a bond’s maturity, the more sensitive it is to this risk.
Morgan Stanley Smith Barney LLC offers insurance products in conjunction with its licensed insurance agency affiliates.
Morgan Stanley Smith Barney LLC offers insurance products in conjunction with its licensed insurance agency affiliates.
Variable annuities are sold by prospectus only. The prospectus contains the investment objectives, risks, fees, charges and expenses, and other information regarding the variable annuity contract and the underlying investments, which should be considered carefully before investing. Prospectuses for both the variable annuity contract and the underlying investments are available from your Financial Advisor. Please read the prospectus carefully before investing.
Hypothetical results are for illustrative purposes only and are not intended to represent future performance of any particular investment. Your actual results may differ. The principal value and investment return of an investment will fluctuate with changes in market conditions, may be worth more or less then original cost. Forward-looking statements are based on assumptions that may not be realized.
© 2024 Morgan Stanley Smith Barney LLC, Member SIPC.
CRC 6080794 11/2023
For more information about the AFCA, visit www.AFCA.com. For more interesting articles, check out The Insider and subscribe to our weekly email.
If you are interested in more in-depth articles and videos, please become an AFCA member. You can find out more information about membership and specific member benefits on the AFCA Membership Overview page. If you are ready to join, please fill out the AFCA Membership Application.
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Coaches, it was great to talk with so many old friends and to meet countless new ones over the few days that thousands of us spent in and around the incredible Opryland venue in Nashville in early January.
While talking to coaches of all types- high school, past and present “35 Under 35” honorees, and FBS and FCS assistants and head coaches- there were a number of themes that were the talk of the town. NIL and “The Portal” certainly drove most conversations and seem to be the most direct sources of stress for seemingly all levels of the college and even high school game. All involved seem to be learning and strategizing on the fly. These new factors in the game are significantly affecting roster construction for teams at all levels. With some noise about conference realignment and expansion on the radar again, the need to be successful has rarely been more urgent.
Stepping away from the non-stop tasks of roster management, team development, and recruiting new- and current- players, we also like to hear from coaches about the themes and concerns that many of you have on the personal or financial planning side of the industry. As such, here is some perspective on the topics that seemed to come up more often than others in our conversations in the hallways, exhibit halls, and watering holes in Nashville.
The Housing Decision and The Coaching Carousel
After the convention in Charlotte last January, we wrote about the drastic increase in interest rates on a 30-year fixed rate home loan from a low point of approximately 3.0% in 2021 to a rate of 6.0% to start 2023. Unfortunately, for borrowers, the interest rate on the same 30-year fixed rate home loan increased even further in 2023 to a rate of 7.52% in November 2023.
When combining the high borrowing rates with the elevated cost of a median-priced, existing single-family home, the ability to buy a home has rarely been more difficult. In fact, the “Housing Affordability Index” from the National Association of Realtors hit a low point in October 2023 and has not recovered much since (1).
The bottom line is it may not a great time to buy a house right now.
That is bad news for the families affected by the 7 NFL head coaches, 27 FBS head coaches, 27 FCS head coaches, 22 Division II head coaches, 15 Division III, and 4 NAIA head coaching changes to date this cycle (2). Not only are those coaches and families likely on the market for new housing arrangements, but the trickle-down effect that those job changes have for their staffs and their families is seemingly endless.
If financial conditions are prohibitive to buy a home, what does the environment for renting look like then? Well, as one might expect, it’s not a lot better. While the nationwide median rental rate fell by 0.8% in December, the median cost to rent an apartment in the U.S. is still almost 20% higher than what it was prior to the COVID-19 pandemic and subsequent boom in the housing market (3).
There is no universal solution to the buy-or-rent housing dilemma, and it is important that every coach and family considers the financial side of the equation as well as the variable of job security that is unique to every member of the AFCA.
Why a Season is NOT the Same as a Year
While presenting to the “35 Under 35” group in Nashville, we shared perspective on the intricacies of employer-sponsored retirement plans such as a 403(b) that most states, colleges, and universities offer to employees. One very important plan design detail is the unique vesting schedule included in every plan. Based on a recent survey of these plans by PLANSPONSOR, over 40% of plans in the Higher Education sector require participants to be employed for two years or longer before they are 100% vested in the employer’s contribution or match (4).
While two years at a job may be more normal for the general workforce, that tenure may be difficult for those working their way up the coaching ladder across all levels of football. That is why it is important to point out that the employer’s Human Resources team considers your date of hire and your date of separation when determining your length of employment, and, thus, your vesting status.
Considering the current schedule of completing a regular season in late November and the final College Football Playoff and FCS Championship games being played in early January, a coach may get hired at a job in January but find a different job in December of that same year or the following calendar year. That is why a “season” is NOT the same as a “year” in the eyes of the Human Resources offices.
So, when looking at your account balances in your 403(b) (or similar type of plan), we encourage you to look closely and only consider the “vested” balance in your financial planning and net worth calculations. Unfortunately, the entire account value you see of the front page of a statement may not belong to you.
2024 Market Outlook from Morgan Stanley’s Global Investment Committee
2023’s historic retracement of the 2022 bear market ended with a crescendo—and the S&P 500 up nearly 25%. While investors welcomed the Fed’s December policy pivot, aggressive repositioning left the market extremely expensive. But given unforgiving expectations, 2024 suggests new challenges. First, consider starting valuations; while valuations tend to be poor short-term timing tools, they matter in the intermediate term. Furthermore, despite a near-universal assumption of slowing economic growth, earnings are forecast to expand by roughly 10%, implying margin expansion amid assumed loss of pricing power and limited labor-cost declines. For the Fed’s part, despite signaling its intent to cut rates three times, futures are pricing more than six 25-basis-point cuts. Finally, liquidity and financial conditions—at their most accommodative since summer 2022—are set to retrace. For much of 2023, talk was cheap. In 2024, it’s show-me time for US markets. Consider shoring up portfolio balance and diversification, adding to non-Magnificent Seven stocks through the equal-weighted index or via active stock selection in the US. Equity and fixed income returns are both likely to be in the mid single digits, and non-US stocks should contend with US equities. Favor value over growth, and SMID and large cap over megacap. Our favorite ideas include financials, industrials, utilities, staples, REITs, health care and defense, especially until the first rate cut (5).
Final Words
With the convention returning to Nashville for the first time since January 2020- just weeks before the world as we knew it was essentially turned upside down- it is hard not to reflect on the changes in the football coaching world also. On some levels, the changes in your daily responsibilities in order to be successful may seem overwhelming and endless at times. While change is constant, not many would have predicted the near-simultaneous arrival of the Name, Image, and Likeness monster with the transfer portal and the non-stop learning and managing on the fly.
The successful programs seem to have the appropriate resources, infrastructure, and a well-thought out plan in place. That same intentionality and discipline can also lead you and your family to success on the personal side of life by working with a financial advisor who has best-in-class resources and is responsive to the constant change in your unique lifestyle and profession. We would encourage every reader of this article to develop a relationship with a financial advisor who can develop a plan to help you navigate the opportunities and challenges that you may face in 2024 and beyond.
|
Keith Norris |
Matt Kuerzi |
Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor
Keith Norris, Senior Vice President and Financial Advisor, and Matt Kuerzi, First Vice President and Financial Advisor, are co-founders of The Derby City Group at Morgan Stanley in Louisville, Kentucky. They have combined over 45 years of experience helping families with their financial planning*. Matt was recognized by Forbes in their first ever list of “Best-In-State Next-Gen Advisors” in 2019 and more recently as a “Best-In-State Wealth Advisor” in 2023. He can be reached directly at (502) 394-4094 or [email protected].
Forbes Top Next-Gen Wealth Advisors
Source: Forbes.com (Awarded June 2019) Data compiled by SHOOK Research LLC based on time period from 3/31/18 – 3/31/19.
Forbes Best-In-State Wealth Advisors
Source: Forbes.com (Awarded April 2023) Data compiled by SHOOK Research LLC based on data as of 6/30/2022.
Branch address: 4969 U.S. Highway 42, Suite 1200, Louisville, KY 40222
* Keith Norris, Senior Vice President, Financial Advisor, experienced in the financial services industry since 1997. Matt Kuerzi, First Vice President, Financial Advisor, experienced in the financial services industry since 2002.
* For more information, please visit https://www.morganstanley.com/articles/protect-retirement-investments-volatile-stock-market?cid=whmt-smfa-protecti-13292. CRC #5441939 (02/2023)
Footnotes
(1) https://cdn.nar.realtor//sites/default/files/documents/hai-11-2023-housing-affordability-index-2024-01-12.pdf
(2) https://footballscoop.com/news/2023-24-nfl-and-college-head-coaching-changes; as of January 18, 2024
(3) https://www.apartmentlist.com/research/national-rent-data
(4) PLANSPONSOR 2023 Defined Contribution (DC) Survey. Valid through December 2024.
(5) The Global Investment Committee (GIC) is a group of seasoned investment professionals from Morgan Stanley & Co. and Morgan Stanley Wealth Management who meet regularly to discuss the global economy and markets. The committee determines the investment outlook that guides our advice to clients. They continually monitor developing economic and market conditions, review tactical outlooks and recommend asset allocation model weightings, as well as produce a suite of strategy, analysis, commentary, portfolio positioning suggestions and other reports and broadcasts.
Please let us know if you would like a copy of the complete referenced Morgan Stanley GIC report which was published January 8, 2024.
Disclosures:
This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security/instrument, or to participate in any trading strategy.
The securities/instruments discussed in this material may not be appropriate for all investors. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Morgan Stanley Wealth Management recommends that investors independently evaluate specific investments and strategies, and encourages investors to seek the advice of a financial advisor.
When Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors (collectively, “Morgan Stanley”) provide “investment advice” regarding a retirement or welfare benefit plan account, an individual retirement account or a Coverdell education savings account (“Retirement Account”), Morgan Stanley is a “fiduciary” as those terms are defined under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or the Internal Revenue Code of 1986 (the “Code”), as applicable. When Morgan Stanley provides investment education, takes orders on an unsolicited basis or otherwise does not provide “investment advice”, Morgan Stanley will not be considered a “fiduciary” under ERISA and/or the Code. For more information regarding Morgan Stanley’s role with respect to a Retirement Account, please visit www.morganstanley.com/disclosures/dol. Tax laws are complex and subject to change. Morgan Stanley does not provide tax or legal advice. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a Retirement Account, and (b) regarding any potential tax, ERISA and related consequences of any investments or other transactions made with respect to a Retirement Account.
Equity securities may fluctuate in response to news on companies, industries, market conditions and general economic environment. Companies paying dividends can reduce or stop payouts at any time.
Bonds are subject to interest rate risk. When interest rates rise, bond prices fall; generally the longer a bond’s maturity, the more sensitive it is to this risk.
Morgan Stanley Smith Barney LLC offers insurance products in conjunction with its licensed insurance agency affiliates.
Morgan Stanley Smith Barney LLC offers insurance products in conjunction with its licensed insurance agency affiliates.
Variable annuities are sold by prospectus only. The prospectus contains the investment objectives, risks, fees, charges and expenses, and other information regarding the variable annuity contract and the underlying investments, which should be considered carefully before investing. Prospectuses for both the variable annuity contract and the underlying investments are available from your Financial Advisor. Please read the prospectus carefully before investing.
Hypothetical results are for illustrative purposes only and are not intended to represent future performance of any particular investment. Your actual results may differ. The principal value and investment return of an investment will fluctuate with changes in market conditions, may be worth more or less then original cost. Forward-looking statements are based on assumptions that may not be realized.
© 2024 Morgan Stanley Smith Barney LLC, Member SIPC.
CRC 6080794 11/2023
For more information about the AFCA, visit www.AFCA.com. For more interesting articles, check out The Insider and subscribe to our weekly email.
If you are interested in more in-depth articles and videos, please become an AFCA member. You can find out more information about membership and specific member benefits on the AFCA Membership Overview page. If you are ready to join, please fill out the AFCA Membership Application.
