Financial Fitness
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Financial Fitness



2010 Women Wellness Conference Session Slideshow

2010 Women Wellness Conference Session Slideshow



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Financial Fitness Financial Fitness Presentation Transcript

  • Women and Money Victoria Collins, Ph.D., CFP® First Foundation Advisors October 9 th , 2010 Keiro Senior HealthCare Taking Charge of Ourselves Women’s Wellness Conference
    • Status of Women and Money
    • Challenges we face/Strengths we bring
    • Selecting & managing your financial advisory team
    • Investing in the “New Normal”
    • Identifying & mitigating risk
    • Planning your legacy
    • More than 50% of investment assets in USA controlled by women 1
    • Own/run businesses generating in excess of $4T per year 1
    • Control more than 80% of household spending 2
    • Comprise 48% of country’s millionaires 1
    • Account for more than 40% of Americans with gross investable assets over $600K 1
    • Own/control nearly 50% of estates >$5M 1
    Women have Economic Power 1 Financial Planning Magazine, March 2010 2 Faith Popcorn, EvEolution
    • More bachelor & masters degrees than men for the last 3 decades  increased earning power
    • Generational & spousal wealth transfers (estimates $14T - $25T over the next 2 decades)
    • “ It’s clear why many predict that by 2030, two thirds
    • of the nation’s wealth will be in women’s hands.”
    And Women’s Economic Future is Even Brighter Financial Planning Magazine, March 2010
  • Worldwide…
    • Women do 66% of world’s work
    • Earn 10% of world’s income
    • Own 1% of world’s property*
    • Fortunately,
    • that is about to change!
    *Katie Couric’s Notebook September 26, 2010
  • Women Face Unique Challenges Women typically live longer than men Process information and values differently Earn less, have less in retirement plan Have multiple commitments and a deficit of time May not have played an active role in finances Experience transitions such as divorce and widowhood differently
    • Daughters
    • Sandwich generation
    • Juggling family/work
    • Responsibility as caretakers
    • Prioritizing time & resources
    • Planning  for retirement
    Women Face Challenges
    • Mothers (Age 50+)
    • Cash flow to support lifestyle
    • Educating & raising financially responsible children & grandchildren
    • Differing perspectives on retirement, future planning
    • Considering death of spouse or divorce
      • Do I know/have enough?
    • Family dynamics – communication/conflict
      • How much is enough?
      •   What’s fair vs. what’s equal
    Women Face Challenges
    • Investment philosophy & approach – conservative
    • Take longer term perspectives
    • Do homework, ask questions
    • Greater engagement in decision making
    • Utilize the internet for information
    Strengths Women Bring
  • The Internet Levels the Playing Field
  • Boston Consulting Group Of all the industries that affect their daily lives, women believe the financial services industry is least sensitive to their needs. Why Financial Services for Women October 2009
  • Smart Money Magazine October 2010
    • Lower earnings  Lower savings
    • Longevity
    • Overweighting cash/conservative investments
  • Selecting a Financial Advisor
    • Qualifications - CFP®, RIA
    • Compensation - Fee only, commission or combination
    • Fiduciary duty
    • Referrals from trusted persons
    • Interview 2-3
  • Selecting & Managing Your Financial Advisory Team People Philosophy Process Performance
  • Investors Today are Concerned… “ The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced, if the nation doesn’t want to go bankrupt. People must again learn to work, instead of living on public assistance.” Cicero, Roman author, orator, & politician (106 BC – 43 BC)
  • Where Are We Now? Maintaining Discipline = Key to Long-Term Success
  • The Case for Pessimism
    • Debt bubble has shifted from private to public sector
    • Concerns over PIIGS nations
    • Volatility impacts investor confidence
    • Fledgling real estate recovery
    • China & other EMs putting on monetary/fiscal brakes
    • Government intervention (rising taxes, protectionism, & regulation
    • Unemployment rate remains elevated
    • Anti-Wall Street sentiment
  • The Case for Optimism
    • Unprecedented global stimulus (1 – 2 year lag typically)
    • Pent –up demand building (consumer & business)
    • Household net worth rising
    • Booming corporate profits & productivity
    • Record positive spread between corporate cash & capital spending
    • Reasonable valuation
    • Inflation remains tame
    • Cash on sidelines
  • Investing in the “New Normal”
    • Expect lower returns (equities & fixed income)
    • Global economic impact - Higher correlation among asset classes
    • Value counts
    • Patience is key
    • “ The new normal has a new set of rules. What once pumped asset prices and favored the production of paper, as opposed to things, is now in retrograde.”
    Co-CEO Bill Gross, PIMCO Moneynews, 9-29-10
  • Investing in the “New Normal”
    • Diversification is still key…
      • Equities
      • Fixed Income
      • Alternative Investments
      • Real Estate
  • Fixed Income
    • In order to stimulate the economy the Federal Reserve will
    • keep interest rates at historically low levels
    • In spite of their low yields, U.S. Treasury securities are bought for their safety and liquidity
    • The municipal bonds market is coming under increased scrutiny as the municipalities faced increasing challenges to balance their budgets and fund their pension obligations
    • Tax-exempt bonds continue to offer the best after tax yields
    • The key to any bond portfolio is to know what you are buying and to diversify the holdings in your portfolio
  • Building Your Legacy I want to leave my children enough money so that they would feel they can do anything, but not so much that they would do nothing. Warren Buffett Fortune Magazine, 9-29-1986
  • Legacy If you could pick one, which of these is the most important to pass between generations? Sense of ethics/morality Sense of faith/religion Family traditions, rituals, stories Instructions/wishes to be fulfilled Possessions of Emotional Value Parental Home Financial Assets Base: Boomers n=1256; Elders n=1279 Source: The Allianz American Legacies Study Elders Boomers
  • Legacy Which of the following was the greatest source of conflict in the transfer of your parents’ inheritance & legacy? Fulfilling last wishes Distribution of personal possessions Distribution of real estate Choice of Executor Understanding choices Distribution of finances Base: Boomers – parents no longer alive n=357 Source: The Allianz American Legacies Study
  • Legacy Do you agree or disagree with each of the following statements (% agree): “ Talking to my children helps me understand their wishes for my inheritance.” “ It is my responsibility to initiate a conversation with my children about my legacy.” 68% of Elders “agree” with each statement Base: Elders n=1,345 Source: The Allianz American Legacies Study
  • Legacy Survey Question: Have you had an in-depth discussion with your child or heirs about their inheritance? 31% have had this discussion Base: Elders n=1,345 Source: The Allianz American Legacies Study
  • Ask Yourself
    • How has the market volatility affected your long-term goals or behavior?
    • How has your investment philosophy changed?
    • Have you recently reviewed your overall financial strategy?
    • Where are the risks & how are you addressing them?
    • Do you have specific financial concerns?
    • What are your personal & financial goals for the future?
    • Do you feel your current financial strategy is aligned with meeting your goals?
    • What will be your legacy?