Kathleen Murphy – TRANSCRIPT
Unfortunately, I am going to be discussing something you’re not supposed to talk about in a polite conversation: money. Now as the song goes, “you work hard for your money.”
My talk is about trying to get your money to work hard for you. And I know that for many, the topic of money can be intimidating or boring. But here is what’s not boring. Buying your first house. Sending you kids to college. Starting a new business that you are passionate about. Or being able to retire comfortably.
So, like it or not, money funds your life, and fuels your dreams. It also creates choices, so that choice of whether to buy a house or which house to buy, the choice about starting that new business or retiring early, it’s all about taking the time to understand your financial situation and how to invest, so you create those choices for yourself. So I want to talk about making sure that people do focus enough on that.
And some people say, you know, “Geez, how did you get started in all of this?” In my profession as John said, we have millions of investors as clients and I see a full range of clients so, so many do it exactly right and are well on their way and all set, but there are so many heartbreaking examples of people who work really hard but then don’t spend the time to figure out once they make that money, how to invest it to make it last a lifetime.
So my profession is also my passion. It’s about a focus on creating better outcomes and brighter futures. So how did it all begin for me? Take you back to a small town in central Connecticut where I grew up. My dad was a salesman who loved his job and was fiercely loyal to his wife and six kids.
My mom was a nurse. We didn’t have a ton of money, but we had a sort of a ¡Brady Bunch existence, ‘ we had a great time and we were very happy. My mom and dad instilled important values in all of us, the importance of hard work, getting an education, giving back, landing a good job. We were thrifty, and we had a focus on making sure we were saving enough. So we focused on the fundamentals but in the retrospect, there was one fundamental that we overlooked, and that’s what to do with that money that we were saving, how to invest to last a lifetime.
And sadly, sometimes a lifetime doesn’t last a lifetime. My dad died unexpectedly at the young age of 57, leaving my mom and six kids, three of which were in college. We all of sudden had to figure things out in a different way. My mom, as I said, was a nurse after she graduated from college, before my dad died, she had made a career transition and worked as a manager at the local phone company. She’s bright and hard-working, but nonetheless, she was a busy lady and she didn’t focus a lot on investing; she didn’t focus on a financial plan, she was not prepared for the unexpected, and in my household was common during that time period and unfortunately is still all-too-common today: my mom and dad delegated the financial responsibilities, the other responsibilities, the household, my mom paid the bills, and my dad focused on investing.
And while it’s completely understandable with a very busy life, how they could arrive at that delegation of duties? The problem is you can’t delegate your future. I am going to talk a little bit more about why couples need to jointly understand and take some time together to understand their financial situation. My situation is personal to me obviously, but again unfortunately, there are so many other people that find themselves confronting the unexpected and not being prepared for it. Think about your own situation. You may be doing fine today.
But what about if the unexpected happen to you? Are you prepared? How many of you know a mom that has survived her husband finds herself suddenly single and not knowing what to do? How many of you have an elderly parent or grandparent, usually the mom, who has survived and also doesn’t know what to do, who typically the mom relies on her eldest daughter to help her through that period? How many of you are that eldest daughter, who’s trying to figure out how to make ends meet and plan for her future, while taking care for Mom and also making sure her kids are on the right path? How many of you are those young adults just starting your careers with lots of balls in the air, with lot of debt, not knowing exactly what to do?
You know I make it a priority to speak about this, and recently I was in DC at an event with AARP, so, women in their 50s and 60s, those eldest daughters, so to speak, we talked a lot about the importance of getting educated, and taking control of your finances so you have control of your life. And it was interesting, we had a great discussion but the most persistent theme of that conversation was we can’t let our daughters do what we did; we need to break the cycle for our daughters, our granddaughters, they’re making so much progress in so many aspects of their lives. We can’t let them be intimidated or lack confidence about financial matters because it’s so important to their future. Why do I focus specifically on women here? Because women of all ages are not making as much progress as they need to, and there’s so much at stake.
So the stakes have never been higher. First of all, in terms of women, again, in particular, and this is the gender neutral topic, “Money,” but women are behind. Longevity, on average, women will outlive men by at least five years; they are expected to live to at least a hundred. Secondly, divorce. Unfortunately, the divorce rate in this country is over 50%. So between longevity and divorce, most women will be single at some point in their lives.
What’s the most common causes of divorce? A lack of communication and finances; notice a trend here. Now on the flip side, women are making progress in many aspects of their lives. In fact in 2014, women will earn worldwide 18 trillion dollar, and will have the power of consumer spending for another 28 trillion dollars. By 2020, there will be 25-trillion-dollar shift in the US alone of wealth to women, either because they’ve inherited it or they’ve earned it at the workplace. So women are making advances.
However, there is a disconnect between economic ownership and financial confidence. Fidelity recently did a survey of couples to see how couples are doing, and we’ve done it every other year for the last several years, and the results were very concerning. So you can see, women first of all, defer to their spouse if they’re married – it was a couple survey so their spouse or partner – women overwhelmingly defer to their spouse on financial matters. The primary reason? Because they think men are, “better with numbers.” Despite the fact that there is overwhelming evidence that women are the better long-term investors.
They also. We look specifically at Gen Y women, Gen Y women are the worst in all age categories; only 12% of Gen Y women in a relationship manages the day-to-day finances of that couple. And only 9% of Gen Y women have confidence in their ability to manage money.
Our moms, those moms at AARP event were right, we do need to break this cycle. So how do we do that? I want to just very quickly go over some tips that we would suggest for how to break that cycle and get people more engaged in their finances. And I want to let you know a little secret that the financial service industry does not like to promote. Investing is not that hard. Anyone can do it.
If you just take a little time. You need to take time, get engaged, get basic education, and embrace that process. So I want to talk a little bit about what you can do at different life stages. So if you’re in your 20s, just starting out in your career, I don’t think many 20 or 30 year olds are thinking about the retirement they’re going to have 50 years from now, they’ve got debts, they’re probably spending more than they’re saving, but there are some basics.