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Financial Literacy and the Money Conversation with Carrie Schwab-Pomerantz

Online • May 19, 2016

J​oin us for a special Jam Session featuring Carrie Schwab-Pomerantz, Senior Vice President at Charles Schwab & Co., on why it is so important for women to engage in the "money conversation."

Summary

00:01 Johanna Pulgarin: Hi, everybody, thank you so much for standing by. I'm Johanna Pulgarin from Ellevate Network. Welcome to a very special Ellevate Jam Session today, streaming live from the Charles Schwab headquarters in San Francisco. Charles Schwab is one of Ellevate's amazing corporate sponsors, and we're honored to have Carrie Schwab-Pomerantz, Senior Vice President at Charles Schwab, and Helen MacKenzie, Managing Director of Co-Capital Partners and Artemis Funds, here with us today to talk about the Money Conversation, and why it's so important for women to engage and be a part of it.

00:33 JP: Before I turn it over to Mary Rosai in San Francisco who'll introduce our speakers to you and to their live audience, a special guest, just some housekeeping tips for our session today. This session is being recorded, and a copy of it will be made available on our website at www.ellevatenetwork.com. If you experience any technical issues, you can either contact me during this session through the chat feature on the left-hand side of your screen, or contact ReadyTalk Customer Care at 1-800-843-9166. If you have any issues hearing the audio, please just let me know through the chat feature, and I'll give you a number to dial in on your phone. We're also live tweeting the Jam session today, so feel free to participate in our discussion that way by using #AskCarrie.

01:21 JP: Before the end of the session, there will be a Q and A with Carrie and Helen, so please use the chat feature on the left to submit any questions you have throughout their conversation. And now, I'll turn it over to Mary Rosai, Senior Vice President of Client Experience in San Francisco.

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01:44 Mary Rosai: Welcome, San Francisco, and welcome to the 350 Ellevate members that are joining us via webcast today. At Schwab, we are proud to be a corporate sponsor of Ellevate, and to host this amazing group of women. So today, we are gonna to talk about women and money. And as we all know at Schwab, we believe in the power of investing to transform people's lives. And as our chairman and founder, Charles Schwab said, "Investing creates wealth, and wealth creates freedom." But as we all know, life gets in the way and we're so busy, that oftentimes, managing our finances gets put to the back burner. So today, Helen MacKenzie and Carrie Schwab-Pomerantz will talk about how you can participate in your finances, why you should, and what are the benefits for doing so? So, we are pleased to have Helen MacKenzie, who is an Ellevate member, and she will be our facilitator today to discuss this topic with Carrie. And Helen is a Silicon Valley Venture Capitalist, she's a banker and an entrepreneur, and so she has helped many, many companies, start-ups through transformation of growth, IPOs, and acquisitions. And Carrie Schwab-Pomerantz, who is our featured speaker today, is a certified financial planner, has over 30 years of financial services experience, she started when she was 10, I think.

03:06 MR: She is the president of our Charles Schwab Foundation. And Carrie is one of the nation's leading advocates for financial literacy. She served on the President's Council for Financial Capabilities, and she's written many books, and the one that's current right now is "The Charles Schwab Guide to Finances After Fifty", and "Answers to Your Most Common Money Questions." So without further ado, let me introduce Helen and Carrie.

[applause]

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03:51 Helen MacKenzie: So thank you, Mary, for the wonderful introduction. I'd also like to add my thanks to all of you here at the Schwab Center for joining us this morning and the Ellevate Network. And Carrie, I thank you for the conversation this morning, I am literally on the edge of my seat as, I'm sure, other people are, waiting to hear about your views and your perspective on women and finances. But before we do that, we already have a question that came into your Twitter account, @CarrieSchwab, just in case you wanted to know what it was. So why don't I read that, and let's get started on that side, okay? So this comes from @EllaCalusian, "Any tips for a first-time investor? I'm thinking about putting a small sum behind a robo-advisor."

04:46 Carrie Schwab-Pomerantz: Well, we're digging right in, Helen. Robo is a great way to get started with investing. I don't know if everybody knows what a robo-advisor is, but it's a lot of firms who have created a very diversified portfolio of investments, equities, and bonds, and cash, and probably some alternatives at a low cost. But the whole idea is, primarily, to have the relationship only online, and there's a lot of new pop-up companies that have come today. So I think it's a great option, but make sure that the company that you're working with is a company that's gonna stay there forever. Also, for a first-timer, you might want some help from an individual. So you may want to align with a robo that also has on-the-ground people to help you as well.

05:45 HM: Great, thank you very much. Now, let's switch gears just a little bit. Certainly, people in and out of the financial industry have long looked at you, and your entire family, as really champions of consumers. It can be said that you probably grew up in the business. So, what was that like for you?

06:08 CS: Well, Mary mentioned that I started at 10, [chuckle] almost 10 years old. I was 16, so at least I was legal. And it was a long time ago, I have to admit, I still smile about it. It was when the company was probably, this is what I'm remembering, two or three rooms. I remember my dad's... The executives were in one room, and his desk was floating, and his Vice President's was floating. It was just a big room, kind of like a startup today. And then next door was a room with a big oval table, and we had our financial consultants around the table, with their black rotary phones. And then Henrietta, in the corner, who was a switchboard operator with the big bouffant, switching in the calls. So, we're talking dinosaur days. But I have to share another cute story. A couple years ago when we came out with the book, The Guide to Finances After 50, we hosted a party, a celebration, an opening party where we asked both my colleagues who helped on the book to come, and clients. And I didn't tell my dad that I had dedicated the book to him, I wanted to surprise him at the event. So when I got up on the stage, I was telling everybody about what an inspiration he had with me and how he hired me at 16, and I told everybody I was his secretary's secretary. And he was standing, chomping at the bit, he says, "Wait a minute, wait a minute." He grabbed the microphone and he said, "Let me set the stage straight. She was not a secretary, she was a file clerk."

[laughter]

08:02 CS: Yeah. And everybody busted up, just like right now. And so I was thinking, "Okay, I gotta change my resume." I'm still trying to decide whether I was demoted or not. But anyways, it's been a long time, but wonderful experiences.

08:17 HM: Great story, and now you are a national leader on financial literacy, which is so important. So vive us an idea of what makes that so important, for us, as well as women.

08:32 CS: Yeah, so just a little side thing, my dad has been a big inspiration for me, in terms of creating more accessibility for Americans, and I guess apples don't fall far from the tree. So, I have been really focused on the lack of financial literacy in this country for most of my career. And when I talk about financial literacy, I really mean about the knowledge and the behaviors that it takes to gain financial security. But unfortunately, there're just so many pressures, and reasons, and variables for all of us not to necessarily be on top as we should. And too many people today are living paycheck to paycheck, and can't make ends meet. But what I've found through my years of work, is a couple things: One is, is that the lack of financial literacy cuts across Americans from all walks of life. So it's blind to socioeconomic status, to age and gender. A couple years ago, and I've got plenty of these kind of stories, and Helen I know you have the same, I was at dinner with a couple, she was a doctor, he was an attorney. And it was during the great recession, the credit crunch, when everything was tanking. And he was proudly bragging, telling me how he had sold all his possessions. And of course they were all at... He locked in his losses, and I had to just smile and go along with it.

10:03 CS: So the point is, is that a lot of people don't understand the basics. But also what I found in my work, and this is the good news, is that financial education changes lives, I see it with all the populations, from the rich to the poor. And a friend of mine, who's an academic, who's been studying how financial education affects our behaviors and so forth and attitudes, she just came up with a study that showed that the inequities in retirement wealth, 30% to 40% can be accounted for by the lack of financial education. So just imagine if we all just... How much better we could do with just a little bit of knowledge. Now I tell you, I was inspired by a study, and I think everybody will know about this, a couple years ago a study came out on obesity, where 40%... Or obesity among toddlers had been reduced 40%. And as we all know, as a country, we really rallied behind this. From the White House, to the school house, around this whole notion of obesity. And it made me think, "Boy, couldn't we do this with financial literacy, especially after the great recession? Bringing it from employers, and the federal government, local government, non-profits, universities, families and individuals. Because Helen, as you know, we live in a world of doing it ourselves, and if we don't take care of ourselves, no one else will.

11:34 HM: Exactly.

11:36 CS: Long-winded answer, sorry.

11:37 HM: No, not at all. A really smart answer.

11:40 CS: I need water.

11:41 HM: Well, speaking of taking care of it ourselves, I think we're here to talk a little more about women. And it has been said that women are just a little bit more uncomfortable, not only in talking about finances and talking about money, but also managing your money. What are your thoughts on that?

12:01 CS: Well, this lack of confidence, unfortunately. I ran, in fact, with Mary, ran the Women's Initiative for Schwab about 16 years ago. So, we were trying to help more women become financially secure and comfortable. And I have to tell you, it was always discouraging, the lack of confidence among women. We like to call it the "confidence gap" where... Huge gap between men's confidence and women's. And that's why actually my dad and I wrote the book "It Pays to Talk: How to Have the Essential Conversations with Your Family About Money". Our premise was, is that if we did have more conversations with ourselves and our families, and spouses and elder parents and so forth and kids, that we could have more financial security in this country. So I equate the basics of financial education as a life skill that we all need to know. It means we need to know how to spend wisely, save, live within our means. It means knowing how to invest for the future, it also means to know when something is too good to be true. And I equate it to swimming, where just because... Life is stormy seas. And if we're out on that boat, in a storm, and our spouse, who knows how to swim, but I don't, it falls off, I'm out of luck. So, it's really about you both having foundational knowledge. And it doesn't have to be rocket science, it's just the basics that can really get you through.

13:48 HM: Exactly. So, how do you think we could break that cycle of women being uncomfortable, on either side? But, let's start with the understanding.

13:58 CS: I hear in another study of... The same study, the confidence gap. We asked individuals if they talk to their families about money. And we found that only 30% of families have conversations about money and investing.

14:15 HM: That's really low, isn't it?

14:17 CS: That's really low. And what's interesting, not... I shouldn't say discouraging, it's an opportunity, is that the families that do talk, they talk to their daughters differently than their sons. They talk to their sons about state planning and the stock market. With their daughters, it's savings and budgeting, which is important, but if we're gonna create wealth, we also need to understand about investing. So my belief is, is that we need to bring along the next generation. With my own kids... I can't remember now, eight or 10 years old, brought them into the bank, made them sit with the banker and open up the paperwork. I wanted to get them exposed to the whole notion of financial institutions. And then when they had enough money to invest, I brought them to the Schwab office. They met the financial consultant, they filled out their own paperwork, they talked about investing with that person. What I've noticed, especially with my colleagues, my female colleagues, we were all exposed to it at an early age. It makes a big difference. And I'll just share, just a couple more stories, I was just talking to a colleague of ours, Gayle, I think it was a week ago or two. She's a technology expert here, and she was telling me how when she had her first job, it wasn't here, and her boss basically sat her down, made her fill out the 401 [k] paperwork, got her invested into a proper fund.

15:52 CS: And I said, "Helen, I'm just curious, did you feel that was a little intrusive for someone to do that with you?" She said, "Absolutely not. That was the best advice I ever got." And then for women, adult women, it's just really about digging in, attending meetings like this, workshops. I know at Schwab, we have many, many workshops. And in fact, I was in Florida at an event, and a client came up to me, and his wife, and he was bragging that he... He's retired, but he attended all the Schwab workshops. And he was telling me how he was mingling at another event with other Schwab clients. And in their conversation, one of them asked, "Are you a financial consultant?" And I thought it was great. It was great, because again, it's not really about smart, it's just about getting exposed.

16:55 HM: Exactly, exactly, and that's a great perspective. Let's ask, maybe, a slightly different question on the same topic. If each of us went back to our families and thought about this, the way to get engaged, are there three or four things that we should really concentrate on?

17:16 CS: Yeah. Certainly, they're more than three and four, but I'll just share a few that I think would be, I think, interesting and relevant to this group. So the three things are, and then I'll go deeper in them. First is planning, the second is saving, and the last is investing. The principles remain the same: Stay strong and true. So, planning. What I mean by planning, there's a lot of planning, right? There's so many aspects to our financial life. At the very least, punch the numbers. I think fewer than 50% of Americans have actually sat down and figured out what they're gonna need for their future. In particular, retirement, fewer than 50%. And what I mean by that, is figuring out how much money do I have now, how much money will I need in the future, and how will I get there to meet my need? It's just putting pen to paper. The same academic who I've mentioned earlier, she found that people who actually plan save on average 300% more than those who do not. So again, it's kind of being intentional, it goes a long way. The other is savings, and I know it sounds so elementary, but like I mentioned, I could go on, 50% of Americans don't even have $400 for an emergency. And as I mentioned, it affects everybody. So speaking of it's affecting everybody, I have another story to share, and I know you know Janet Hanson from 85 Broads. 85 Broads, which is actually the predecessor to this...

19:07 HM: Ellevate?

19:08 CS: Yeah, to Ellevate. Janet was the founder of 85 Broads. Does everybody know who 85 Broads is? Yeah. It's an alumni... An association of women from Goldman Sachs. Janet and I are both, this is a long time ago now, and we're both very passionate about women's financial security. We talked for a good hour on the phone, and at the end, I noticed she started to sort of hint, like she wanted me to be a spokesperson for the organization. And I said, "Janet, why would you want someone from Charles Schwab to be a spokesperson for all of you? You are the Titans of Wall Street." And she said, "Carrie... " And granted, this was a technology bubble burst, all sorts of things happening. She said, "So many of us graduated from college, and earn the salaries the size of CEOs, yet we squander it away and we have nothing to show for it." So, there you go, right? We all think that we're gonna live forever, we're gonna make lots of money, you just don't know what life's gonna bring you. So, I think it's really important that those of us who are in our 20s... I call it the minus 10 rule, save 10% of your income and if you start in your 20s, the rest of your life, you'll have a relatively comfortable future, or retirement. If you wait 'til you're 30, you've gotta save 20%, your 40s, it's 30%. So the longer you wait, as you know, the harder it is.

20:44 HM: Yeah, it is. Well, I join you in the thought that planning is incredibly important, because I think there are so many things that women deal with that perhaps men don't have to think about as often. So, if you can give us your perspective, on not only the financial planning that women do but sort of why it needs... why it's different.

21:11 CS: Well, all us are living longer, men and women, there's more centenarians than ever before. True though, that it's mostly women. I think that we do have unique circumstances, there's no doubt, relative to men. Men, or women, we tend to go in and out of the workforce, so we lose time in terms of saving. Unfortunately, we earn less, still to this day, despite all the efforts. Divorce, in fact, 50% of marriages and widowhood is the average age of 56 years old. And that's real. I've been talking about that for years, and experienced it with my sister who lost her husband, just a couple of years ago, at 51. So this is real life circumstances, and so what happens is for women, is that we have more years of retirement to save for, because we live longer, with less money. So again, it's so important for us to really plan ahead and get ahead of the game, because also studies show that our standard of living, when we become single, goes down by 70%. It's depressing, but if we could get ahead of it, it doesn't have to be that way.

22:38 HM: The planning, again, is critically important, and I sincerely hope that we had some active listening going on while you were telling your stories. But let's go to your third bullet, which is the investing side. If you could share some insight on how you manage your own portfolio, perhaps, and some of the pitfalls that we need to be aware of, that would be helpful.

23:05 CS: I was a do-it-yourselfer, makes sense, right, for years. And investing in mutual funds, and individual stocks, mostly mutual funds. And I was always a saver, always a saver. And when I was close to 40, I got more intentional about my finances. There was something about really getting serious about my retirement, and making sure I was on track. And so, I signed up for a service at Schwab, that is not quite handing over your finances, but it's a partnership relationship, where a financial consultant looks at your finances on a quarterly basis, and makes suggestions and tweaks to your portfolio, making sure you've got the proper asset allocation that you have set out to have. And then I am to make the changes, if I want to. I liked it so much, that I hired an independent registered investment adviser. So I ended up delegating the day to day management of my finances, not advocate, but delegate, still involved, to manage it. And I equate it to... Well, first of all, a lot of people think, "Oh, a professional uses a professional?" I'm sure you know, we have many professional women at Schwab that use professionals, but it's really like a doctor, you're not gonna do surgery on yourself. And for me, I equate it to a personal trainer, where I'm accountable, I show up for the meetings, I learn more from that individual, they have their own perspective, and I get better results. So, it's a win-win situation.

25:10 HM: It really does help to have somebody else take a second view of what it is that you were comprehending on.

25:15 CS: Absolutely. And even the emotional side of investing, even though those of us who are in the business, it can be... Especially when it's your own money, your emotions, I remember my husband, when the market was down 50%, and he asked our advisor, he said, "Mike, I'm sure the phones are ringing off the hook." And he said "Actually, Gary, no one's calling." He said "There's only one client, and he's a nervous Nelly, and he always calls. He always finds an excuse, but the bottom line is, is that we are properly invested that reflects our goals, risk tolerance, time frame, and our philosophy of investing."

26:01 HM: Well I think that everything that you have talked about so far, hopefully will encourage everyone who's here, and listening in, to take a more active view in just having a conversation, number one with your husbands, your family, your friends, your even acquaintances, about finance, because it is so important that you understand that. And the more you talk... Someone was just saying earlier this morning, the more you talk to people about a topic, the better it is for you, because you hear somebody say it in a different perspective, and you get perspective of experts who are always helpful to us, that's for sure. I think that you have a lot of people in this room, as well as listening in, that are professionals and have careers, and financial literacy is as important, if not more important to them. Do you perhaps have some advice for them as well?

27:04 CS: From a career perspective?

27:05 HM: Yes.

27:07 CS: For me, having financial knowledge, it's really all about having confidence in your life, and being liberated, having choices. We talked a lot about confidence, and Helen you actually brought it up. Well, we already talked about the lack of confidence, it permeates... So many women today lack confidence in their finances, and as you mentioned, it permeates every aspect of our lives, and it is so true. The lack of confidence not only affects how we think about our money, but it affects our relationships at home with our spouse, it affects our relationship at work. In fact, financial stress, which lack of confidence can lead to stress, it affects our productivity and our cognitive abilities. So again, it's really important to get that baseline, so you can get that confidence up. I think about programs again that I'm involved with, I oversee a national program with the Boys and Girls Club, where we've had over 700,000 teens go through financial education. And I see how it opens up their lives, their trajectory. A lot of these young people think they're just gonna graduate from high school and get a job paid minimum wage. But instead, they save a little bit of money, and then all of a sudden, college is in their future. And then I think about with all of us as women, we want choices.

28:45 CS: We wanna be able to change jobs if we wanna change jobs, we wanna get involved in the community and philanthropy if we want. Start a business, buy that cute dress or piece of jewelry we've been eyeing, shoes right? We wanna do what we wanna do. So actually, financial knowledge and security offers a lot in our lives.

29:09 HM: I think it does, and I think it does not matter what your age, it is important to continue to have that conversation up. Carrie and I were talking about this... My mother-in-law, when my father-in-law died, she was octogenarian at that point in time, asking for a little bit of help in looking at her finances, and I went over there to help her. And she said, "Helen, you see that, that I have pinned up on the wall there?" I said, "Yeah mom, what is that?" She said "That is my Phi Beta Kappa key that I got when I graduated from Stanford in 1932. And it's to remind me that after 66 years of marriage, I am not dumb, I am not stupid. I am intellectual, I just haven't had any conversation about finance for that long a time period, and so I need a little bit of education." And I think that you shouldn't wait until you're an octogenarian, I think, is the theme of that story. But it does not matter how intelligent you are or how educated you are, you still need to have that that conversation with experts like Carrie, and among yourselves, and your family members. Carrie, we've had a great conversation, but I know that there are other people out there that would like to ask you some more questions, and their questions are great. So Christina, do you have some questions out from the audience?

30:40 Christina: Yes, we have a few questions from the phone line, from Ellevate. So the first one is from Jane Warren. "The process of figuring out how much you need to retire sound so daunting. I'm 54 and have no idea where to start. How can I figure out what my monetary goal should be?"

31:00 CS: That's a big question, but it's an important question. I'll give some rule of thumbs. It's Jane, right? For Jane, I would definitely sit down with an expert and talk it out. Because Jane, you are 54, and you've got another, what, 10... Well, not 10, but 15, 20 years in retirement, and it's a critical time. I'll just give a couple of rules of thumb about how much you need. First of all, figure out what are your flows, stream of income gonna be, aside from social securities, or anything else? And then what are you gonna need to supplement your social security, your rental income, or whatever, from your portfolio? So a rule of thumb is, let's just say you need $40,000. The rule of thumb is that you'll need 25 times the amount of income you need the first year of retirement. That's kind of a big number, it sounds big. So for instance, what that means is, is that if you need $40,000, you'll need $1,000,000 saved at retirement to supplement your income. That mix has multiple assumptions, it assumes that you've invested at least 40% in stocks, preferably starting with 60% in equities. It assumes a 30-year retirement, 'cause we're living longer or we're healthier today, we might work longer, so maybe it's not gonna be a 30-year. So those are sort of the two assumptions... And that you're healthy.

32:49 CS: And then you want a 100% confidence level. So, 25 times the amount you need in your portfolio is the rule of thumb. And then what you do is, you increase it each year by the rate of inflation. So, what that comes out to be, or is... Then when you withdraw, it comes out to about 40%, I'm sorry, 4%. Does that make sense? So 4% of a $1,000,000 is $40,000. So the first year, you take out 4%, and then the next year, you up it a little bit for inflation. Meanwhile, when you have a down market, you may wanna cut back. Or if there is an up-market, you may take a little bit more. So it's not cut and dry, it's only a guide.

33:37 Christina: Great. The next question has two parts to it, and it's from Andrea Herbert. "It seems like financial literacy planning is not top in higher education college or in family conversations. Where can millennial women today go for sound advice? And then secondly, in addition, oftentimes financial advisers or brokers are pushing a product to their clients. How do you find a trustworthy adviser?"

34:03 CS: I'm going to start with that, just because I think that's really the most important. The financial consultant matters. Here is a couple of things to think about. How is that consultant paid? This questions alludes to the fact that someone is pushing products, and probably charging large commissions and fees. You do not want that, run as fast as you can. You want a financial adviser who has your best interests in mind, who has the same goals as yours, which is to grow your portfolio. There is different ways. There is financial consultants who will gladly review your portfolio for no fee. If you want more hands-on management, there are what we call fee-based financial advisers. We have them at Schwab, we have independent advisers we also recommend from Schwab, that work with Schwab. Fee-based means that they charge a percentage of your portfolio, and you wanna compare, you wanna compare the cost or the charge to other financial consultants. You also want to make sure that that consultant is somebody you have good chemistry with. Do they respect you? Do they encourage you to learn along the way with them, be a partner? You don't want somebody who patronizes you, you want a partner. You also want somebody who has investing philosophy like yours. I was just with a professor yesterday, who's a friend. I won't name the name of the firm, but he looked at his portfolio, and he had all sorts of proprietary funds. So funds that were from that firm, large fees.

36:00 CS: He even had an annuity in a tax-deferred account, it was a mess! And this friend of his was smart, I think he probably was another professor. And I think some people, you've got to look for a reputable, honest financial consultant. So, that's number one. I'm glad this millennial wants to learn more, it's music to my ears. Because like I mentioned, with my IRA, I still understand and know what's going on. You don't want to just, again, advocate over the management of your funding, or of your investments. You wanna know what's going on, so you can ask the right questions and make sure that person is honest. But start again with some education, there is schwabmoneywise.com. It's a wonderful resource to get young people started with the basic knowledge. A friend of mine, Beth Kobliner, wrote a book for millennials, and I can't remember the topic but... Beth Kobliner with a K, or any type of primer is a great start. And then also attend our workshops, or other investment firms' workshops. Just dive in.

37:20 HM: Do you have another question, Christine?

37:22 Christina: Why don't we turn it to the live audience, to see what questions they have?

37:25 HM: All right. Great. Do we have any questions from the audience today? In the back.

37:41 S?: Relative to millennials, I have two teenage daughters, and one of them has a very casual relationship with money, the other does not. And I'm just wondering where to start with them?

37:53 CS: So, I have kids from 19 to 27, and of course, they're all different in terms of their attitudes with money. The sooner you can start, the easier it is with your children. I always suggest, start... They are teenagers, but you can still do it, starting with an allowance. It could be over something, so that they're learning how to budget and make choices with money, that's a really good start. When they become teenagers, I encouraged my kids to get jobs. And then they earned money, and at 16 I opened up Roth IRAs for them, and highly encouraged them to save a portion of their earnings in their Roth IRA. Again, that got them exposed also to investing, and the whole notion of having to save. So, I think you can also match... If you have a young person who's not taking it seriously, you can always match their money into the Roth IRA, so there's different ways to do it. But I think the sooner you get them exposed, the better.

39:09 HM: Anyone else here? Yes, right here in the middle.

39:19 S?: Hi, on the other end of the spectrum, when it comes to a lot of women are stepping in to care for elderly parents, and stepping into their financial lives, do you have some thoughts about tips around how to have that conversation, and what tools and resources they have available to them?

39:33 CS: That's to me is one of the hardest questions that you could ask, because there's just not an easy answer to that. Assuming your parents still have their cognitive abilities, I think it's better to have that conversation when they're healthy. It's important that they have their durable Powers of Attorney, their healthcare directive, so that somebody that they trust can manage their finances, manage their healthcare, making sure that their trusts and their wills are in place and accurate, and reflect what they want, making sure their beneficiary forms are filled out, a lot of us forget about our IRAs or our 401 [k] s, and it could easily end up going to somebody else you don't want it to. Long-term care, it sounds like your parents are elderly, so this may not really apply anymore. It's good to get long-term care, if you can't self-fund between 50 and 64 years old, 'cause once you have an issue, like dementia, you can't afford it for long-term care. So getting all those in place. Making sure that your parents, have the conversation with your siblings, assuming you have siblings, so that everybody is aligned and knows their wishes, so that there's no misunderstanding. You hear about one sibling interpreters things one way and the other, splits up a family.

41:03 CS: And also working together, so it's not all on your shoulders is really important. And then lastly, for elderly parents, we've done a fair amount of work with AARP, and I've since learned that one of the biggest issues with elderly abuse, or one of the underlying reasons, is that we feel isolated. Elderly people feel isolated from the world., so they start making best friends with the housekeeper, the gardener, the 1-800 number that sells them billed goods. So the more we can keep our elder parents active and engaged with people that care about them, the better.

41:48 HM: So, just to add on to that, Carrie, if you have a lot of siblings, I'm the first of eight children, and my husband is the first of six. So we're familiar with this scenario. All of your siblings should be on the same page, and they should have... You don't have to all be in the same room when your parents have made their decision, but everyone should know about it. It will make it much easier on your parents, as well as on you. That's a financial conversation that may not be the easiest to have, but it's one that needs to take place at all times.

42:25 CS: And there's different ways you can bring up the subject, whether it's, "I was talking to my friend, and her parents... " Make an excuse, or just dive in, depending on the relationships you have.

42:43 HM: Okay. Any other questions from the audience here? Yes.

42:47 S?: So in the realm of financial planning and stuff, having a trust and making sure that everything's in place, where do you put that in the realm of this? A trust account, putting a little trust maybe...

43:03 CS: Oh, what would you do with a trust? Oh, okay. So A trust usually... And Howard, if you wanna chime in, it's sort of a form of estate planning, where either you can gift money over to people, I'll assume children, during your lifetime or after your lifetime. I'll' assume you mean for your lifetime... I think you're talking about gifting. So, I'll just give you an example. If you have grandparents or somebody giving a young person, let's just say you can gift... Each individual can gift up to $14,000 to an individual. So grandparents, two grandparents, can gift $20,000 to a grandchild, and as many grandchildren and kids they want. But let's just say they do... This is sort of an extreme example, and they gift it every year, that money can grow fairly big, fast. And if you were to put it in a custodian account, depending on the state laws, that money then becomes legally the young person's at age 18 or 21 or 25, depending on the state. A lot of us don't want our kids to have $50,000, or a $100,000 or even more. So if that's the case, a trust is actually a great way to put some stipulations on when the child actually gets the money. And it's pretty common, I wouldn't say it's common, but one way would be when they're 25, 35 and 45, depending...

44:46 CS: But the the trustee, which might be you or a grandparent, can make decisions outside and decide that person... Like my grandchild needs to buy a home, or my grandchild is going to graduate school, I can take money out for that. So there's flexibility, but it also keeps the money away from a child who's maybe not mature enough to handle it. Did I that answer your question?

45:17 S?: Yes.

45:17 HM: What about others, any other questions here?

45:22 CS: I just have to tell a funny story, this is when the book "It Pays to Talk" came out. We learned of a woman that had a trust for her son, but he was not gonna get the money until he was 65.

[laughter]

45:37 CS: Yeah, and that was because he was a spendthrift, and she knew he will have nothing in his older years.

45:45 HM: The word "trust," wasn't the word that mattered there, was it?

45:49 CS: Yeah.

45:52 Christina: We do have a question that came in, at your Twitter account, @CarrieSchwab, from at @AmandaMizrahe. What's the best financial advice you've ever received?

46:05 CS: Two pieces of advice. One is this whole notion of saving. Like I mentioned, I've been a saver since I was nine years old. My mom helped me open up my savings account, actually at Wells Fargo, Schwab didn't have a bank... Nor did Schwab exist then. Always save for a rainy day, always, always. But the second is investing, the power of investing. I remember in my early 20s, IRA, we're just coming into fruition, and I called my dad and I said, "Dad, I'm putting my $2,000 in my IRA, I don't know what to invest in. What should I do?" And he said, "Just pick two mutual funds, two equity funds, and you'll do great." and I remember thinking, "Gosh, I thought he could tell me this... Tell me a lot more than just 'Pick two mutual funds.'" But he was so right. What it really is about, is about the power of investing and just getting started, or participating in the market. If you look at historically the way equities have performed versus cash, like equities, even a bad choice of mutual fund, will far exceed the performance of cash. And so it's really about just diving in and picking some mutual funds. The world has changed since those days, where today there is choices of very actively managed funds, and then there's passive funds, also known as Index Funds or Index ETFs.

47:46 CS: I'm a really big believer, and I encouraged my children, to invest in broad-based ETFs at a young age, because you're participating in a broad array of equities all over the United States, all over the world.

48:07 Christina: Great, I think we have time for one final question. This come from @mpsloom, and they ask "I'm having trouble balancing saving for the future, and spending it on fun. Do you have any advice on that?"

48:25 CS: I know, we all wanna have fun. So, that's kind of timely, because I'm just finishing up what I call "the 30-day cleanse". Has anybody heard about my 30-day cleanse? A few nods, okay. So, the 30-day cleanse is all about mindful spending. And the reason it came about, is that I'm always perpetually trying to lose weight. I'm on a seafood diet, I always try and it never works. And so I went on the 30-day cleanse for dieting and what it made me realize, is that I was a picker, and I was eating with no mind in... Or not using my brain. And so I thought, "We need to do something like this for money." So basically, what I suggest, is spend a week and using just cash. Get away from your ATM card, get away from your credit card. Figure out what your expenses are, make yourself a budget, and try to just spend on cash.

49:45 HM: That's cold turkey.

49:45 CS: That's cold turkey, just for your non-essentials. And just practice mindful spending, I think that's a really good start. Because my guess is you can find ways, $20 here, $30 there, to really add up for a savings cushion.

50:02 HM: I love your 30-day cleanse idea. I particularly like the planning part. I think one of the best pieces of advice I got was when I was working at B of A, they made me do a five year plan, a 10 year plan. And of course, if you're younger than I am right now, in your 20s, I'm thinking "I'm not sure what I'm gonna do on Friday, and you want me to tell you what I'm gonna do 10 years from now?" But I think the planning and going into finance and doing that for yourself, that financial planning, it is one of the best things that you do. And if you do it right, then you need to worry about how you are going to be investing it. And that's a worry that...

50:49 CS: We all should have. We all have.

50:51 HM: Exactly, right. Well, we are out of time. I wanna thank you Carrie, so much. I love this conversation, I hope all of you feel a little bit more comfortable about having conversations about money. Certainly, we're more financially literate now, after hearing all of this. Thank you very much for being engaged. Thank you also to Charles Schwab and company for being a partner to the Ellevate Network who has hosted this jam session. Thanks to all who have listened, and we hope you have a wonderful day.

[applause]

51:38 JP: Hi everyone, thank you so much for tuning in today and for sending in all of your questions. I realize that we didn't get a chance to answer all of them, I'm sorry for that. We did have limited time today, but be rest assured that Carrie and Helen are going to be receiving all of your questions, and feel free to go over on Twitter and still use that @AskCarrie hashtag to send them to them again. And we would love to hear from you as well, so feel free to reach out to info@ellevatenetwork.com or through our Facebook, Twitter and LinkedIn pages. As a reminder, this session was recorded, and you'll be able to find it on the website, starting tomorrow. Thanks again, everybody, have a wonderful day.

Thursday, May 19, 2016 1:00 PM - 2:00 PM EDT

Join us for a special Jam Session featuring Carrie Schwab-Pomerantz, Senior Vice President at Charles Schwab & Co., and Helen MacKenzie, Managing Director of Co-Capital Partners and Artemis Funds, on why it is so important for women to engage in the "money conversation." Learn how to own your financial journey so you are empowered to achieve your personal and professional goals.

Don't miss out on this opportunity to have your questions on financial planning answered live by leading experts in the field.

Carrie Schwab-Pomerantz is the Board Chair and President of the Charles Schwab Foundation, Senior Vice President of Charles Schwab & Co., Inc. and Board Chair of Schwab Charitable. She is an expert in Family Finance, Education and Corporate Philanthropy, and is a leading advocate for financial literacy. 

Helen MacKenzie is a successful Silicon Valley venture capitalist, banker and entrepreneur, with a proven track record of excellent investment, risk, financial, operations and growth oriented strategist and management skills. She is the Managing Director of Co-Capital Partners and Artemis Funds.

Summary

00:01 Johanna Pulgarin: Hi, everybody, thank you so much for standing by. I'm Johanna Pulgarin from Ellevate Network. Welcome to a very special Ellevate Jam Session today, streaming live from the Charles Schwab headquarters in San Francisco. Charles Schwab is one of Ellevate's amazing corporate sponsors, and we're honored to have Carrie Schwab-Pomerantz, Senior Vice President at Charles Schwab, and Helen MacKenzie, Managing Director of Co-Capital Partners and Artemis Funds, here with us today to talk about the Money Conversation, and why it's so important for women to engage and be a part of it.

00:33 JP: Before I turn it over to Mary Rosai in San Francisco who'll introduce our speakers to you and to their live audience, a special guest, just some housekeeping tips for our session today. This session is being recorded, and a copy of it will be made available on our website at www.ellevatenetwork.com. If you experience any technical issues, you can either contact me during this session through the chat feature on the left-hand side of your screen, or contact ReadyTalk Customer Care at 1-800-843-9166. If you have any issues hearing the audio, please just let me know through the chat feature, and I'll give you a number to dial in on your phone. We're also live tweeting the Jam session today, so feel free to participate in our discussion that way by using #AskCarrie.

01:21 JP: Before the end of the session, there will be a Q and A with Carrie and Helen, so please use the chat feature on the left to submit any questions you have throughout their conversation. And now, I'll turn it over to Mary Rosai, Senior Vice President of Client Experience in San Francisco.

[pause]

01:44 Mary Rosai: Welcome, San Francisco, and welcome to the 350 Ellevate members that are joining us via webcast today. At Schwab, we are proud to be a corporate sponsor of Ellevate, and to host this amazing group of women. So today, we are gonna to talk about women and money. And as we all know at Schwab, we believe in the power of investing to transform people's lives. And as our chairman and founder, Charles Schwab said, "Investing creates wealth, and wealth creates freedom." But as we all know, life gets in the way and we're so busy, that oftentimes, managing our finances gets put to the back burner. So today, Helen MacKenzie and Carrie Schwab-Pomerantz will talk about how you can participate in your finances, why you should, and what are the benefits for doing so? So, we are pleased to have Helen MacKenzie, who is an Ellevate member, and she will be our facilitator today to discuss this topic with Carrie. And Helen is a Silicon Valley Venture Capitalist, she's a banker and an entrepreneur, and so she has helped many, many companies, start-ups through transformation of growth, IPOs, and acquisitions. And Carrie Schwab-Pomerantz, who is our featured speaker today, is a certified financial planner, has over 30 years of financial services experience, she started when she was 10, I think.

03:06 MR: She is the president of our Charles Schwab Foundation. And Carrie is one of the nation's leading advocates for financial literacy. She served on the President's Council for Financial Capabilities, and she's written many books, and the one that's current right now is "The Charles Schwab Guide to Finances After Fifty", and "Answers to Your Most Common Money Questions." So without further ado, let me introduce Helen and Carrie.

[applause]

[pause]

03:51 Helen MacKenzie: So thank you, Mary, for the wonderful introduction. I'd also like to add my thanks to all of you here at the Schwab Center for joining us this morning and the Ellevate Network. And Carrie, I thank you for the conversation this morning, I am literally on the edge of my seat as, I'm sure, other people are, waiting to hear about your views and your perspective on women and finances. But before we do that, we already have a question that came into your Twitter account, @CarrieSchwab, just in case you wanted to know what it was. So why don't I read that, and let's get started on that side, okay? So this comes from @EllaCalusian, "Any tips for a first-time investor? I'm thinking about putting a small sum behind a robo-advisor."

04:46 Carrie Schwab-Pomerantz: Well, we're digging right in, Helen. Robo is a great way to get started with investing. I don't know if everybody knows what a robo-advisor is, but it's a lot of firms who have created a very diversified portfolio of investments, equities, and bonds, and cash, and probably some alternatives at a low cost. But the whole idea is, primarily, to have the relationship only online, and there's a lot of new pop-up companies that have come today. So I think it's a great option, but make sure that the company that you're working with is a company that's gonna stay there forever. Also, for a first-timer, you might want some help from an individual. So you may want to align with a robo that also has on-the-ground people to help you as well.

05:45 HM: Great, thank you very much. Now, let's switch gears just a little bit. Certainly, people in and out of the financial industry have long looked at you, and your entire family, as really champions of consumers. It can be said that you probably grew up in the business. So, what was that like for you?

06:08 CS: Well, Mary mentioned that I started at 10, [chuckle] almost 10 years old. I was 16, so at least I was legal. And it was a long time ago, I have to admit, I still smile about it. It was when the company was probably, this is what I'm remembering, two or three rooms. I remember my dad's... The executives were in one room, and his desk was floating, and his Vice President's was floating. It was just a big room, kind of like a startup today. And then next door was a room with a big oval table, and we had our financial consultants around the table, with their black rotary phones. And then Henrietta, in the corner, who was a switchboard operator with the big bouffant, switching in the calls. So, we're talking dinosaur days. But I have to share another cute story. A couple years ago when we came out with the book, The Guide to Finances After 50, we hosted a party, a celebration, an opening party where we asked both my colleagues who helped on the book to come, and clients. And I didn't tell my dad that I had dedicated the book to him, I wanted to surprise him at the event. So when I got up on the stage, I was telling everybody about what an inspiration he had with me and how he hired me at 16, and I told everybody I was his secretary's secretary. And he was standing, chomping at the bit, he says, "Wait a minute, wait a minute." He grabbed the microphone and he said, "Let me set the stage straight. She was not a secretary, she was a file clerk."

[laughter]

08:02 CS: Yeah. And everybody busted up, just like right now. And so I was thinking, "Okay, I gotta change my resume." I'm still trying to decide whether I was demoted or not. But anyways, it's been a long time, but wonderful experiences.

08:17 HM: Great story, and now you are a national leader on financial literacy, which is so important. So vive us an idea of what makes that so important, for us, as well as women.

08:32 CS: Yeah, so just a little side thing, my dad has been a big inspiration for me, in terms of creating more accessibility for Americans, and I guess apples don't fall far from the tree. So, I have been really focused on the lack of financial literacy in this country for most of my career. And when I talk about financial literacy, I really mean about the knowledge and the behaviors that it takes to gain financial security. But unfortunately, there're just so many pressures, and reasons, and variables for all of us not to necessarily be on top as we should. And too many people today are living paycheck to paycheck, and can't make ends meet. But what I've found through my years of work, is a couple things: One is, is that the lack of financial literacy cuts across Americans from all walks of life. So it's blind to socioeconomic status, to age and gender. A couple years ago, and I've got plenty of these kind of stories, and Helen I know you have the same, I was at dinner with a couple, she was a doctor, he was an attorney. And it was during the great recession, the credit crunch, when everything was tanking. And he was proudly bragging, telling me how he had sold all his possessions. And of course they were all at... He locked in his losses, and I had to just smile and go along with it.

10:03 CS: So the point is, is that a lot of people don't understand the basics. But also what I found in my work, and this is the good news, is that financial education changes lives, I see it with all the populations, from the rich to the poor. And a friend of mine, who's an academic, who's been studying how financial education affects our behaviors and so forth and attitudes, she just came up with a study that showed that the inequities in retirement wealth, 30% to 40% can be accounted for by the lack of financial education. So just imagine if we all just... How much better we could do with just a little bit of knowledge. Now I tell you, I was inspired by a study, and I think everybody will know about this, a couple years ago a study came out on obesity, where 40%... Or obesity among toddlers had been reduced 40%. And as we all know, as a country, we really rallied behind this. From the White House, to the school house, around this whole notion of obesity. And it made me think, "Boy, couldn't we do this with financial literacy, especially after the great recession? Bringing it from employers, and the federal government, local government, non-profits, universities, families and individuals. Because Helen, as you know, we live in a world of doing it ourselves, and if we don't take care of ourselves, no one else will.

11:34 HM: Exactly.

11:36 CS: Long-winded answer, sorry.

11:37 HM: No, not at all. A really smart answer.

11:40 CS: I need water.

11:41 HM: Well, speaking of taking care of it ourselves, I think we're here to talk a little more about women. And it has been said that women are just a little bit more uncomfortable, not only in talking about finances and talking about money, but also managing your money. What are your thoughts on that?

12:01 CS: Well, this lack of confidence, unfortunately. I ran, in fact, with Mary, ran the Women's Initiative for Schwab about 16 years ago. So, we were trying to help more women become financially secure and comfortable. And I have to tell you, it was always discouraging, the lack of confidence among women. We like to call it the "confidence gap" where... Huge gap between men's confidence and women's. And that's why actually my dad and I wrote the book "It Pays to Talk: How to Have the Essential Conversations with Your Family About Money". Our premise was, is that if we did have more conversations with ourselves and our families, and spouses and elder parents and so forth and kids, that we could have more financial security in this country. So I equate the basics of financial education as a life skill that we all need to know. It means we need to know how to spend wisely, save, live within our means. It means knowing how to invest for the future, it also means to know when something is too good to be true. And I equate it to swimming, where just because... Life is stormy seas. And if we're out on that boat, in a storm, and our spouse, who knows how to swim, but I don't, it falls off, I'm out of luck. So, it's really about you both having foundational knowledge. And it doesn't have to be rocket science, it's just the basics that can really get you through.

13:48 HM: Exactly. So, how do you think we could break that cycle of women being uncomfortable, on either side? But, let's start with the understanding.

13:58 CS: I hear in another study of... The same study, the confidence gap. We asked individuals if they talk to their families about money. And we found that only 30% of families have conversations about money and investing.

14:15 HM: That's really low, isn't it?

14:17 CS: That's really low. And what's interesting, not... I shouldn't say discouraging, it's an opportunity, is that the families that do talk, they talk to their daughters differently than their sons. They talk to their sons about state planning and the stock market. With their daughters, it's savings and budgeting, which is important, but if we're gonna create wealth, we also need to understand about investing. So my belief is, is that we need to bring along the next generation. With my own kids... I can't remember now, eight or 10 years old, brought them into the bank, made them sit with the banker and open up the paperwork. I wanted to get them exposed to the whole notion of financial institutions. And then when they had enough money to invest, I brought them to the Schwab office. They met the financial consultant, they filled out their own paperwork, they talked about investing with that person. What I've noticed, especially with my colleagues, my female colleagues, we were all exposed to it at an early age. It makes a big difference. And I'll just share, just a couple more stories, I was just talking to a colleague of ours, Gayle, I think it was a week ago or two. She's a technology expert here, and she was telling me how when she had her first job, it wasn't here, and her boss basically sat her down, made her fill out the 401 [k] paperwork, got her invested into a proper fund.

15:52 CS: And I said, "Helen, I'm just curious, did you feel that was a little intrusive for someone to do that with you?" She said, "Absolutely not. That was the best advice I ever got." And then for women, adult women, it's just really about digging in, attending meetings like this, workshops. I know at Schwab, we have many, many workshops. And in fact, I was in Florida at an event, and a client came up to me, and his wife, and he was bragging that he... He's retired, but he attended all the Schwab workshops. And he was telling me how he was mingling at another event with other Schwab clients. And in their conversation, one of them asked, "Are you a financial consultant?" And I thought it was great. It was great, because again, it's not really about smart, it's just about getting exposed.

16:55 HM: Exactly, exactly, and that's a great perspective. Let's ask, maybe, a slightly different question on the same topic. If each of us went back to our families and thought about this, the way to get engaged, are there three or four things that we should really concentrate on?

17:16 CS: Yeah. Certainly, they're more than three and four, but I'll just share a few that I think would be, I think, interesting and relevant to this group. So the three things are, and then I'll go deeper in them. First is planning, the second is saving, and the last is investing. The principles remain the same: Stay strong and true. So, planning. What I mean by planning, there's a lot of planning, right? There's so many aspects to our financial life. At the very least, punch the numbers. I think fewer than 50% of Americans have actually sat down and figured out what they're gonna need for their future. In particular, retirement, fewer than 50%. And what I mean by that, is figuring out how much money do I have now, how much money will I need in the future, and how will I get there to meet my need? It's just putting pen to paper. The same academic who I've mentioned earlier, she found that people who actually plan save on average 300% more than those who do not. So again, it's kind of being intentional, it goes a long way. The other is savings, and I know it sounds so elementary, but like I mentioned, I could go on, 50% of Americans don't even have $400 for an emergency. And as I mentioned, it affects everybody. So speaking of it's affecting everybody, I have another story to share, and I know you know Janet Hanson from 85 Broads. 85 Broads, which is actually the predecessor to this...

19:07 HM: Ellevate?

19:08 CS: Yeah, to Ellevate. Janet was the founder of 85 Broads. Does everybody know who 85 Broads is? Yeah. It's an alumni... An association of women from Goldman Sachs. Janet and I are both, this is a long time ago now, and we're both very passionate about women's financial security. We talked for a good hour on the phone, and at the end, I noticed she started to sort of hint, like she wanted me to be a spokesperson for the organization. And I said, "Janet, why would you want someone from Charles Schwab to be a spokesperson for all of you? You are the Titans of Wall Street." And she said, "Carrie... " And granted, this was a technology bubble burst, all sorts of things happening. She said, "So many of us graduated from college, and earn the salaries the size of CEOs, yet we squander it away and we have nothing to show for it." So, there you go, right? We all think that we're gonna live forever, we're gonna make lots of money, you just don't know what life's gonna bring you. So, I think it's really important that those of us who are in our 20s... I call it the minus 10 rule, save 10% of your income and if you start in your 20s, the rest of your life, you'll have a relatively comfortable future, or retirement. If you wait 'til you're 30, you've gotta save 20%, your 40s, it's 30%. So the longer you wait, as you know, the harder it is.

20:44 HM: Yeah, it is. Well, I join you in the thought that planning is incredibly important, because I think there are so many things that women deal with that perhaps men don't have to think about as often. So, if you can give us your perspective, on not only the financial planning that women do but sort of why it needs... why it's different.

21:11 CS: Well, all us are living longer, men and women, there's more centenarians than ever before. True though, that it's mostly women. I think that we do have unique circumstances, there's no doubt, relative to men. Men, or women, we tend to go in and out of the workforce, so we lose time in terms of saving. Unfortunately, we earn less, still to this day, despite all the efforts. Divorce, in fact, 50% of marriages and widowhood is the average age of 56 years old. And that's real. I've been talking about that for years, and experienced it with my sister who lost her husband, just a couple of years ago, at 51. So this is real life circumstances, and so what happens is for women, is that we have more years of retirement to save for, because we live longer, with less money. So again, it's so important for us to really plan ahead and get ahead of the game, because also studies show that our standard of living, when we become single, goes down by 70%. It's depressing, but if we could get ahead of it, it doesn't have to be that way.

22:38 HM: The planning, again, is critically important, and I sincerely hope that we had some active listening going on while you were telling your stories. But let's go to your third bullet, which is the investing side. If you could share some insight on how you manage your own portfolio, perhaps, and some of the pitfalls that we need to be aware of, that would be helpful.

23:05 CS: I was a do-it-yourselfer, makes sense, right, for years. And investing in mutual funds, and individual stocks, mostly mutual funds. And I was always a saver, always a saver. And when I was close to 40, I got more intentional about my finances. There was something about really getting serious about my retirement, and making sure I was on track. And so, I signed up for a service at Schwab, that is not quite handing over your finances, but it's a partnership relationship, where a financial consultant looks at your finances on a quarterly basis, and makes suggestions and tweaks to your portfolio, making sure you've got the proper asset allocation that you have set out to have. And then I am to make the changes, if I want to. I liked it so much, that I hired an independent registered investment adviser. So I ended up delegating the day to day management of my finances, not advocate, but delegate, still involved, to manage it. And I equate it to... Well, first of all, a lot of people think, "Oh, a professional uses a professional?" I'm sure you know, we have many professional women at Schwab that use professionals, but it's really like a doctor, you're not gonna do surgery on yourself. And for me, I equate it to a personal trainer, where I'm accountable, I show up for the meetings, I learn more from that individual, they have their own perspective, and I get better results. So, it's a win-win situation.

25:10 HM: It really does help to have somebody else take a second view of what it is that you were comprehending on.

25:15 CS: Absolutely. And even the emotional side of investing, even though those of us who are in the business, it can be... Especially when it's your own money, your emotions, I remember my husband, when the market was down 50%, and he asked our advisor, he said, "Mike, I'm sure the phones are ringing off the hook." And he said "Actually, Gary, no one's calling." He said "There's only one client, and he's a nervous Nelly, and he always calls. He always finds an excuse, but the bottom line is, is that we are properly invested that reflects our goals, risk tolerance, time frame, and our philosophy of investing."

26:01 HM: Well I think that everything that you have talked about so far, hopefully will encourage everyone who's here, and listening in, to take a more active view in just having a conversation, number one with your husbands, your family, your friends, your even acquaintances, about finance, because it is so important that you understand that. And the more you talk... Someone was just saying earlier this morning, the more you talk to people about a topic, the better it is for you, because you hear somebody say it in a different perspective, and you get perspective of experts who are always helpful to us, that's for sure. I think that you have a lot of people in this room, as well as listening in, that are professionals and have careers, and financial literacy is as important, if not more important to them. Do you perhaps have some advice for them as well?

27:04 CS: From a career perspective?

27:05 HM: Yes.

27:07 CS: For me, having financial knowledge, it's really all about having confidence in your life, and being liberated, having choices. We talked a lot about confidence, and Helen you actually brought it up. Well, we already talked about the lack of confidence, it permeates... So many women today lack confidence in their finances, and as you mentioned, it permeates every aspect of our lives, and it is so true. The lack of confidence not only affects how we think about our money, but it affects our relationships at home with our spouse, it affects our relationship at work. In fact, financial stress, which lack of confidence can lead to stress, it affects our productivity and our cognitive abilities. So again, it's really important to get that baseline, so you can get that confidence up. I think about programs again that I'm involved with, I oversee a national program with the Boys and Girls Club, where we've had over 700,000 teens go through financial education. And I see how it opens up their lives, their trajectory. A lot of these young people think they're just gonna graduate from high school and get a job paid minimum wage. But instead, they save a little bit of money, and then all of a sudden, college is in their future. And then I think about with all of us as women, we want choices.

28:45 CS: We wanna be able to change jobs if we wanna change jobs, we wanna get involved in the community and philanthropy if we want. Start a business, buy that cute dress or piece of jewelry we've been eyeing, shoes right? We wanna do what we wanna do. So actually, financial knowledge and security offers a lot in our lives.

29:09 HM: I think it does, and I think it does not matter what your age, it is important to continue to have that conversation up. Carrie and I were talking about this... My mother-in-law, when my father-in-law died, she was octogenarian at that point in time, asking for a little bit of help in looking at her finances, and I went over there to help her. And she said, "Helen, you see that, that I have pinned up on the wall there?" I said, "Yeah mom, what is that?" She said "That is my Phi Beta Kappa key that I got when I graduated from Stanford in 1932. And it's to remind me that after 66 years of marriage, I am not dumb, I am not stupid. I am intellectual, I just haven't had any conversation about finance for that long a time period, and so I need a little bit of education." And I think that you shouldn't wait until you're an octogenarian, I think, is the theme of that story. But it does not matter how intelligent you are or how educated you are, you still need to have that that conversation with experts like Carrie, and among yourselves, and your family members. Carrie, we've had a great conversation, but I know that there are other people out there that would like to ask you some more questions, and their questions are great. So Christina, do you have some questions out from the audience?

30:40 Christina: Yes, we have a few questions from the phone line, from Ellevate. So the first one is from Jane Warren. "The process of figuring out how much you need to retire sound so daunting. I'm 54 and have no idea where to start. How can I figure out what my monetary goal should be?"

31:00 CS: That's a big question, but it's an important question. I'll give some rule of thumbs. It's Jane, right? For Jane, I would definitely sit down with an expert and talk it out. Because Jane, you are 54, and you've got another, what, 10... Well, not 10, but 15, 20 years in retirement, and it's a critical time. I'll just give a couple of rules of thumb about how much you need. First of all, figure out what are your flows, stream of income gonna be, aside from social securities, or anything else? And then what are you gonna need to supplement your social security, your rental income, or whatever, from your portfolio? So a rule of thumb is, let's just say you need $40,000. The rule of thumb is that you'll need 25 times the amount of income you need the first year of retirement. That's kind of a big number, it sounds big. So for instance, what that means is, is that if you need $40,000, you'll need $1,000,000 saved at retirement to supplement your income. That mix has multiple assumptions, it assumes that you've invested at least 40% in stocks, preferably starting with 60% in equities. It assumes a 30-year retirement, 'cause we're living longer or we're healthier today, we might work longer, so maybe it's not gonna be a 30-year. So those are sort of the two assumptions... And that you're healthy.

32:49 CS: And then you want a 100% confidence level. So, 25 times the amount you need in your portfolio is the rule of thumb. And then what you do is, you increase it each year by the rate of inflation. So, what that comes out to be, or is... Then when you withdraw, it comes out to about 40%, I'm sorry, 4%. Does that make sense? So 4% of a $1,000,000 is $40,000. So the first year, you take out 4%, and then the next year, you up it a little bit for inflation. Meanwhile, when you have a down market, you may wanna cut back. Or if there is an up-market, you may take a little bit more. So it's not cut and dry, it's only a guide.

33:37 Christina: Great. The next question has two parts to it, and it's from Andrea Herbert. "It seems like financial literacy planning is not top in higher education college or in family conversations. Where can millennial women today go for sound advice? And then secondly, in addition, oftentimes financial advisers or brokers are pushing a product to their clients. How do you find a trustworthy adviser?"

34:03 CS: I'm going to start with that, just because I think that's really the most important. The financial consultant matters. Here is a couple of things to think about. How is that consultant paid? This questions alludes to the fact that someone is pushing products, and probably charging large commissions and fees. You do not want that, run as fast as you can. You want a financial adviser who has your best interests in mind, who has the same goals as yours, which is to grow your portfolio. There is different ways. There is financial consultants who will gladly review your portfolio for no fee. If you want more hands-on management, there are what we call fee-based financial advisers. We have them at Schwab, we have independent advisers we also recommend from Schwab, that work with Schwab. Fee-based means that they charge a percentage of your portfolio, and you wanna compare, you wanna compare the cost or the charge to other financial consultants. You also want to make sure that that consultant is somebody you have good chemistry with. Do they respect you? Do they encourage you to learn along the way with them, be a partner? You don't want somebody who patronizes you, you want a partner. You also want somebody who has investing philosophy like yours. I was just with a professor yesterday, who's a friend. I won't name the name of the firm, but he looked at his portfolio, and he had all sorts of proprietary funds. So funds that were from that firm, large fees.

36:00 CS: He even had an annuity in a tax-deferred account, it was a mess! And this friend of his was smart, I think he probably was another professor. And I think some people, you've got to look for a reputable, honest financial consultant. So, that's number one. I'm glad this millennial wants to learn more, it's music to my ears. Because like I mentioned, with my IRA, I still understand and know what's going on. You don't want to just, again, advocate over the management of your funding, or of your investments. You wanna know what's going on, so you can ask the right questions and make sure that person is honest. But start again with some education, there is schwabmoneywise.com. It's a wonderful resource to get young people started with the basic knowledge. A friend of mine, Beth Kobliner, wrote a book for millennials, and I can't remember the topic but... Beth Kobliner with a K, or any type of primer is a great start. And then also attend our workshops, or other investment firms' workshops. Just dive in.

37:20 HM: Do you have another question, Christine?

37:22 Christina: Why don't we turn it to the live audience, to see what questions they have?

37:25 HM: All right. Great. Do we have any questions from the audience today? In the back.

37:41 S?: Relative to millennials, I have two teenage daughters, and one of them has a very casual relationship with money, the other does not. And I'm just wondering where to start with them?

37:53 CS: So, I have kids from 19 to 27, and of course, they're all different in terms of their attitudes with money. The sooner you can start, the easier it is with your children. I always suggest, start... They are teenagers, but you can still do it, starting with an allowance. It could be over something, so that they're learning how to budget and make choices with money, that's a really good start. When they become teenagers, I encouraged my kids to get jobs. And then they earned money, and at 16 I opened up Roth IRAs for them, and highly encouraged them to save a portion of their earnings in their Roth IRA. Again, that got them exposed also to investing, and the whole notion of having to save. So, I think you can also match... If you have a young person who's not taking it seriously, you can always match their money into the Roth IRA, so there's different ways to do it. But I think the sooner you get them exposed, the better.

39:09 HM: Anyone else here? Yes, right here in the middle.

39:19 S?: Hi, on the other end of the spectrum, when it comes to a lot of women are stepping in to care for elderly parents, and stepping into their financial lives, do you have some thoughts about tips around how to have that conversation, and what tools and resources they have available to them?

39:33 CS: That's to me is one of the hardest questions that you could ask, because there's just not an easy answer to that. Assuming your parents still have their cognitive abilities, I think it's better to have that conversation when they're healthy. It's important that they have their durable Powers of Attorney, their healthcare directive, so that somebody that they trust can manage their finances, manage their healthcare, making sure that their trusts and their wills are in place and accurate, and reflect what they want, making sure their beneficiary forms are filled out, a lot of us forget about our IRAs or our 401 [k] s, and it could easily end up going to somebody else you don't want it to. Long-term care, it sounds like your parents are elderly, so this may not really apply anymore. It's good to get long-term care, if you can't self-fund between 50 and 64 years old, 'cause once you have an issue, like dementia, you can't afford it for long-term care. So getting all those in place. Making sure that your parents, have the conversation with your siblings, assuming you have siblings, so that everybody is aligned and knows their wishes, so that there's no misunderstanding. You hear about one sibling interpreters things one way and the other, splits up a family.

41:03 CS: And also working together, so it's not all on your shoulders is really important. And then lastly, for elderly parents, we've done a fair amount of work with AARP, and I've since learned that one of the biggest issues with elderly abuse, or one of the underlying reasons, is that we feel isolated. Elderly people feel isolated from the world., so they start making best friends with the housekeeper, the gardener, the 1-800 number that sells them billed goods. So the more we can keep our elder parents active and engaged with people that care about them, the better.

41:48 HM: So, just to add on to that, Carrie, if you have a lot of siblings, I'm the first of eight children, and my husband is the first of six. So we're familiar with this scenario. All of your siblings should be on the same page, and they should have... You don't have to all be in the same room when your parents have made their decision, but everyone should know about it. It will make it much easier on your parents, as well as on you. That's a financial conversation that may not be the easiest to have, but it's one that needs to take place at all times.

42:25 CS: And there's different ways you can bring up the subject, whether it's, "I was talking to my friend, and her parents... " Make an excuse, or just dive in, depending on the relationships you have.

42:43 HM: Okay. Any other questions from the audience here? Yes.

42:47 S?: So in the realm of financial planning and stuff, having a trust and making sure that everything's in place, where do you put that in the realm of this? A trust account, putting a little trust maybe...

43:03 CS: Oh, what would you do with a trust? Oh, okay. So A trust usually... And Howard, if you wanna chime in, it's sort of a form of estate planning, where either you can gift money over to people, I'll assume children, during your lifetime or after your lifetime. I'll' assume you mean for your lifetime... I think you're talking about gifting. So, I'll just give you an example. If you have grandparents or somebody giving a young person, let's just say you can gift... Each individual can gift up to $14,000 to an individual. So grandparents, two grandparents, can gift $20,000 to a grandchild, and as many grandchildren and kids they want. But let's just say they do... This is sort of an extreme example, and they gift it every year, that money can grow fairly big, fast. And if you were to put it in a custodian account, depending on the state laws, that money then becomes legally the young person's at age 18 or 21 or 25, depending on the state. A lot of us don't want our kids to have $50,000, or a $100,000 or even more. So if that's the case, a trust is actually a great way to put some stipulations on when the child actually gets the money. And it's pretty common, I wouldn't say it's common, but one way would be when they're 25, 35 and 45, depending...

44:46 CS: But the the trustee, which might be you or a grandparent, can make decisions outside and decide that person... Like my grandchild needs to buy a home, or my grandchild is going to graduate school, I can take money out for that. So there's flexibility, but it also keeps the money away from a child who's maybe not mature enough to handle it. Did I that answer your question?

45:17 S?: Yes.

45:17 HM: What about others, any other questions here?

45:22 CS: I just have to tell a funny story, this is when the book "It Pays to Talk" came out. We learned of a woman that had a trust for her son, but he was not gonna get the money until he was 65.

[laughter]

45:37 CS: Yeah, and that was because he was a spendthrift, and she knew he will have nothing in his older years.

45:45 HM: The word "trust," wasn't the word that mattered there, was it?

45:49 CS: Yeah.

45:52 Christina: We do have a question that came in, at your Twitter account, @CarrieSchwab, from at @AmandaMizrahe. What's the best financial advice you've ever received?

46:05 CS: Two pieces of advice. One is this whole notion of saving. Like I mentioned, I've been a saver since I was nine years old. My mom helped me open up my savings account, actually at Wells Fargo, Schwab didn't have a bank... Nor did Schwab exist then. Always save for a rainy day, always, always. But the second is investing, the power of investing. I remember in my early 20s, IRA, we're just coming into fruition, and I called my dad and I said, "Dad, I'm putting my $2,000 in my IRA, I don't know what to invest in. What should I do?" And he said, "Just pick two mutual funds, two equity funds, and you'll do great." and I remember thinking, "Gosh, I thought he could tell me this... Tell me a lot more than just 'Pick two mutual funds.'" But he was so right. What it really is about, is about the power of investing and just getting started, or participating in the market. If you look at historically the way equities have performed versus cash, like equities, even a bad choice of mutual fund, will far exceed the performance of cash. And so it's really about just diving in and picking some mutual funds. The world has changed since those days, where today there is choices of very actively managed funds, and then there's passive funds, also known as Index Funds or Index ETFs.

47:46 CS: I'm a really big believer, and I encouraged my children, to invest in broad-based ETFs at a young age, because you're participating in a broad array of equities all over the United States, all over the world.

48:07 Christina: Great, I think we have time for one final question. This come from @mpsloom, and they ask "I'm having trouble balancing saving for the future, and spending it on fun. Do you have any advice on that?"

48:25 CS: I know, we all wanna have fun. So, that's kind of timely, because I'm just finishing up what I call "the 30-day cleanse". Has anybody heard about my 30-day cleanse? A few nods, okay. So, the 30-day cleanse is all about mindful spending. And the reason it came about, is that I'm always perpetually trying to lose weight. I'm on a seafood diet, I always try and it never works. And so I went on the 30-day cleanse for dieting and what it made me realize, is that I was a picker, and I was eating with no mind in... Or not using my brain. And so I thought, "We need to do something like this for money." So basically, what I suggest, is spend a week and using just cash. Get away from your ATM card, get away from your credit card. Figure out what your expenses are, make yourself a budget, and try to just spend on cash.

49:45 HM: That's cold turkey.

49:45 CS: That's cold turkey, just for your non-essentials. And just practice mindful spending, I think that's a really good start. Because my guess is you can find ways, $20 here, $30 there, to really add up for a savings cushion.

50:02 HM: I love your 30-day cleanse idea. I particularly like the planning part. I think one of the best pieces of advice I got was when I was working at B of A, they made me do a five year plan, a 10 year plan. And of course, if you're younger than I am right now, in your 20s, I'm thinking "I'm not sure what I'm gonna do on Friday, and you want me to tell you what I'm gonna do 10 years from now?" But I think the planning and going into finance and doing that for yourself, that financial planning, it is one of the best things that you do. And if you do it right, then you need to worry about how you are going to be investing it. And that's a worry that...

50:49 CS: We all should have. We all have.

50:51 HM: Exactly, right. Well, we are out of time. I wanna thank you Carrie, so much. I love this conversation, I hope all of you feel a little bit more comfortable about having conversations about money. Certainly, we're more financially literate now, after hearing all of this. Thank you very much for being engaged. Thank you also to Charles Schwab and company for being a partner to the Ellevate Network who has hosted this jam session. Thanks to all who have listened, and we hope you have a wonderful day.

[applause]

51:38 JP: Hi everyone, thank you so much for tuning in today and for sending in all of your questions. I realize that we didn't get a chance to answer all of them, I'm sorry for that. We did have limited time today, but be rest assured that Carrie and Helen are going to be receiving all of your questions, and feel free to go over on Twitter and still use that @AskCarrie hashtag to send them to them again. And we would love to hear from you as well, so feel free to reach out to info@ellevatenetwork.com or through our Facebook, Twitter and LinkedIn pages. As a reminder, this session was recorded, and you'll be able to find it on the website, starting tomorrow. Thanks again, everybody, have a wonderful day.


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Community Discussion
Gloria Monfrini

Will this be US focused advice only or applicable to international members?

April 29, 2016

Toniya Singh

This is such an important talk. We are having our first Women in cardiology Session for the American college of cardiology in MO. And one of the topics our members asked was to have a speaker to talk to them about finances, retirement etc. As you know physicians are not the best planners.

May 19, 2016

Toniya Singh

What is the average fees charged by financial advisors?

May 19, 2016