Mind the retirement gap

Esta semana con Anne Ackerley, Head of U.S. and Canada Defined Contribution de BlackRock

Existe una brecha entre hombres y mujeres de la que no estamos hablando: una brecha en la jubilación. Solo 52% de las mujeres ahorran para la jubilación, frente a un 61% de hombres. Son más las mujeres que se estresan al pensar en invertir y que creen que invertir no es para personas como ellas.

En este episodio de The BID, rompemos el techo de cristal con Anne Ackerley, directora de Contribución Definida de EE.UU. y Canadá, y cofundadora de Women’s Initiative Network de BlackRock. Brinda consejos a partir de sus 34 años de trabajo en el área de los servicios financieros y analiza por qué cree que el término “jubilación” es anticuado.

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  • Mary-Catherine Lader: March is Women’s History Month in the United States. People are celebrating women’s empowerment in their companies, in their communities, and families. But when it comes to retirement, there’s still a big gap – an investing gap – between men and women. And we may not be fully aware of it, or what to do about it.

    We’re seeing a crisis in retirement, and that crisis is magnified for women. Only 52% of women are saving for retirement, versus 61% of men. More women than men feel stress at the thought of investing, and are more likely to believe that investing isn’t for people like them.

    On this episode of The BID, we’re talking to the expert on these issues. Anne Ackerley heads BlackRock’s U.S. and Canada Defined Contribution business, and she co-founded our Women’s Initiative Network. She’ll talk about what we can do to get more women invested, share advice from 34 years working in financial services, and discuss why she thinks the word “retirement” is outdated. I’m your host, Mary-Catherine Lader, we hope you enjoy.

    Anne, thank you so much for joining us today.

    Anne Ackerley: Thanks so much for having me.

    Mary-Catherine Lader: So on our last episode, President Rob Kapito talked about the retirement crisis, and his view is that it’s actually getting worse. The problem is magnified for women, and our Investor Pulse found that only half of all women have started to even save for retirement. You’re an expert in this area; you lead our defined contribution business, and you’re also, of course, a woman who’s been in financial services for decades, observing these trends over time. Why is this particularly bad for women?

    Anne Ackerley: Let me just take one step back and say, actually, when I think about statistics like that, where I first go to is access, and the fact that a third of Americans don’t have access to an employer-sponsored retirement plan. So for both men and women, we start off with a lot of people not being able to save through their employer. Then when we look at women and only 50 percent, about 50 percent of women are even saving for retirement, I think it has to do with something I call The Triple Whammy. So women are going to live longer, we live longer and our money has to last longer. Two, we tend to make less than men, in the United States, 82 cents on the dollar. And third, we often have gaps in our employment, and sometimes we’ll miss out on benefits. And when you take the effect of the three of those things, when we look at 401(k) plans, we sometimes find that when women get to retirement, their balances might be up to 40 percent less than men’s.

    Mary-Catherine Lader: Wow.

    Anne Ackerley: And yet, that money has to last longer. So we have a retirement crisis in the U.S., and we really have a retirement crisis for women.

    Mary-Catherine Lader: Those three things you mentioned – living longer, making less, and gaps in employment – they’re sort of out of women’s control. So what can we do about it, and what can women do themselves?

    Anne Ackerley: So, money is the number-one stressor for both men and women, but when we specifically ask women, why aren’t you saving, why haven’t you saved enough? Women will tell you that they feel alienated from the finance industry and alienated from retirement. Three out of four women consider themselves savers, not investors. Women will say that there’s too much jargon, there’s too much choice, they’ll say sometimes their advisors aren’t actually helping them, they’re telling them, they’re not teaching them. So what can we do? I think as an industry, we’ve just got to do better here. We’ve got to have less jargon, we’ve got to make retirement easier, easier for women, easier for men. I think tools can go a long way to helping everybody save more. We’re focusing on building a digital technology enabled platform to help people save more for retirement. I think that can go a long way. I think we have to help financial advisors get better at working with women, and helping them think about how to save.

    Mary-Catherine Lader: Right. So making the complex simple and putting aside jargon really requires a mindset shift. Often, we think that the complexity is what allows us to add value. Do you see financial advisors and wealth management firms in particular interested in doing that?

    Anne Ackerley: I think we’re trying, as an industry. I remember back when I was in our marketing department, and somebody once said to me, it was a portfolio manager, and they said to me, “But if we don’t make this complicated, how will people know we’re smart?” And I think there is something in that, that you’re right, the value that we at least historically have tried has been is, look, I’m smart, I know a lot, I’m the expert. But it doesn’t resonate, and in particular doesn’t resonate with women. This isn’t about dumbing it down. But it is about using words and using language that people can understand, and that resonates with them.

    Mary-Catherine Lader: So that’s a part of a problem. At a more micro level, if you have to narrow it down, what are the three things you tell people to do to help plan for retirement?

    Anne Ackerley: So am I allowed to say, start saving now, three times?

    Mary-Catherine Lader: Absolutely.

    Anne Ackerley: Start saving now, start saving now, start saving now. But in all seriousness, the younger you start to save, the better you’re going to be. The impact of compounding over time is immense. So if you start saving at 22 versus start saving at 30, that has a very big difference into what you will have in retirement. So start saving now. Save more. Do everything you can to try to save a little bit more. 401(k) plans and employers allow you to auto-escalate, so every year, you can set it so it increases automatically. You’ll hopefully get raises, it’ll just come out, you won’t even notice it’s gone. I would say the third thing is invest appropriately. I am a zealot about target date funds, I think for most people getting into an age based asset allocated product is the right thing. It’s easy, the professionals are doing it for you, and we know that asset allocation ultimately drives a lot of returns.

    Mary-Catherine Lader: And how do people think about that age today, and should women be thinking about that age any differently than men? And when I think about when I signed up for a target date fund, my first 401(k), I was 22, I probably picked 65 because that is the number that you have in your head as a retirement age, even though that’s increasingly unrealistic, right?

    Anne Ackerley: Yes. Unrealistic and probably not wanted. If you’re going to live to 100, 102, 105, I think the statistic is that the ten year olds today will live to 105 in the United States, 107 in Japan, the notion that you’re going to retire at 65 and have 40, 45 years “in retirement”, that’s becoming very outdated and unrealistic. And I think we’re going to have to start thinking about careers in stages, or encore careers. It probably isn’t going to be go to school, get a job, retire. It’ll probably be go to school, get a job, go back to school, take a sabbatical, go do something else. But since I said invest target date, and I think target dates will evolve over time as retirement changes. But today, think about an age that you might think about retiring. Maybe it’s not 65, maybe it’s 70, maybe it’s 75, and put your money in that.

    Mary-Catherine Lader: And how do you see target dates evolving over time? So if today you pick that date and then its asset allocation is optimized for a certain outcome based on the risk you’re willing to tolerate to that date, what do you think might be an option for a 22 year old graduating in 2025?

    Anne Ackerley: Great question. I have two young adults. So I spend some time trying to convince both of them to save, to set up their 401(k)s, to try to put some of their money in it. I could see it going a whole bunch of ways. As we get to more customized investing, maybe we’ll have more customized target dates. I have often thought should men and women have different target dates, given that our longevity and our earnings profiles are different. That being said, I just want to come back to, as a zealot, for most people, a target date can be a great investment.

    Mary-Catherine Lader: So contributing to a 401(k) is one piece of the puzzle, but you also mentioned the idea of just saving more, and taking advantage of the mechanisms that are out there to help people plan for retirement.

    Anne Ackerley: One of the biggest issues is just that people aren’t saving enough. When you look at participants across the board in 401(k) plans and their employer sponsored plans, only ten percent of people who save in 401(k)s actually reach the IRS match.

    Mary-Catherine Lader: Wow.

    Anne Ackerley: People aren’t taking advantage of let’s say the employer match, or they’re not maxing to the IRS and taking advantage of all the tax situations. We still need to help people get the full employer match, get the tax benefits, and try to continue to save. And not to scare people, but today, if you start at 22, and you’re going to retire at 65, and you invest in a target date, you probably should be saving combined with your employer, 15 percent a year.

    Mary-Catherine Lader: 15 percent of your total income pre-tax?

    Anne Ackerley: Yes, pre-tax, a year. I think in the United States, the average savings rate is probably closer to six. So we have a lot of way to go between where people are and probably where they should be. If we go into a period of low returns, that 15 percent might become even higher. So there’s a lot that we can do to just get people to save more.

    Mary-Catherine Lader: And you’re part of dialog not only with our BlackRock and our clients but also with government, and different regulators around this issue. What level of awareness and interest do you see in solving the consumer education that you were just talking about, now relative to five, ten years ago?

    Anne Ackerley: I think there has been increased interest on the part of government around retirement generally, and today, as we look at the legislature, there are quite a number of bipartisan bills around retirement. And I know a rallying cry for BlackRock has been make it easier. Make it easier for the employer to offer plans – by the way, I would just tell you that in the United States, there is no law, there is no rule that says an employer has to provide a retirement savings plan.

    Mary-Catherine Lader: So why do they all do it? To attract employees?

    Anne Ackerley: Actually many don’t. The large companies tend to, but many, many, many don’t. And so some of what we have advocated here at BlackRock is make it easier for employers, particularly the small employers. If you do offer one, there is a lot of reporting requirements and you probably need to make it simpler for employers. We might actually have what they call MEPs which would allow small employers to pool money and make it easier as well.

    Mary-Catherine Lader: So let’s switch gears a little and talk about something more personal. You’ve been in financial services for 34 years. What’s different today about being a woman in finance versus 5, 10, 34 years ago?

    Anne Ackerley: Let me just start by saying I think finance is a great place for women; I think it’s a super-dynamic industry and I think it is a great place to build a career. So I would say to women, come to finance. Over the last 34 years, I think there have been a lot of changes. There are more women coming, I think there is much, much more consciousness about some of the things that maybe kept women from getting ahead. I think there is a lot more willingness to see women get ahead in finance.

    Mary-Catherine Lader: You started the Women’s Initiative Network at BlackRock, it didn’t exist until what year?

    Anne Ackerley: We started it in about 2010.

    Mary-Catherine Lader: And what as the intention there and how has it been impactful?

    Anne Ackerley: We had just come out of the merger with Barclays BGI and you had BlackRock and BGI coming together. And so it was a great moment in time I think from a cultural perspective to bring these two groups together. The network was formed to help BlackRock capitalize on all the female talent that it had. Women are more than 50 percent of the population. To the extent that BlackRock wasn’t making as much use of women, we were leaving talented people on the sidelines. So the network focuses on helping women develop and make the most of their potential here at the firm.

    Mary-Catherine Lader: So in your 34 years in the industry, you have worked with and increasingly mentored so, so many women. What piece of advice do you find has been most impactful as you’ve talked to them about their careers?

    Anne Ackerley: I talk to a lot of young women. And a lot of times they’ll come in and they’ll ask me, Anne, I’ve heard about this opportunity, do you think I should put my hand up for it? And mostly what I find is they just need somebody to believe in them, to see them as being able to do it. And so a lot of the time, really I’m not giving them—I’m saying, yeah, raise your hand, you can do it, you’re talented, go for it. And there is nothing better than seeing a young woman raise her hand, put herself out there, get that job, and then just totally crush it.

    Mary-Catherine Lader: So I’m going to end with a rapid fire round, so I’ll ask you a couple quick questions that you can answer in one sentence or less, ready?

    Anne Ackerley: Okay.

    Mary-Catherine Lader: Do you think you’ll retire?

    Anne Ackerley: Okay. Now you’ll know the truth, the hate the word “retirement.” I think we need to banish it from our vocabulary for everybody, because the world is changing, we’re going to live longer. I think this should all be about phases, transitions, encore careers. In my encore career--

    Mary-Catherine Lader: Right, new term, better term.

    Anne Ackerley: --rather than my retirement, I hope to help women invest and then I’d love to travel, garden and cook.

    Mary-Catherine Lader: That sounds like a busy encore career, like three at the same time. That sounds awesome. So I’ve heard that your son is in a band. What song would you make a guest appearance on?

    Anne Ackerley: I have absolutely zero musical talent, so it would be much better for my son and me if I just stayed as a groupie. But if he forced me to pick, I’m partial to their song “Keep Mother Sane.”

    Mary-Catherine Lader: Is this in honor of you?

    Anne Ackerley: No, it is not. To be very clear, it is not.

    Mary-Catherine Lader: What’s the name of the band?

    Anne Ackerley: Jackals.

    Mary-Catherine Lader: Very cool. What book are you reading right now and would you recommend?

    Anne Ackerley: That is a hard one to pick. So the book I’m reading right this minute is called Say Nothing, I believe it’s by Patrick Keefe. And it’s about Northern Ireland and the troubles. It’s fascinating. It’s kind of a true murder mystery, wrapped into that time. But I also just finished Becoming by Michelle Obama. Highly recommend that. And could I do a third?

    Mary-Catherine Lader: Go for it.

    Anne Ackerley: Okay. Bad Blood by John Carreyrou.

    Mary-Catherine Lader: Love that.

    Anne Ackerley: About Theranos. Fascinating read.

    Mary-Catherine Lader: I just read Becoming and Bad Blood also, really enjoyed them both, they’re great. What’s something your colleagues don’t know about you?

    Anne Ackerley: When you work at a place for 20 years, I think they know everything.

    Mary-Catherine Lader: Is that really true?

    Anne Ackerley: They know a lot. They know a lot. Maybe that my first job was on a farm stand.

    Mary-Catherine Lader: Doing what?

    Anne Ackerley: I was a cashier. So from the cashier on the farm stand selling corn to the world of high finance on Wall Street.

    Mary-Catherine Lader: Wow, and where was this farm stand?

    Anne Ackerley: On Long Island.

    Mary-Catherine Lader: Okay. And in those 34 years, what is the one thing you’re most proud of?

    Anne Ackerley: Well, I’d obviously have to say my two children, Jack and Juliette. But if it’s work related, I’d say coming to BlackRock, helping to build this company and staying true to our mission of helping people have better financial futures.

    Mary-Catherine Lader: Thank you Anne so much for talking about how exactly you’re doing that today and thanks for joining us.

    Anne Ackerley: Thanks for having me.