Money mentor Jill Schlesinger advises women of a certain age to assess where they stand financially and develop a game plan for their future.
by Sue Tomchin
Jill Schlesinger has a knack for translating complicated business and economic news into understandable, relatable topics. Whether covering the economy and investments for CBS News, taking calls on her nationally syndicated radio show, “Jill on Money,” writing syndicated columns for Tribune Media Services, or blogging at jillonmoney.com, she engages and educates everyday viewers, listeners and readers in the world of investing and finance. Before her second career at CBS, Jill spent 14 years as the co-owner and chief investment officer for an independent investment advisory firm.
What is the best first step toward planning your financial future?
You need to go through the process of looking at your financial life, to assess where you stand. It’s hard to assess where you stand if you don’t have some idea of where your money is going, where you spend it, not every dime, but generally speaking what are the costs to you to live your life. You need to understand your assets: I have this much in the bank; this much in my IRA; this much in my investment account; my house is worth this much. These are the general questions that any financial planner or advisor is going to ask you and the exact questions that an estate planning attorney is going to ask you when you sit down to do your will and plan for your estate. They need to know what you have and they can’t do that for you. You’re going to have to get the information yourself.
So even if you have a financially savvy spouse or money manager, you’ve got to know where you stand…
There’s no more just letting someone else do it. I promise if you do it yourself, in terms of getting a sense of what you have, then you will feel more in control. I even saw it with my own mom. My mother is in her 70s. After my father died eight or nine months ago, I had a really long talk with her and literally put [her assets] down on paper. I said, “Here is everything you have. I want you to take a look at it.” Her first inclination was, “I don’t need to do it; you can do it.” That is not the answer. I wanted her to wrap her head around the idea that, with my father gone, she was financially O.K. Getting her head around the real numbers, how much money was coming in and how much was going out, gave her peace of mind.
Where do you see women deriving the biggest source of their retirement income?
It’s always astounding to find out how many people are counting on Social Security. Also, some come to the realization, probably too late in life, that they have too much of their net worth in their homes. While it’s great to live in a nice home, you need the liquidity of an IRA or a 401K, or other investments to be able to supplement your lifestyle.
It can be a little bit dangerous, as we found in the boom and bust of the housing market, to count on your house as a primary source of your estate, to finance your retirement or your kids’ education. You’ve got to have a good mix – some illiquid assets [those that cannot be sold quickly] and some liquid assets. It’s good to have retirement accounts, but if you only have retirement accounts you could have tax problems.
Many people look at their mix of assets too late in life to make a big enough difference. That’s why we always encourage people to look at where you stand early, build some sort of game plan and then adjust it going forward.
Do you recommend that women seek out a certified financial planner?
I think there are plenty of women – and men – who are perfectly capable of managing their own financial lives. But there are also a lot of people who don’t have the time, the energy, or the discipline to do it themselves. For those people who are seeking financial advice, I do recommend they work with a certified financial planner because they are fiduciaries. A fiduciary has to put the needs of clients before their company’s or their own interests. A fiduciary has to put you first whereas a broker or a salesperson simply has to recommend something that is suitable for you. It may be suitable but may not be the best thing for you. I think a lot of people don’t understand that that distinction can push them into a product that may be more expensive or may not be in their best interest long term.
Where does one find a certified financial planner?
A good place to start is the Financial Planning Association which has a website, plannersearch.org. You also need to interview that person and ask questions about their experience, the services they offer, their approach to investing and how they get paid, among other things. These are things you’d ask any professional, yet many people get embarrassed and don’t ask the right questions. I wrote an article about this – “How to Choose a Financial Advisor.”
Do women still turn to husbands or fathers in search of financial guidance?
That’s changing. Financial companies are specifically trying to recruit female financial advisors and brokers and sales people because increasingly women want to work with women. Women are very clear about the fact that they trust other women more as brokers and advisors. You have a whole generation of women that, while they may ask their fathers for advice, when it comes to their own lives they would much rather have their own relationship [with a financial professional].
When do you need to start the planning process?
When I used to be a financial planner, I would really encourage people to start that process in their 30s, at least. The three big issues that people need to have covered before they start planning for the future are: they need to be consumer debt free (no credit cards or auto loans); they need to have 6-12 months of expenses in the bank in a safe emergency reserve fund; and they need to be contributing to a retirement plan. Once they get those big three covered they can start planning for different goals in their lives. That could be education funding, that could be buying a house or it could be retirement. It’s not at some magical age this occurs, but at some point in your life when you are beyond those three basic issues, you really have to start thinking ahead. This doesn’t mean you have to be a slave to a spreadsheet or an app that’s tracks every dime you spend, but you have to ask yourself hard questions about what are the things you want to accomplish in your financial life.
A financial planner can be instrumental in helping you outline what it is you want to do. Not everyone needs a financial planner just like not everyone needs a personal trainer. But sometimes that trainer helps you get to the gym and helps you do the exercise the right way.
(Originally published in 2014.)