Back to a volatile future

EPISODE TRANSCRIPT

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Larry Fink: Welcome to The Bid, I’m Larry Fink, Founder, Chairman and CEO of Blackrock. As a 3-time guest of the podcast, I am honored and delighted to introduce The Bid’s 100^th episode. The Bid started in 2018 as a new channel for the firm to reach our end investors and provide them with key conversations about the world of finance. As well as hitting 100 episodes The Bid also recently hit 1 million downloads. I am excited for the next 100 episodes where we’ll continue the in-depth conversations that make The Bid so unique.

On this episode of The Bid, Blackrock’s Gargi Pal Chaudhuri has a conversation with a prominent personal finance expert, Lauren Simmons, on the topic of financial literacy, something that we firmly believe in here at Blackrock. Only 32% of Americans feel confident in their investing knowledge and here at the firm we strive to ensure our clients of all backgrounds achieve their own financial goals, wherever they fall on the wealth spectrum. Lauren Simmons is participating in Blackrock’s Future Ballers campaign where she will lead up-and-coming basketball players through a curriculum to develop their financial skills

I am sure you will enjoy this episode and If you haven’t already, I invite you to subscribe to The Bid where you can get more episodes like the one you are about to hear.

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Gargi Pal Chaudhuri: [00:00:00] Welcome to The Bid. I'm your host, Gargi Pal Chaudhuri, Head of iShares Investment Strategy and Markets Coverage. Lauren Simmons is a personal finance expert and former stock trader as well as being a producer writer and the host of Going Public, a web series, following the stories of founders on their capital raising journey and her own podcast, Money Moves.

Lauren is part of BlackRock's new [00:00:30] iShares Baller$ campaign, where Lauren is taking five college basketball players, under her wing to coach them through a financial literacy curriculum.

Hi Lauren, welcome! It's so great to have you. How are you?

Lauren Simmons: I'm so grateful to be here. I'm doing great. How are you Gargi?

Gargi Pal Chaudhuri: I am well, thank you. I've been so excited to speak to you about the Baller$ campaign. The one thing that I was thinking [00:01:00] about is the tagline it's called playing the long game, tell me a little bit about what that means to you and why did this campaign resonate with you so much?

Lauren Simmons: This campaign resonated in so many different ways. especially when it comes to young, new athletes coming into a lot of money, thinking about the broader markets and how everyday retail investors are looking at how to invest for their future.

And so the saying goes and it's, and it's what is [00:01:30] coined for this campaign is “play the long game. That is how you want to look at investing. Look at the long term, don't get too excited about instant returns and instant money, and how can we continue to grow and build our wealth for the long term.

Gargi Pal Chaudhuri: Especially, in these volatile markets, that makes a lot of sense. So as you were doing this campaign, and you talked about young people a little bit ago, what would you want young people generally to learn from this project?[00:02:00]

Lauren Simmons: I want them one, to obviously recognize that these players that are getting their contracts are the 1%. But there is still relevancy there in the sense of how you are investing and looking at your financial future for the long run. So I don't want people to feel intimidated or think that they aren't gonna be able to learn some of the tools that, is developed throughout this campaign.

Gargi Pal Chaudhuri: Yeah, Let's talk about you a little bit. So as I was researching for The Bid, I noticed that you have a degree in Genetic Science. And, I'd love to learn a little bit about how you translated that degree into this amazing career in finance that you've built. And, I speak [00:03:00] to a lot of women in finance that often ask about what classes they should be taking, and I tend to tell them that it doesn't matter you learn on the job.

Lauren Simmons: Yeah. So I study Genetic, Counseling and I had a really strong statistical analytical background there was definitely correlation when I went in to become an equity trader and having to analyze different stocks.

. And when we're looking at [00:03:30] the Gen Z population overall, they are the largest population that aren't even going to college. They're going directly into entrepreneurship. So when it comes to finances, I don't think to your point, there needs to be a direct correlation, there are definitely books that I could recommend, but to learn, in the Capital Market space is learning on the job. And even when it comes to your personal finance journey, it is. Learning, in order to be good with money, you have to be bad with money. And hopefully you can [00:04:00] make those mistakes earlier on, but having open transparent conversations about finances and what your journey is, is going to, help improve, one, your investment journey, but two your personal finance journey.

Gargi Pal Chaudhuri: And on that note, in terms of your journey of personal finance, I would say some of that relationship with money actually comes from when you were growing up. and I know that I am an immigrant in this country.

I grew up in India and so much of how I feel about money today comes from the lessons that [00:04:30] my parents taught me about saving and investing and how to think about cash versus the markets. And I'd love to hear from you around some of those same topics when you were growing up, what were some of the lessons that you learned about money and what were some of the relationships that you or your parents had with money?

Lauren Simmons: So my relationship with money, I come from a household where my mom was very good in personal finance, almost too good. In the sense of she was. frugal, but she also saved everything saved so much [00:05:00] so that she didn't really have a balance of, just living life and, and experiencing, different moments, going on vacation or going out to eat and as I got older, I realized that there has to be a healthy balance. you don't have to cut back on everything. You don't have to necessarily save everything, but I had to learn how to spend money. And, I, I recently had an executive coach tell me it's okay [00:05:30] to, spend money and have some risk involved that is healthy, right?

Let's not avoid having debt, let's not avoid making investments, but let's do it in a smart, reasonable way. so I've had to unlearn some of that thinking of if I spend money then I'm gonna be completely outta money.

The other thing that I've learned on my personal finance journey is that while my mother was great when it came to personal finances, she didn't invest at [00:06:00] all. I had to learn what it meant to invest, what my risk tolerance was, what my ethos was around investing and what I want to invest in and making sure that I was investing for me and not because of something I read on TV, something I read in the news and, and just making sure that I was in a solid place to start investing and a solid place is, building that emergency fund, making sure I have all of my revolving debt paid off. And then from [00:06:30] there taking the tools that, I learned in the household to, to make, my investing decisions.

Gargi Pal Chaudhuri: I love that Lauren, I have a strong belief that it's mothers of young girls that teach them about investments because it was definitely my mother who's a doctor who taught me all about um, saving well, I should say. so let's talk about the sports professionals that you're working with we'd love to hear if you have worked with sports professionals before, or if there were any expectations that you had going into this project and also, what are you [00:07:00] looking forward to the most?

Lauren Simmons: So I've not worked with sports professionals before, but I have worked with, clients that were younger, that came into a lot of money, whether it's working in entertainment, music, et cetera. And, there is a lot of correlation. From just the conversations that I have with my initial conversations, with some of these rookie players that I've been talking to, we have not had our one on ones yet, which I'm really excited to dive into that

But what I [00:07:30] hope is that, I'm a soundboard, that I'm a guidance, that I'm someone that is a trusted voice, that they can ask any and all questions. that they have related to finance and when it comes to the financial industry, and seeking financial advisors, many people get intimidated because the person sitting across from them doesn't look like them, whether it's lack of representation, whether it's, a young woman, or just women in general.

And [00:08:00] Sometimes when you feel like you don't have a seat at the table or the person that you're talking to relates to you, there can be an intimidation factor and everything that I do is all about giving that accessibility, giving people seat at the table, making sure that they're seen, they're heard that they're not being talked down to and that they feel comfortable asking all the questions that they want.

Personal experience coming onto the trading floor, when I worked at the New York stock Exchange, I did feel that level of intimidation of [00:08:30] working with 250 men and feeling like my financial literacy wasn't on par with theirs but what I learned was it is okay to ask for help. It is okay to ask any and all questions.

There is no such thing as a dumb question, especially when it comes to finance. And honestly, I'd rather ask a dumb question and be smart with my finances than not ask the question at all. But I'm curious, Gargi did you have that same experience working in finance?

Gargi Pal Chaudhuri: [00:09:00] Sure. So I, grew up on the bond trading floor at Merrill Lynch. I, started my career in 2001. So as you can imagine, not very many women, certainly not very many of color, certainly not very many women who speak with an accent. but my experience was actually wonderful.

I had people that I could ask questions to. Of course I felt out of place. I remember I felt so out of place probably even a couple of years where I felt very different. and I didn't have the confidence then that I do [00:09:30] now where I could say different is fine. Now you and I can say that you can be different and that's our, advantage.

That's our edge, 20 years ago that wasn't the case. Thankfully, I think, if you walk into a bond trading floor now, I think it looks slightly different. I hope not, not hugely, but slightly. And hopefully with women like you, there is a lot of representation and what you said earlier really resonated with me.

You can't be what you can't see. So having you there [00:10:00] and, especially having women, investors, showing women and people of color that you too can invest your money. So thank you for doing all the work that you're doing and, being visible. it's so meaningful. I'd love to talk a little bit about the curriculum that you're designing for these players. the philosophy that you're perhaps approaching it with and, how the relationship that you're building with them is expected to grow.

Lauren Simmons: we actually touched on this a little bit earlier, but I'm starting with the foundation of what is your relationship with money, [00:10:30] because it is very indicative to how you look at finances and how you are going to have different spending and investing habits. And I think so often is we jump right into, okay, these are different vehicles that you can put your money into.

This is what you can do for the long term. And that goes over people's head. And isn't a connecting point. If you don't understand how they are operating the way that they are operating and regardless if the players or [00:11:00] just anyone that is listening to, this conversation today has a financial literacy background or not, just know that your relationship with money is going to follow you throughout your entire life. And your relationship with money is going to continue to change and how you look at investing and saving and et cetera is going to change with different, life stages. Who I was at 18, going into college and who I was at 21, starting a job, making, no [00:11:30] money basically. And then who I am now making six figures plus. The, the milestones are gonna be different. I'm a little bit older. And so I'm hoping with these players, they can at least articulate what are some of their visions that they have, as far as how they're thinking about growing their money. and then also recognizing that they can change the mindset of how they've been raised. So I'm really doing it from a very holistic, psychological standpoint, and then [00:12:00] growing into the conversation of money and again, understanding what their risk tolerance is and how we can look at investing the a hundred thousand dollars that they've been given. but the biggest thing is that I want them to feel empowered and I want them to stand by the decisions that they make. One of the best lessons I've learned while working at the New York Stock Exchange is that you had to make, decisions and microseconds when being an equity trader and whatever decision you made, you had to be firm in that decision. There was no [00:12:30] hiding behind someone. There was no making excuses. And Because I learned that so early on every decision that I make, especially with my personal finance and investing journey, I stand by it. And maybe it is a bad decision. That is okay, there, is no it's bad or good it's the decision that you felt was right for you and whatever the outcome is, the outcome is.

And so I want these players to feel empowered by the decisions that they make and regardless of what happens. Feeling [00:13:00] good that they made those decisions because they were able to come up with those decisions.

Gargi Pal Chaudhuri: I think you make an important point, the decision is your decision and owning it. I think it's very similar when you're trading or when you're managing risk as an investor, you have to own your decision and you have to know that there are consequences to the decision and that's okay.

And I love that you're teaching them that at this juncture. so talking about decision making, especially for the players given their age [00:13:30] and the particular career that they're in, which is obviously different for the one that you and I have had as traders and investors. are there certain issues that come up?

I suppose the one that immediately comes to mind is injury and perhaps a shorter timeframe of their careers. Is there something to think about there?

Lauren Simmons: You touched right on it. with athletes in general, their peak salary is gonna happen a lot younger than how an everyday person . That is working in the typical workforce, you continue to scale on a yearly [00:14:00] basis. You keep growing, you keep building towards your retirement, and there are definitely similarities there. but their money, is going to peak unless they decide to do other business ventures and continue to grow and develop, the more business side of their brand. so with that in mind, they have to be very intentional and very strategic in what they are thinking about doing with their finances in the long run and not just get so excited about, oh, I have so much money right now because that's only today. That could be [00:14:30] next year. That could be even five years. But when we talk about how long we are living on this earth, it's very, it's relatively a very small percentage of the time that they will be alive and they need to be making those long term decisions, as early as possible.

Gargi Pal Chaudhuri: That makes complete sense, and we're talking about the athletes a lot, because of course it's super exciting, but everyone listening to this, podcast, isn't an athlete. So what are some of the teachings that you have and [00:15:00] spread it across people of all ages? What should they be learning an investment 101 if you will..

Lauren Simmons: So of course the, the standard advice that everyone always gets is following the 50, 30, 20 rule. And that is a great foundation. 50% is gonna go to your everyday expenses. 30% is gonna go to your future. And 20% is going to go towards your savings now, Now that 30 20 can be flipped. but with that added the 30 or 20% that is going to go towards your investing [00:15:30] and that's a great foundation. I think that those numbers will continue to change as you will get into your different life stages. But with that, the other important thing is making sure that you have. Credible voices around you so that you can't ask and articulate any and all questions. And the main thing is making sure that you don't just have one voice when you have one voice. You're usually following that one ideology, which may not be a direct reflection on how you want to invest or [00:16:00] what your financial decisions are. So I do think. Being able to source different voices in the space, asking questions, getting different ideologies, and then putting those together, figuring out what works for you, your ethos, your risk tolerance, and going from there.

This is advice that I would tell someone who is making a million to someone who's not making any money at all.

Gargi Pal Chaudhuri: Love that Lauren. And I'll just add a couple of things. And these are from conversations that I've had with friends and family, that often come up. And the one thing that [00:16:30] people ask is around, oh, how much money do I need to have to start investing? I'm sure you come across that too. And I'd say that no amount of money is too small to start investing. There's so many ways to invest now at such cost efficient ways. And number two, I don't think you need to know everything about everything to start your investment journey. I think people often get overwhelmed because they're like, oh, but I don't know about the earnings report and I don't know about CPI and I don't know about fed.

[00:17:00] It doesn't matter. You can start small, you can start in a diversified manner and take little steps. And then you can think about asset allocation later, just remain remaining diversified in the beginning, instead of putting all your eggs in a single basket, I think is one thing that I often tell friends and family.

Lauren Simmons: And I think that that's really important. especially when you're just starting out, because you get to figure out what kind of investor you are. And I think as you are going on your journey and [00:17:30] you understand what your risk tolerance is, what type of investor you are, the better you can shape yourself to maybe more specific vehicles. but I think the more diversified you are to your point the better.

Gargi Pal Chaudhuri: I know that there's been so much concern recently with the volatility in the markets or with mortgage prices going up. And of course, with inflation being at four decade highs, I guess when people are worried about some of these things such as, not being able to buy a home because home affordability, has moved meaningfully with [00:18:00] mortgage rates or things like social security, not being around how do you talk to them about ways of building wealth in the traditional manners that we had perhaps thought about earlier? with some of those perhaps not being, as in reach.

Lauren Simmons: to answer your question, when it comes to real estate, there's still ways to be able to buy real estate without directly buying real estate but again, take your time to do your due diligence, there are definitely barriers of entry into all these different, vehicles and, and continuing to [00:18:30] be able to diversify your money.

The accessibility is there, especially when we have the technology and just different avenues to be able to do things. I wouldn't get too narrow focused on “I'm not able to, to purchase a home.” Of course, that's the American dream. Everyone wants to do that, but you can still be part of Real Estate just in different ways and get dividends and passive income, which is a plus. So That is where asking the questions comes into mind. but I think, let's not [00:19:00] sugar coat it the next year or two is going to be a little tough, right? and the cost of living has gone up but there are cycles in the financial market. there is cycles in the economy and if you can breathe through this, do all the smart strategic decisions. Especially when we talk about playing the long game.

Gargi Pal Chaudhuri: I like that. Talk to us a little bit about what you see to be the biggest barriers for financial literacies, [00:19:30] especially to women and to people of colour who perhaps don't have access or formal education on financial literacy as many others do.

Lauren Simmons: what I am learning now, have worked a few years in, in finance is that it's not just minorities and women that don't have that financial literacy acumen. I'm learning that the conversation around money just doesn't happen overall, and I think we can be more empowered by [00:20:00] having those conversations. And this can open up a floodgate of a lot of things, but having the conversations on what is proper salary, how do I budget? How do I save? Knowing how much you have to pay in taxes at the end of the year, the more that you can start having those conversations, especially the earlier on the better it is down the road when you get through those different milestones and you don't have to figure it out right on the spot. Financial literacy, isn't about reading the [00:20:30] best book or, reading the best newspaper. It is just about having the open conversation around money and so much in society. Money is so taboo that we don't even have the conversation.

I am grateful that I was raised in a house. Where my mom had very transparent conversations with me about how much money she made, what her actual job was, how she was saving and budgeting her money. And I think it always starts in the household. If [00:21:00] parents could have conversations with their children around that, the better it is.

And there's no shame in having open, transparent conversations about what your salary is. I think the more that you can have those conversations, then when those kids turn into adults, they know how to strive for more later on in life.

Gargi Pal Chaudhuri: Yeah, fully agree. I actually always talk to my team about this and I tell them how important it is to have those conversations about [00:21:30] expectations, about pay no salary at the end of the year should come as a surprise ever. So hopefully if you're listening to this, you are having conversations about your expectations of compensation.

you talked a little bit about books and I'd love to ask you, what are you reading these days? Anything on top of your playlist, and anything that you're watching that you'd like to share with us?

Lauren Simmons: Just in general or finance related I always have CNBC Bloomberg, all the financial channels in the background. [00:22:00] This is the time for anyone that's listening if you wanna understand how markets move, how the economy is going, this is the time to do it This is the time to learn because the market is so volatile you get to learn in real time and understand why the market is moving the way that it is and forecast for the future. And I think that that will prepare you for the next recession, 10 plus years down the road and what that looks like.

There's so much. room to [00:22:30] learn when the market is as volatile as it is. So that is a plus side to that. When I just want to unwind and relax, streaming services have been really great. We're talking about basketball, but I really love the show, Winning Time on HBO, max. I don't know if you all have watched it, but it is incredible.

I love just relaxing on a Sunday night watching that. and outside of that, I, I listen to a lot of podcasts, but I'm curious, what do you watch Gargi?.

Gargi Pal Chaudhuri: I'd say that one of my goals for 2022 is to [00:23:00] watch less TV and read more books. So I'm trying to get to 50 books by the end of the year. So I am currently reading some of my beach reads. I just finished, Wahala by Nikki May. It's a fun book about four, British Nigerian women so that was a fun beach read. I tend to never read, finance books because I read so much for work when it comes to the markets, but I do consume financial literacy via podcasts. So Bloomberg's Surveillance is my [00:23:30] favorite and of course The Bid, it's another good one so those are some of the ways in which I consume financial literacy. Lauren, I'd love to hear who are some of your role models within the financial space or even more broadly, who are some people that you've looked up to?

Lauren Simmons: In the financial space, a great role model and I just met her for the first time was Arlan Hamilton. She is an African American woman in the VC space and she is just doing phenomenal things. And again, back to representation, seeing a [00:24:00] woman be able to raise so much capital and assets under management, is just absolutely phenomenal and inspires me to think beyond my limits of what I wanna do for my career and my future.

And then outside of that, I really am inspired by my family, my mom, and my brother, I have a disabled brother and he has this optimistic, mindset that just empowers me to just move forward every single day to never use excuse as a reason why I can't do something because he doesn't [00:24:30] use any excuses. And he is really the passion and the motivation to why I do everything that I do today. And then of course, I have a younger sister who inspires me. She keeps me in the know of what this world is that we're in, especially with her being 19 and I just feel like I'm so detached but she, she keeps me young, And I love looking at the world through her eyes as well, it's nice to have a different perspective and what this next generation is [00:25:00] thinking about going.

Gargi Pal Chaudhuri: That's awesome. I'm sure you're teaching them all about investing and they're going to be super investors in no time. Lauren, this was so much fun. Thank you so much for your time. I learned so much and it was such a pleasure meeting you.

Lauren Simmons: It was so amazing meeting you as well. I'm so grateful that we had this conversation and I'm excited for everyone to hear these golden little nuggets that we have to share.

Gargi Pal Chaudhuri: Thank you for listening to this episode of the bid. On our [00:25:30] next episode, Mark Wiedman will be back with another episode from the mini series, The Real Leaders of Net Zero, where he's interviewing CEOs who are leading the private sector through sustainable business practices and towards the net zero future.

Make sure you subscribe to the bid wherever you get your podcasts.

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Sources: Pollfish Survey May 2022, N-1, 000