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.
First of all, have a budget. Start to manage down your debt. If you’re in a company that offers a 401 K or 403 B, the best advice you can get is just participate in that program. Many companies offer a match. It’s free money. And the other thing for those young investors is, make sure you take advantage of free: free online resources to help you get started and get educated, don’t pay fees, high fees to an adviser for that.
You can do it yourself at this point in your life. If you’re in your 30s and 40s, this is when life starts to kick in, get married, you have a family, you need to think about college educations, you start your job, it starts to take off. So when you’re in your 30s and 40s you have got to save more for all those commitments for college education, the other things you want to do. You need to, as a couple, start to have the conversations about what you want to achieve over the course of your future. You need to start thinking about what the right diversification is.
If you’re in your 40s and 50s life gets more complicated, right? The kids may be starting to go to college, you’re at the top of your career, you have more assets and more places and so you need to start thinking about the diversification of those assets and start to actually have a more formal financial plan. If you’re in your 50s and 60s you need to think about actually sitting down with an adviser at this point because an adviser of some sort may be helpful to you. You need to start thinking about how you are going to live post-retirement. You need to start thinking about insurance and all those things.
And also if you’re in your 50s and 60s I want to come back to that AARP event, the women in that event. If you’re in your 50s and 60s also be a role model and a mentor. Make it OK to talk about money. Make it OK for your kids or your grandkids to learn from you whether you did it right or you didn’t do it right. Help them to get on a good path.
I wanted to share with you three signs in my office, that really illustrate my philosophy in life and it is completely applicable to today’s conversation. The first is, “Attitude is everything.” Make sure you have an attitude that’s positive, and that you embrace challenges and turn them into opportunities. Second, have a sign, it’s on my desk, says that “Thou shalt not Whine.” And so when people come to my office, they usually say “I’m not whining, but.” It has to be about solutions, not about problems. The third sign in my office is a bumper sticker somebody gave me that I put on the back of that “Thou shalt not whine” sign, and this is for the ladies in the round: “Well-behaved women rarely make history.” I want to show you a short video of a woman like that.
(Video) [Saving stories] My name is Marianne-Louise-Teresa Stanger-Barnet. I was born July 17, 1921. The 9th of 11 children. Every Sunday, my mother would clean out every drawer to find five cents. I’ve never held a nickel other than that. I joined the service on January 13th, 1943. Couple of months later, I married the man of my dreams, Fred Barnet, in San Francisco, in China Town. When Freddie and I got married, we decided never to live beyond our income, his income; mine I’ll put in a bank. Just now I’ve got my jardiniere by the door. I bet I’ve got 500 dollars and change in that. My mother would’ve been proud of me.
I’ve saved for two years to sky jump Jumping out of the plane was something I wanted to do. And Freddie wouldn’t go with me. I said: “Come on Freddie, let’s go do it!” He said, “I don’t want to,” and I said, “Coward!” And my kids wouldn’t do it. My daughter said that she did it in Cleveland, but I have a big doubt about that.
When I signed in, they all marveled “How old are you?” I said, “90” “Oh my gosh, I wouldn’t do it for the world!” I said: “That might be stupid, but I can fall out of an airplane. We got there and he said: “We are going to go out in three” I said, “You’d better push.” He did, at three-and-a-half we went. You can just sit and do nothing, but I don’t If I sit and do nothing, and I’m bored. I’d rather save my money and jump out of an airplane again. That’s more fun.
KM: That young girl who became a skydiving grandma is a hero. Be that skydiving grandma. Don’t let anything get in the way of your dreams. Don’t let inertia or intimidation, or lack of confidence prevent you from achieving everything you want. Get serious about getting educated.
Make sure that you take control of your future, by taking control of your money. It’s your life, it’s your future, it’s your dreams. What the heck are you waiting for? Thank you.