Archive for June, 2014

GRIFFIN & TAYLOR: HIGHER HURDLES FOR WOMEN TRANSCRIPT

Consuelo Mack: On this week’s Consuelo Mack WealthTrack building financial security for women…two award winning financial advisors Maura Griffin and Debra Taylor give us the essential building blocks to construct a plan to last a lifetime next on Consuelo Mack WealthTrack.

Hello and welcome to this special WealthTrack Women edition, I’m Consuelo Mack. Since we launched WealthTrack in 2005 our goal has been to help our viewers build long-term financial security through disciplined diversified investing with advice from some of the top professionals in the business.

This week is no exception. We are interviewing two award winning financial advisors who are devoted to helping their clients achieve financial security, with particular emphasis on their women clients. They are part of our WealthTrack Women feature on our website wealthtrack.com.

For the most part we have been gender neutral on WealthTrack, figuring sound advice applies to everyone. But on the topic of financial planning there are some distinct differences and facts pertaining specifically to women that we cannot ignore.

Individual circumstances can vary but these generalizations apply to most:
–Women live several years longer than men do. That means they have more longevity risk. –Women are far more likely to be alone as they get older. –Only 18% of women over 85 are married whereas 58% of men are. –Women’s spend nearly 3x more than men do on long-term care. –Yet women’s retirement income is substantially less than men’s. Some $21,000 on average for women over 65 versus $37,000 for men.

Yet there is what is called a “perilous paradox” for women. Despite their financial needs many don’t adequately plan for their financial future. They are too busy taking care of everyone else. And that is where this week’s guests come in. They are here to help women build financial plans.

Maura Griffin is the founder and CEO of Blue Spark Capital Advisors, a New York City based, fee only firm providing investment advice, asset management and financial planning for women, men and their families. A certified financial planner, she was given the 2013 Women’s Choice Award for Financial Advisors.

Debra Taylor is the principal of Taylor Financial Group, a full service wealth management firm based in Franklin Lakes, New Jersey. She started her career as a lawyer and is a licensed certified public accountant and financial planner as well as being a certified divorce financial analyst. She is also the recipient of the 2013 Women’s Choice Award for Financial Advisors.

I began the interview by asking them what is the first thing they want to know when a woman client walks into their office for the first time.

MAURA GRIFFIN: When a woman walks in my office, what I want to know is her story. I want to know why she’s here. I want to know what brought her to my office. I want to know about her family. I want to know about her kids and her parents. Is she sandwiched? Is she taking care of people? Often what brings people into my office is some kind of a life change, either a single woman who’s gotten an inheritance or a woman who’s divorced and is suddenly taking care of the finances by herself; and the same with widows. So I want to know all of that because all of that detail matters, the big picture. Then we can dig into the details.

CONSUELO MACK: Debbie, what’s the first thing you want to know about a woman client when she walks in the door?

DEBRA TAYLOR: The first thing I ask is, “Why are you here?” So I want to find out why they’re here, what triggered them coming to my office, and then the same thing that Maura says is, I want to know what your story is. What’s going on in your life that has made you decide to make the big move of coming to see a financial advisor? Because for many women, that is a big move. The other question I like to ask right up front is, what does money mean to you? Because you’re going to get, I think, generally different answers from a woman than you might from a man. And the other thing is, what are your goals? What are your dreams? What are you hoping to accomplish?

CONSUELO MACK: Getting a story from a woman client, is that approach different than it would be for a man, for instance? Do you want to know the whole picture when a guy comes into your office.

MAURA GRIFFIN: It’s a bit of a different conversation when a man or a couple comes in. I want to know all the same details, but the questions that a man asks, a man wants to know about the likelihood of market out performance. A man wants to know about sharp ratios. A man wants to know about benchmarks. But a woman wants to talk about her goals and whether her assets can help her get there, and it’s a much softer conversation. It’s a much more emotional conversation.

CONSUELO MACK: Is that the case for you as well, Debbie? DEBRA TAYLOR: My experience is exactly the same. I’m trying to have the woman open up and feel comfortable, so you do need to create a little bit of a softer environment where she feels comfortable having these discussions and exploring topics that she may never have felt comfortable exploring before. With the men, typically you need to be more data driven. They’re not so interested in their story being shared with you or that you’ve played the role of financial therapist to them. They want to know about fees, and data, and alpha, and beta, and stocks, generally.

CONSUELO MACK: Both of you deal with men and women and families. Also, one of the reasons you’re here is you’ve won awards for actually helping women, specifically. So the conversation then is different. What are the questions you wish women would ask more often?

MAURA GRIFFIN: I wish they would ask more questions in general. One big question that I don’t get asked a lot, but I think should be a question is, what is your value? What do you as a financial advisor bring to the table? It’s obviously smart wealth management but it’s also having a second opinion, to have a trusted confidante, a fiduciary confidante who can help you through all of the decisions that you will be facing really for the rest of your life.

CONSUELO MACK: So what’s the question that you wish that women would ask you that they don’t necessarily?

DEBRA TAYLOR: The question that should be on everyone’s mind is, how do I achieve financial security? That’s really the goal at the end of the day.

CONSUELO MACK: Do men ask that question?

DEBRA TAYLOR: Generally not.

CONSUELO MACK: Generally not. So the financial security, because isn’t that what … I mean, we’ve looked at a lot of surveys, and you know all of the stats as well. Financial security is huge for a woman.

MAURA GRIFFIN: Well, it’s supposed to be huge for everybody. That’s the end game.

CONSUELO MACK: How prevalent is the bag lady syndrome for instance?

MAURA GRIFFIN: Absolutely, to a one, every woman client I have, whether it’s $10 million or whether it’s half a million, they are all afraid, and they all mention the bag lady.

CONSUELO MACK: And why is that? Why are we so insecure about where we’re going to end up?

MAURA GRIFFIN: It’s an interesting question because I will say I have never talked to a man who says, “I’m afraid of being homeless.” No matter what their financial … it can be very precarious, but they never worry. They never express the fear of being homeless, or the bag lady syndrome.

CONSUELO MACK: Explain this, Debbie. Why is this an issue for women and it’s not for men?

DEBRA TAYLOR: I think culturally from the time women are little girls there are messages sent out that women or girls are not good at math. We’re not supposed to be capable in that area, finance, math, numbers; and that message is sent from society from a very young age. We see the statistics where the girls will start off very strong in math and by middle school they start dropping out of the more advanced math classes, and by the time then they get to be middle-aged, particularly if they choose to work within the home, they’re becoming, in certain respects, disenfranchised from the family finances and from that empowerment that they need. So particularly then if there is a divorce or death where then overnight they are thrust into this leadership role in handling finances, it is overwhelming, and they’ve had literally no experience in dealing with this and with lack of experience and lack of education comes fear.

CONSUELO MACK: We’ve talked a lot on WealthTrack about longevity risk which is something that you talk about and you’re very aware of with your clients as well. Longevity risk, how does that conversation happen with your clients?

MAURA GRIFFIN: It’s a question that we always bring up, and, to know that when we’re projecting out for inflation, for health care costs, for investment returns, we look at sometimes a 10 or 15-year period more than men.

CONSUELO MACK: Ten or 15 years more than men, just to be on the safe side? Is that why?

MAURA GRIFFIN: Just to be on the safe side. So the longevity risk I think is something that, even more than market volatility or some of the other issues for women, it.

CONSUELO MACK: How does that conversation happen with your women clients?

DEBRA TAYLOR: It happens in a very serious way. I had one client who is recently divorced, and she’s in her late 40s, and she has $4 million, and I basically sat her down and created an entire road map, saying, “I need to plan for you to live until age 95, and at the rate you’re going you will run out of money.” She got absolutely panicked, because I’m probably one of the first people in her life at least recently to tell her no to something, and she literally turned to me and she said, “Debbie, you’re scaring me.” And I said, “I am trying to scare you.” So we sat down, and I basically showed her how her $4 million, which seems like a lot of money now but with the way she was spending it, she would be running out of that money, and then she was listening very receptive and we created a very comfortable road map for her.

CONSUELO MACK: Women go through a whole bunch of transitions during life. We play a lot of different roles. How important is what role we are playing now, and what role we might play later in life? If we’re married, for instance, we’re probably going to end up being widowed. If we have parents, we’re going to probably end up being the caretaker for our parents at some point. How important are those roles in this kind of a conversation?

MAURA GRIFFIN: Very important in this conversation. You know, the statistics say that men, 80 percent of men will die married and 80 percent of women will die alone.

CONSUELO MACK: Wow.

MAURA GRIFFIN: So whether it’s a couple or if it’s a woman, a single woman never married, divorced, widowed, all of these stages need a road map.

CONSUELO MACK: How do you plan for that with your women clients, Debbie?

DEBRA TAYLOR: So part of the planning is creating that financial plan or that road map. It’s absolutely critical, and then it drives a lot of the other decisions such as the types of investments you have because women typically will have more conservative investments than men. Even if they’re in their 60s or 70s, they’ll say, “Well, I’m in my 60s or 70s. I should be conservative,” and I’ll say, “You’ve got another 35 years. And I don’t want you showing up here in 35 years without money. You cannot be at my doorstep,” and they say, “Well, Debbie, I don’t want to be at your doorstep either.” I say, “Well, then we need to deal with that now.” So part of it then is, the road map is critical. Coming back and revisiting the road map at least annually to make sure that we’re on course; and then a big thing also is long-term care insurance and dealing with the health insurance aspect, because that’s becoming more and more of a big uncertainty and a variable with all the changes. So one of the things we typically recommend is long-term care insurance but also budgeting for that as well, because we see that the woman is going to take care of the man. Who is going to be there to take care of her?

CONSUELO MACK: The long-term care insurance then is more important generally for a woman to have than it is for a man to have? Is that fair to say?

DEBRA TAYLOR: I think it’s fair to say. I do. I would like to recommend it to both, but there are times where the men are not interested in it, and I understand because I will sit there and say to the man, “I know you’re not interested in it because you know that she’s going to take care of you, but what’s going to happen to her when you’re gone?”

CONSUELO MACK: Another issue is for single mothers and that again, that’s a more prevalent trend now as well. Is it suddenly as a single mother there are other concerns that you have that you’re not if you are a married mother? So what are those concerns?

MAURA GRIFFIN: I think some of the most important concerns for single mothers would be to make sure that your estate plan is in order. You want to make sure that if anything happens to you that, especially with minor children, that they are going to be taken care of. You need to establish guardianship. You need to make sure that you have enough life insurance that they will be able to thrive.

CONSUELO MACK: Debbie, I know that you deal with divorced women and you deal with widows as well, and there’s this old maxim that you shouldn’t do anything different the first year once you’re widowed, for instance, or divorced. Don’t do anything different. Don’t sell the house. Don’t change jobs, whatever. What’s the first thing that we should do if we have a major lifestyle change like that?

DEBRA TAYLOR: So for a widow, I would say there’s basically three stages, and there’s articles and books on this. So the first stage is like you’re saying, is let’s not make any major decisions right now, and let’s just try to take care of ourselves. So there’s a grieving process, and it’s just sort of coming to terms with our new life. So early on we basically just try to stabilize the situation. Let’s probate the estate. Let’s make sure tax issues are dealt with, just stabilization.

The second phase is then trying to put in the plan for our new life basically, coming to grips with what our new life looks like, what we need to do. And then really ideally, and this is, to me, the most exciting phase is that third phase, which is to me that empowerment phase where you’ve come to grips with your new life. You are actually excited about some of the possibilities that you have, and then we start getting creative with helping families, helping community. The widow exploring hobbies that she never could explore before because maybe she was taking care of a sick husband or taking care of her family; and that phase is really exciting to me as a financial advisor, and I feel like that’s where we get our best work done. So it’s really very fulfilling work.

CONSUELO MACK: What are the biggest pitfalls that widows, new widows, face?

DEBRA TAYLOR: they really struggle with how to manage expectations with their adult children. They want to help them, but sometimes they need to say no, and that’s a real struggle for them.

CONSUELO MACK: Is that a role that you have to play?

DEBRA TAYLOR: It is. I will sit with them. I will create the plan with them. I will make recommendations as to what they should and should not be doing, and at times I say, “Have Suzy call me directly, and I will explain to Suzy why you’re not going to loan her $400,000 for a beach house.”

CONSUELO MACK: Suzy, the daughter.

DEBRA TAYLOR: Yes, who is the adult daughter by the way.

CONSUELO MACK: So you were nodding, Maura. Is that a familiar theme for you as well?

MAURA GRIFFIN: It is. You know, becoming a widow happens sometimes overnight, but the process of widowhood and growing through that is a multi-year phase. Like the first year right after it happens, this first stage is … actually the grief sometimes is so overpowering that- it changes your brain chemistry. Your brain goes into sort of like the reptilian mode, and…

CONSUELO MACK: So where you’re paralyzed.

MAURA GRIFFIN: So you’re paralyzed. Very hard to make financial decisions because basically your higher cognitive functioning isn’t working the way it usually does, and some of these women are having to make financial decisions for the first time. I have one client who her husband died, and she wanted to change everything immediately. She was in so much grief. She wanted to sell the house. She wanted to move across the country to be with her children, and we needed to really talk about what the outcomes would be for all of those.

CONSUELO MACK: Another huge transition obviously is a divorce. What are the first steps that divorcees should take, and I should also ask both of you what the biggest mistakes are that newly divorced people make.

DEBRA TAYLOR: So in my experience dealing with newly divorced women or women who are about to get divorced is we need to build the team, and what happens is the man generally has been working outside the home, and he has an attorney. He has a CPA. He has all these people lined up. The woman, generally speaking, doesn’t have the team in place, so she’s several steps behind the man. Also she’s more emotionally connected. So what I find is once the divorce becomes an imminent possibility, it becomes a business transaction for the man. They basically compartmentalize, flip the tape, and they’re like, “Okay, Joe, you’re the attorney. Let’s deal with this. I got my CPA over here. Let’s get to work.” The woman struggles with months and maybe even years of creating the team. I’m not saying it has to become a business transaction, but an understanding that this is her new reality and she needs to protect herself, and the men generally are pretty good at protecting themselves. The women struggle with that.CONSUELO MACK: Women need that kind of protection and that kind of team behind them as well in order to even just have parity in their divorce proceeding. Right?

DEBRA TAYLOR: Right. So I had one client, and the man was saying, “Well, let’s go to mediation, but you don’t need to bring an attorney. Let’s just go the two of us.” Well, he’s very sophisticated. He does the investments. He has the tax returns. She has no clue. She has no clue what their net worth is, where their money is. How can you say let’s go to mediation and not bring attorneys when she has no idea? And I told her, “Don’t you dare go. Do not go without an attorney. And if you do go with an attorney, you should also consider bringing somebody like me, but at the very least do not go without an attorney.”

CONSUELO MACK: So Maura, what are the biggest pitfalls that women face, newly divorced women or about to be divorced women?

MAURA GRIFFIN: I think one of the biggest pitfalls that divorcing or newly divorced women make is not properly budgeting, that they don’t realize how expensive life is outside of the combined economic unit of the family, that there are two of everything, two households, childcare costs. Even babysitting costs go way up because you can’t go out. You used to leave the kids with the husband when you went out, and now you’ve got to pay for care. Everything has to be taken into account.

DEBRA TAYLOR: The challenge with divorce is what I find is men might take a step or two back, but then within years they’re back on course because they’re working outside the home. They have lucrative careers. Often the women get the children. There’s some nominal child support that’s provided to them, but at the end of the day all those additional expenses that are connected with raising children and running that household, they’re falling primarily on her, and let’s face it. It’s almost impossible to anticipate what all those expenses are in today’s world.

CONSUELO MACK: What about a woman who’s going to get remarried? That’s a whole other set of challenges, and obviously now prenups. Everyone says you’re nuts if you don’t have a prenup. Is that correct as far as your women clients are concerned?

MAURA GRIFFIN: And this is a question that comes up often. So a woman particularly who’s been divorced before and she’s thinking about getting remarried, and some of my clients make significantly more than their potential husbands.

CONSUELO MACK: So that can happen in a second marriage. That’s a danger for women who are doing well financially.

MAURA GRIFFIN: It is, and so it’s part of my job to make sure we think about all the risks and how to plan for those risks.

CONSUELO MACK: Debbie, a woman about to be remarried … absolutely a necessity to have a prenup?

DEBRA TAYLOR: I believe so. Now whether they get it or not is a different thing because it becomes very contentious, but I’d like to think that we’ve learned from lessons from the first go- around, and the second marriages can be very, very tricky. I have a number of couples that are on their second marriages, and often they have children from previous marriages so that there’s a lot of conflict as far as money, spending, inheritances, who the beneficiaries of the IRAs are. There’s a tremendous amount of conflict, and so on the second marriages I am very much a financial therapist because there is so much tension and conflict there. So what I would say that at the very least early on we need to have thoughtful conversations and literally maybe have a therapist or a minister involved, or somebody to help work through some of these issues. For better or worse a prenuptial agreement often helps you to hammer out those issues in advance, however uncomfortable that may be.

CONSUELO MACK: We always ask all of our guests what is the one investment for a long-term diversified portfolio or the one thing that we should do. What would your suggestion be, Maura?

MAURA GRIFFIN: So I think women need to be less cautious in their investments. A strategy is to have the first three to five years of their needs in completely safe investments and then take a look at being riskier, going into more equities because they’re going to live a long time. Even if they have perhaps a more risk-averse personality, that doesn’t mean they have to put that on their whole portfolio. They’re going to need to grow that money but still be able to sleep at night knowing that the market fluctuations are not going impact the money that they need to live in the next several years.

CONSUELO MACK: That’s good advice. Debbie, what’s your one investment or one thing that we should all do?

DEBRA TAYLOR: So to piggyback on Maura’s recommendations regarding the bucket approach is what I would say is, let’s do an overlay of a financial plan with that. So let’s have our bucket approach, and let’s understand then the type of spending we need to be doing and how long our assets are designed to support us, and our other causes or things that are important to us.

CONSUELO MACK: And a bucket approach, you’re talking about have cash or liquid investments to support you for two or three years and then another bucket is the more longer term, more risky but growth assets.

DEBRA TAYLOR: That’s right. That’s right,

CONSUELO MACK: So Maura Griffin, so great to have you and Debbie Taylor as well. Thank you both very much. Thank you for advising us and for advising your clients.

DEBRA TAYLOR: Thank you for having us.

CONSUELO MACK: They’re very lucky indeed.

MAURA GRIFFIN: My pleasure.

CONSUELO MACK: Thank you.

As we mentioned earlier, Griffin and Taylor are part of our WealthTrack Women series on our website. They and our other women advisors recently tackled the role of prenups in a financial plan. Their next focus is the process of helping new widows make the right decisions in a devastating period.

We hope you will consider our WealthTrack women series as a resource for all of the women in your life.

One of the recommendations we just heard was to buy long term care insurance. It’s been an action point of ours several times over the years as well. But there is a new urgency to this recommendation especially for women because of some big changes occurring in what’s being offered.

So this week’s action point is: explore long-term care insurance sooner rather than later.

According to insurance guru Kim Lankford of Kiplinger’s the premiums for long- term care insurance policies for women are increasingly rapidly, in most cases are much more expensive for women, in some cases more than 50% more costly! It can vary from state to state but more carriers are raising prices and charging more for women because women live longer and therefore tend to require more care.

Lankford’s advice: Get price quotes from several insurers. Check out policies offered by your employer because they may still use unisex rates. Consider buying with your spouse because most insurers offer discounts of about 30% to couples. Consider getting shared benefits.

Lankford says if each spouse gets a three-year shared benefit policy they have six years of coverage between them which they can split any way they want.

For more of our conversation with Maura Griffin and Debbie Taylor go to our website wealthtrack.com and please connect with us on social media as well. Have a great weekend and a wonderful Fourth of July holiday on Friday and make the week ahead a profitable and a productive one.