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Oscar Pulido: Welcome to The Bid where we break down what's happening in the markets and explore the forces changing the economy and finance. I'm Oscar Pulido.
Today, we're bringing you a special Ask Me Anything episode focused entirely on a topic we hear about constantly- retirement.
Jaime Magyera: And the way I think about retirement is, retirement is the choice to do what's next. It's the freedom to do what's next. So it could mean the choice to start a business or the choice to go back to school or the choice to, travel the world, do charity, philanthropy, but it's a choice. And in order to have that choice, you actually need to have a plan.
Oscar Pulido: Whether you're just starting out on your retirement journey or thinking about how to transition out of the workforce, today's guest will help you get on the right track in terms of considering your retirement options.
Our guest is Jamie Magyera, head of BlackRock's, US Wealth Advisory and Retirement Businesses. Jamie spends a lot of her time in conversations with both individual savers and financial advisors across the country. We'll talk about the biggest themes on people's minds today from how to build savings early to supporting small business owners to staying financially resilient throughout a longer life.
Jaime, thank you so much for joining us on The Bid.
Jaime Magyera: It's great to be here!
Oscar Pulido: And welcome back. This is a different format than the last time we spoke. This is part of our Ask Me Anything series where we bring in a guest and we ask them questions that our listeners have submitted. So, obviously in your role as the head of the US Wealth Advisory business, you talk to a lot of, and clients, a lot of financial advisors. So I think you'll find that the questions are in the spirit of what you do day to day.
Jaime Magyera: This is quite intimidating!
Oscar Pulido: That's okay, we've had some success with this format and you're a pro. So, Jamie, let's start with one theme that we keep hearing from listeners, which is about the transition into retirement itself.
You and I spoke a lot about retirement the last time we spoke, and people say they've spent decades building a career or a business, and now they're trying to figure out the shift into the next phase. So, what do you tell people who are just starting to think about this transition?
Jaime Magyera: So first of all, I love that you said shift into a next phase or a transition because I find that so many people think about retirement as this kind of ending point, right?
It's the stop, it's the destination. And the way I think about retirement, for me, retirement is the choice to do what's next. It's the freedom to do what's next. And for people, that means many different things, right? So, it could mean the choice to start a business or the choice to go back to school or the choice to, travel the world, do charity philanthropy, but it's a choice. And in order to have that choice, you actually need to have a plan, right? You need to be prepared emotionally and mentally. You also need to be prepared financially. And so, for people who have been saving and have been investing, approaching that time where you're thinking about what you're going to do next is a time to take stock of how you've invested and what you've saved.
But importantly, what do you then need to do or get from those savings? Do you need to generate income to support what you're going to do next? You need to now protect those savings. You need to grow those savings further. But if you've had a plan and you've been investing all along, now's the time to either keep working with an advisor or find a financial advisor to maybe help you really refine that plan as you go into retirement or whatever that next phase is for you.
And by the way, for many people, they might not be as prepared as they had intended, and that's okay. Life happens. We have many competing priorities, both financially as well as with our time. And so, getting started and getting back on track is really important. And the good news is you have time to do that.
You have time to keep investing, to keep saving. And again, working with an advisor or even online resources or tools to help you figure out what is it that you actually need in order to go do what you want to do next.
Oscar Pulido: You're painting this picture of retirement being a very active phase, and I love what you said about the freedom to do what's next, but it's also an active phase in terms of thinking about your finances.
Maybe we could switch to a different generation. We've also heard from some of our younger listeners, these are the folks who are maybe still a while away from retirement, and a lot of early career workers told us that they're thinking about their financial future much earlier than they expected. I think that's good news. They want to know what are the most important things someone can do in their twenties or thirties to set themselves up for long-term financial security?
Jaime Magyera: So, first of all, I think that's great news that people are thinking about this so much earlier and they're actually asking the question, what do I do? How do I do it?
Look, what I would say is just get started, right? Just get started. That's the key to all of this, is start investing, start saving early, start doing it young even when you can't imagine what that future might look like. a wise friend once told me that you can't save for the future in the future.
It sounds a little crazy to say, wow, that's the wisest thing I've ever heard. Actually, if you start to think about that, it's very true. You can't plan for the future in the future. You can't save for the future. In the future. And so, I just think about my own story. When I first started working, this is going back 25 years ago now. I had student loans. I wasn't making a lot of money, I had to pay my rent, I had all of these bills, but I remember I made a point every month to have $50 deducted from my checking account and just put into a savings and investing account. And it felt like a lot of money back then, because by the way, $50 could have bought me more coffee or whatever it was.
But I made that choice and I stuck to that discipline. And over the 25 years, that's actually turned into a good deal of money. And so, the point here is it's not about timing the market, it's about time. In the market. And so, if you think about us, Oscar, if we had invested, a little bit of money back in the markets, let's call it in $2000 today, that money that we invested would've been worth seven times the amount that we invested.
So just think about that concept again. It's not about timing the markets. Markets go up and down, but it is about consistently being in the market and having enough time in the market. So, what I would say to everyone is just get started. Open up a brokerage account. Open up a savings and investment account at your bank. If you work for a company that offers a retirement savings plan, take advantage of it. Use that every little bit that you save and invest is going to pave away toward your future
Oscar Pulido: Seven times, what you would've invested in 2000, think about all the scary headlines that have taken place since then and maybe have given you reason to not invest, but if you stayed the course, you were successful. And I have a bit of a steel trap memory that $50 deduction, I think is a story about your dad as well, if I'm not mistaken.
Jaime Magyera: It is, very good!
Oscar Pulido: We heard about that the last time we spoke. We also heard from some listeners whose retirement timelines don't follow a traditional pattern. So, we're thinking about dual career households - gig workers, blended families, partners that are retiring at different times. They asked, how do you build a sense of financial security when your career path and family structure are anything but linear?
Jaime Magyera: So I’ve listened to this question, and it makes me scratch my head a little bit because I find that my experience has been anything but linear. And I wonder what it is even like to have a linear progression here. But I think what you're hearing from this question is that the world has changed, right? Our lives have changed, our families have changed, our career paths have changed. And by the way, they'll continue to change. And for me, I think there's really three things that I tend to think about when I think about my own journey and where I'm going.
The first is really thinking about goals versus milestones. I find that a lot of times we're sitting here saying, what's the magic age to start saving or build a plan? Or, what's the magic dollar amount I need in order to retire?
And it's really not about that. It's about what you want to do. What goals and objectives you have and how you want to use your money to support your life, to support your family, to support your dreams. And so I often talk to my family and friends about this is, it's not the milestones, it's the goals. It's what you want to do with what you're saving and what you're investing. So that's the first thing. The second thing I would say is, it's not about having this perfect plan on paper, it's about the direction of the plan.
And earlier you talked about discipline, right? And continuing to save and continuing to invest even when markets go up or down. My, my suggestion to everyone is just commit to having a plan, build a plan that puts you in the driver's seat along with possibly a partner, like an advisor or someone you trust.
But have that plan actually pan out the direction of what you want your life to be, how you want your money to work for you. And once you have that plan, be really comfortable with the fact that it's going to change. And by the way, it should change because your life changes, you have a different career, you get a different job, you have children,, life happens. And so, you need to have that plan change. And so I encourage people to think about the direction, not the perfection of that plan. And then the last point is, we don't know what's coming next, right? In life, we never know. And people want to try to predict everything, don't predict it, just plan for it and be prepared.
And so often we're talking about the emergency dollars that you needed to fund something that you didn't even realize was going to happen. Your roof, your car, your this, your that. Have an emergency savings plan. Put some money aside so that when the emergency happens, when something happens where you need those dollars, you don't need to take them from your investment account.
You actually have them waiting for you to deploy as you need. So again, not about predicting everything. Just be prepared.
Oscar Pulido: Yes, be prepared. Have a plan. I too, I'm just thinking, what does a linear path look like working at a company for 50 years and nine to five. But people change careers. Things happen in their family. So having a plan is, sound advice when we got the questions.
We also heard from advisors, you've mentioned financial advisors, financial planners, people who help individuals with their financial path. And we heard from advisors who work with small business owners and they want to know what should advisors, what should they be thinking about when they help these business owners plan for retirement, both for themselves, but also for the employees of that small business.
Jaime Magyera: Yeah, it's so interesting when you think about small business owners. first of all, many of these small businesses are not that small, right? We call them small business owners, but they, the, these owners, these creators, these entrepreneurs, these inventors, they have built incredible businesses.
And so if I'm a small business owner and I'm thinking about what my future is and when I might retire, it's not just about how am I going to generate income? It's about what do I do with this creation, right? This thing that is so aligned with my identity, it's so purposeful to me. I'm thinking about succession planning.
I'm thinking about how do I have this live on, how do I have my legacy? Live on who are going to be the leaders of this business. And so there's so much to that conversation that actually has nothing to do with the financial aspect of it. And so I encourage advisors to think about this as this is an emotional conversation, and in fact, that small business owner needs someone they can trust, someone who can really help them, give them the right judgment, the right counsel, but also remove the emotion from that conversation because it's an incredible opportunity to build a business. It's an even more incredible opportunity to then leave a business. And what I would also say is for advisors working with small business owner clients, make sure you have that conversation early. Don't wait for the day where that small business owner wakes up and says, I'm thinking about selling this business, or I'm thinking about transitioning this business.
Know that's a 10-year plan, that's a 15-year plan. You need to have a lot of time to work with that, business owner. Now, on the flip side of it is, as the business owner might be thinking about retiring, think about retirement for all those employees, right? All of the employees that business owner has hired to help create this business, to help deliver on this business. What an incredible opportunity and benefit to give each one of those employees the opportunity to save for retirement. And so, if you're an advisor working with a small business owner, it's not just about how that business owner is managing their business and running their business, it's about how that business owner is retaining their talent, attracting new talent and serving that talent, all of their employees, and doing so by setting up a retirement plan for them.
And so having a 401k plan or some type of retirement savings program so that every employee that's working for you has an opportunity to not only deliver on your vision, but also deliver on their life vision for their families and build a retirement fund.
Oscar Pulido: And you mentioned being prepared is so important and sometimes people reach retirement and they're not prepared.
But if they work at a business, at a company that has put some infrastructure in place to help them save and invest, then maybe they stand a better chance of being prepared when they get to retirement.
Jaime Magyera: Absolutely.
Oscar Pulido: We also heard from advisors about long-term engagement and what they mean is that many workers start saving in their late twenties, but the advisors may not meet them until decades later.
So, sometimes the individual investor and that advisor, they don't link up right at the beginning of when the saving an investing journey starts. So the advisors are asking, what can they be doing now to build relationships earlier in a client savings journey?
Jaime Magyera: It's a question I hear all the time. So there's a few things going on here. for advisors, oftentimes they meet their clients when the client's wealth is larger, or perhaps when their situation gets a little bit more complicated and they actually need an advisor to help them think about different situations.
The problem is at that point in time. That client might already have another advisor. They might have two or three other advisors. And so, they're really deciding who is the one advisor I'm going to work with? Who is the one advisor I really trust? And if you instead start building a relationship with a client much younger, you have a much deeper relationship with that client.
You were there for them when they needed you in the way beginning. And I think about my relationship with my financial advisor, my advisor, was my mentor. When I first started working, she was someone that I admired and she was a mentor of mine and she took me on as a client way back when all I had was student debt, a 401k plan, and she was my mentor. She took me on as a client. I was not her typical client. She's still my advisor today because I am so loyal to her and she has built such an incredible trust with me. She's helped me through all of my life changes. And so, for advisors who are thinking about how they deepen their relationships or even attract younger clients, help them think about life, help them think about career, help them thinking about, think about jobs, savings, college loans. Help them think about the challenges that they might have at that point in life. And don't worry about selling products. Don't worry about all of the, details that come along with financial and planning.
Instead, just be a partner to them and help them think about how they navigate the choices and decisions they're making. Then, the other thing I might just offer is. Many advisors are working with the parents of these children, and so when you think about the fastest growing segment in the market today, it is millennials.
People under 44 years of age, those 44 year olds and younger are responsible for, will be responsible for about 70 trillion in a wealth transfer over the next 10 years. So those clients or those children of your parents are very important potential clients for you. And as the wealth transfers to those children, you need to have a relationship with them before that happens.
And so if you're working with the parents of the children, ask those parents to bring the children along, help the children think about their life along with their parents.
Oscar Pulido: And speaking of the children, going back to the younger generations, which we said they're incredibly engaged in their finances, and maybe that's because the advisor has engaged them, or maybe they're just reading more about it and hearing more about it, but they often turn first to friends or social media for guidance, which I guess is not, overly surprising, but what's the best way to demonstrate the value of professional advice to someone just starting out? It sounds like you had a mentor, but what about those other younger generations? How are they supposed to see the value of that advice?
Jaime Magyera: Yeah, so the world is so different today. the younger generations, and by the way, it's not just the younger generations, it's everyone now. Everyone relies so much on technology, on digital, on AI, on social. We call, oftentimes some of the younger segments, the WeChat generation. Because they are so engaged in digital, in social, they oftentimes trust social more than they'll trust people.
And so, what we talk about with advisors and some of the best advisors who do this well are really trying to be, just that the advisor, they're relying on experience, on judgment, on context, whereas social media is relying on emotion.
And chasing trends and making reactive decisions. And by the way, you can get a lot of ideas from social media, but social media doesn't know who you are. It doesn't have the context of what you're going through. It doesn't have the context of your financial situation, and it certainly doesn't have the judgment and the experience that an advisor has.
I look at my friends and family and say the same thing, you can get a lot of great ideas online. By the way, that's good, bring those ideas to your advisor and talk to your advisor about it, because they will then look at those ideas and have a conversation with you through the context of who you are and what you need. And not just the short term, but the long term, and what would this idea do to better shape your future.
Oscar Pulido: Jamie, I knew you would do great with this. the ask me Anything format, you're a wealth of information when it comes to. thinking about things like retirement and saving and investing, and I heard a few themes, which was again, going back to retirement, being the freedom to do what's next, but important to stay, be prepared to have a plan, not only leading up to retirement, but also having a plan once you get into retirement as it relates to your finances. We talked about some of the younger generations and the encouraging trend that they're focusing on their financial future. We also talked about the value of professional advice, and I think this last point you made where you can get a lot of ideas from social media and online but bring those to somebody who knows you well. Jamie, we appreciate you sharing all these insights and we appreciate you doing it on the bid.
Jaime Magyera: Thanks for having me!
Oscar Pulido: Thanks for listening to this episode of The Bid. Next week I'll be speaking with Jay Jacobs about the macro investing themes he's considering in this new year. Don't forget to subscribe to The Bid wherever you get your podcasts.
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This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener. Reference to the names of each company mentioned is merely for explaining the investment strategy and should not be construed as investment advice or recommendation. In the UK and Non-European Economic Area countries, this is authorized and regulated by the Financial Conduct Authority. In the European Economic Area, this is authorized and regulated by the Netherlands Authority for the Financial Markets. For full disclosures, visit blackrock.com/corporate/compliance/bid-disclosures.
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