Anne Lester — Turn Your Money Shame into Money Power with Anne Lester

[00:00:00] Anne Lester: I think this is again, a place of financial advisor could be offering a lot of value, i’m not sure many do, is really making sure you define success. And you know, just speaking of target dates, we talked about it a lot, which is, is success maximizing the upside or is it minimizing the downside?

[00:00:16] Anne Lester: Is success, being confident that it’ll be good enough, or is success going, oh yeah, I picked the best thing. And there’s a word that I adore, which is satisficing, F-I-C-I-N-G, at the end. And that basically means trying to be good enough and acknowledging that you’re not gonna swing for the fences and that’s really hard for people to accept emotionally. Well, you could have done, yeah, I could have, but I did. That’s not what I wanted to define as success. Like sometimes good enough is success and knowing where your good enough line is, I think is really important.

[00:00:48] Intro: Do you think money takes up more life space than it should? On this show, we discuss with and share stories from [00:01:00] artists, authors, entrepreneurs, and advisors about how they mindfully minimize the time and energies. Spent thinking about money. Join your host, Jonathan DeYoe, and learn how to put money in its place and get more out of life.

[00:01:21] Jonathan DeYoe: Hey, welcome back. On this episode of the Mindful Money podcast

[00:01:24] Jonathan DeYoe: I’m chatting with Anne Lester. Anne spent 20 years as the head of Retirement Solutions for JP Morgan. With AARP, she co-founded the Aspen Leadership Forum on Retirement Savings. In 2020, she was recognized for extraordinary lifetime contributions to Americans economic security with the prestigious Ray Lillywhite Award. Anne has a Master’s in International Economics in Japan Studies from Johns Hopkins and a BA from Princeton. She was awarded a Fulbright Graduate Research Fellowship, and she’s often quoted across media, Bloomberg, Barron, [00:02:00] CNBC, Forbes, Wall Street Journal, New York Times. I think Baron’s actually featured you on the cover…

[00:02:05] Anne Lester: It was a while ago. Yep, that was a while ago. Yeah.

[00:02:08] Jonathan DeYoe: Right, right. Anne addresses or often addresses the under 45 crowd, which is, you know, also our audience. And I wanted to have her on the podcast to talk about her book, Your Best Financial Life: Save Smart Now for the Future You Want, William Morrow 2024. Anne, welcome to the Mindful Money podcast.

[00:02:26] Anne Lester: Thank you so much for having me, Jonathan.

[00:02:28] Jonathan DeYoe: First, where, where do you call home? Where are you uh, I live in, uh, believe it or not, Princeton, New Jersey, which was not part of the grand plan, but we just ended up here. ’cause my husband’s job was here when we moved back to the States. So that’s where we are.

[00:02:40] Jonathan DeYoe: Where’d you grow up? I grew up in Honolulu, Hawaii, and when I decided I was looking at colleges and the East coast just seemed incredibly exotic to me.

[00:02:49] Anne Lester: so that’s where I wanted to to be. Yeah, it was a huge, huge move. Worst culture shock of my life. from slow to fast.

[00:02:56] Anne Lester: From warm to cold, from [00:03:00] needing to wear clothes to shoes, you know? Yeah. Everything was crazy. It was a big change.

[00:03:06] Jonathan DeYoe: what age did you make the transition? Was I was eight, I Was 17, actually I was 17 when I, turned 18 in October. So yeah, it was, uh, it was a long time ago too, but it was.

[00:03:14] Anne Lester: I graduated from a small high school with 50 kids in my class. And so just everything, you know, the whole tiny high school to big-ish school, knowing every single person in my high school class. Well, I mean, there were the usual like jocks and cheerleaders and nerds, but like there were 50 of us, so that that didn’t get too, too big.

[00:03:35] Anne Lester: I mean, then just coming to a school like Princeton, which in the eighties was doing, its sort of hardcore, preppy thing that was just like, I just, it was overwhelming.

[00:03:43] Jonathan DeYoe: I I’m curious, the first 17 years of your life, what did you learn about money and entrepreneurship

[00:03:47] Anne Lester: I write about this a little bit in my book and talk about it pretty explicitly, but my parents are children of the Depression. They grew up in the thirties and forties. they’re 90 now and. I just [00:04:00] never remember talking about money. What I do remember is saying, you know, can I have X or Y or Z?

[00:04:06] Anne Lester: And it was either, yes, you can, and it was a, a good thing, or no, you can’t because we don’t spend our money on that. But it was never a conversation about, well, there’s a finite amount of money and we have to make choices. It was just a yes, you can have piano lessons. No, you can’t have a new dress to wear to the high school dance.

[00:04:22] Anne Lester: you don’t need that. Do you need piano lessons? I guess I did, so, you know, when my dad was a professor and there was always enough money, I don’t think my parents ever had, you know, lots of money, but it was certainly a pretty comfortable middle class. there was money for piano lessons. I never got her fixed allowance. I always just had to ask for money and they either gave it to me ’cause they agreed with what I wanted to spend money on or they didn’t. And I think that was not a great choice. and then my dad lost his job when I was a junior in high school, and he took a two thirds pay cut right when I went on.

[00:04:52] Anne Lester: He had a year’s severance and then I went off to school. He had two kids in college and his income was a third. And there was. Zero money. And I [00:05:00] was going from Honolulu with a wardrobe of like t-shirts, shorts, and flip flops to Princeton, , which is Princeton, and also cold. I didn’t have any clothes toed shoes.

[00:05:10] Anne Lester: I didn’t have any jackets. I didn’t have any sweaters. I had nothing. I, I remember asking my mom how much money I could spend and she said, I don’t know. I don’t know what you need, so just try to be careful. And I just, it was such a. I mean, I, I can see why she said that now, but it was such a terrible thing to do to me.

[00:05:30] Anne Lester: ’cause I just, it was, I mean, I knew there was no money and I needed shoes and a code, right? So I went to the thrift stores. It’s sure I got on my clothes, but it was a painful experience. But also I didn’t really learn enough about budgeting. You know, if I’d had a hundred bucks or 200 bucks, I could have made decisions.

[00:05:45] Anne Lester: But

[00:05:45] Jonathan DeYoe: Hmm,

[00:05:46] Anne Lester: try not to spend too much dear. We trust you. Was terrible, terrible. It was awful.

[00:05:51] Jonathan DeYoe: you. must have been a very trustworthy kid. ’cause I don’t think I, we don’t, we don’t give that lesson to our

[00:05:56] Anne Lester: Well, I had a terrible trouble with credit card debt. Terrible, [00:06:00] terrible credit card debt problems, you know, my whole, all my twenties and even into my thirties. I mean, it was just this constant, I can make the payments, I can afford it, you know? And. W what we did. with our kids was really different, and we were religious about putting them on an allowance.

[00:06:13] Anne Lester: And I, I think we gave them ATMs. Now this is, again, my kids are in their late twenties now, but we gave them ATMs and expected them to start doing electronic banking when they were, I think in middle school or, you know, elementary school, even fifth, sixth grade. And this is like, you are in charge of spending your money and we’ll tell you what we expect you to cover out of your allowance.

[00:06:32] Anne Lester: And it’s, you know, I. we live downtown and it’s walkable. So if you wanna go up to, you know, CVS and buy a candy bar, that’s, we’re not giving you money for that. If you wanna go buy a new video game, we’re not giving you money for that. Like your allowance has to cover these things.

[00:06:45] Anne Lester: We would’ve done it for clothing, except they wouldn’t have ever bought any new clothing ’cause they were two boys and they didn’t care. So I was like, we’re not gonna make you buy your own clothes. ’cause I know right now how this is gonna go and you’ll have a lot of video games and no clothes at all.

[00:06:55] Anne Lester: So, so we didn’t, we didn’t put ’em in charge of that, but we pretty much said, you need to manage [00:07:00] your money and discretionary spending and it’s finite

[00:07:04] Jonathan DeYoe: That’s pretty aggressive. Like I don’t think I’ve heard anyone go that aggressive. , I like the fact the clothes were excluded, but we did a little bit of that, but not quite that much. Do you think that they picked up on, do you think they learned lessons

[00:07:14] Jonathan DeYoe: from

[00:07:14] Anne Lester: I think they learned a lot. the nursery school we went to asked us to. Start paying the kids an allowance. And back then they were tying up newspaper for recycling and that was their job. So, you know, three yearold or 4-year-old could kind of stack the paper and then the adult could put the finger on the string and that, you know, I dunno, this is back when we had to separate all of our recycling and they said, okay, we want you to pay them and then have them give half and they forget what they were raising money for, chicken coop or something, for whatever they were doing.

[00:07:40] Anne Lester: And then we’re like, this is a really good idea. So we kept up the allowance and we made it big enough so that if they spent their allowance, so they always had to save half of it. So we gave them $2 in cash and they would say one goes in the savings and then you can spend a dollar. And you know, this is back when there were toy stores and we would go to the toy store and there was always something really crummy that you could buy for a dollar [00:08:00] that would break instantly, but you could, you could spend the money.

[00:08:02] Anne Lester: And so for a long time our kids would, you know, it burned a hole in their pockets, just like money does with me. And they spent it and bought something dumb. But the little tiniest Lego set, they used to sell these really small like little Lego sets in there. I think they were $3 maybe. and we covered the sales tax ’cause that seemed like an aggressive lesson.

[00:08:19] Anne Lester: but we said, if you don’t spend your money one week, we’ll give you an extra dollar for every week. You know, every week you don’t spend your money, you’ll get an extra dollar next week. And so they only had to wait two weeks until they had $3 to buy a Lego set. They’re both very good, like goal oriented savers.

[00:08:33] Anne Lester: And I, I do think that they learned a real lesson there. Now, my, parents also said they wanted to deposit their money in our savings account. I’m like, yeah, that interest rate is only good for a 3-year-old. It’s not for you. but it, it really worked. And we had conversations. I know when our, when our kids were going off to college, you know, my older son.

[00:08:49] Anne Lester: Ended up living off campus and had to manage an apartment and rent. And he went overseas actually. So it was, we didn’t know how much stuff cost or kind of what the, sort of typical expenditures were. So we actually had [00:09:00] some pretty interesting conversations with him about we want you not to feel poor and want you not to just be able to buy whatever you want.

[00:09:07] Anne Lester: Like we want you to have to make decisions about what you are choosing to do.

[00:09:11] Jonathan DeYoe: Hmm.

[00:09:12] Anne Lester: He helped us figure out a budget that I think we all felt really good about. maybe we’re just lucky with our kids, but, it was an interesting conversation. And he managed, you know, they both seemed to be figuring it out.

[00:09:22] Jonathan DeYoe: So I’m, I’m curious, did your partner have the similar kind of experience

[00:09:26] Anne Lester: He did.

[00:09:26] Jonathan DeYoe: you did? I mean, what is it, what is it that led you both to agree on this method of raising

[00:09:30] Jonathan DeYoe: kids?

[00:09:31] Anne Lester: He.

[00:09:31] Jonathan DeYoe: I wasn’t gonna go this way, but

[00:09:32] Jonathan DeYoe: this

[00:09:32] Anne Lester: I know. Isn’t it fascinating? He did. He had a very similar experience. His father, immigrated from Italy. His parents met in Italy. His mom’s American, his dad was Italian, and then his father died when he was a senior in high school. And money got really tight for him. And he went off to college under very, he grew up in Southern California off to school in Maryland.

[00:09:49] Anne Lester: It had A very similar, like, I don’t have any clothes. We don’t have any money. I mean, it was an interesting.

[00:09:53] Anne Lester: we, you know, you sort of discover these things when you, you know, I’ve been married to my husband now for 33 years. But it’s interesting [00:10:00] what you kind of can unpick later talking about it.

[00:10:02] Anne Lester: And we both found the combination of parents who didn’t wanna give us constraints. ’cause I think to them it felt very unsupportive and unloving to say, no, we can’t, you can’t buy new clothes. But we as 17 and 18 and 19 year olds knew darn well there wasn’t any money. and. It didn’t help. Like we both found that to be unfair.

[00:10:28] Anne Lester: Like it wasn’t fair to us to put that burden on us. And I think my, our parents were trying very hard not to let what they felt. I’m guessing it should be an interesting conversation to have with my parents now. Like what they would’ve perceived as their failure. Right to spill over on me. And yet how could it not?

[00:10:43] Anne Lester: I mean, you know, we’re a family, right? We all wear, we all wear whatever’s going on economically. And, and I, you know, it’s, it’s just tough. And I think that experience has certainly made me, Much more willing to talk about money, values. I don’t mean again, then I do this for a living, but, to [00:11:00] feel more comfortable being more explicit about, we’re trying to teach you this lesson and here’s how we’re trying to do it, and let’s check in and see if it’s working or not.

[00:11:10] Anne Lester: Like, I don’t, I don’t see any upside in keeping what we’re trying to do. A secret, like you are participants. You’re not stupid, like you’ll figure this out.

[00:11:17] Jonathan DeYoe: Yeah. I, wonder, and, and I don’t want to, create problems or challenges for you, but I wonder how much. Shame

[00:11:25] Jonathan DeYoe: was

[00:11:25] Anne Lester: Oh, sh

[00:11:27] Jonathan DeYoe: and the way they handled it.

[00:11:29] Anne Lester: well, I, I talk about this a lot in my book. I I have a, a thesis, if you will, hypothesis that shame is central to most people’s relationships with money. I certainly felt tons of money, shame, and. my mother, right, her father, ran a restaurant, and this is again, going through the Depression, was also an immigrant, Greek immigrant, ran a diner.

[00:11:47] Anne Lester: and, money was often very tight. He gambled and I think she grew up with a huge amount of economic uncertainty, and I think that really, Shaded how she feels about money and, you know, we all react to what we grew up in. [00:12:00] So I think she, she didn’t want to convey a sense of precariousness and, and certainly I think there was no financial precarity until my dad, you know, lost his job.

[00:12:08] Anne Lester: And, and even that was temporary. But, it’s an interesting thing what we do. And I, I guess one of the things that I’ve concluded is, you know, there is this shame and. Well, to me, one of the root causes of some of the shame we feel about money is not understanding that there’s this combination of nature and nurture that shapes our relationship with money.

[00:12:28] Anne Lester: And the, the nurture is what we learn in our families, what happens in the systems around us, what our parents teach us or don’t teach us. and then nature is kind of what we are wired for in terms of. Our ability to delay gratification, right? I always say I would’ve failed that marshmallow test as a kid.

[00:12:45] Anne Lester: A hundred percent. on the other hand, am a very rational risk taker when it comes to financial markets, right? I don’t tend to get into the fear greed thing, which is maybe why I enjoyed managing other people’s money. But, I do it more for my own money than I do for somebody [00:13:00] else’s money, which is also interesting.

[00:13:01] Anne Lester: I do notice myself feeling more anxious when it’s my money. But even so, I’m quite conscious of it. Uh, yeah. But, but it, but it’s something I’m, I’m very much able to thing, but, you know, put a, a nice thing that I want to buy in front of me. I mean, I went to the Apple store today intending to replace the battery on my iPhone 12, and I walked out with an iPhone 16.

[00:13:20] Anne Lester: So here we are. But, um, There’s reasons I did that, but still it was like not what I intended to do. I was like, oh, there’s a really shiny little phone. Maybe I’ll buy that instead. Right? I mean, I do. I fall for that stuff. I know that I’m wired like that. Okay. Now that I know I’m wired like that, I don’t have to go into a, you’re a bad person.

[00:13:38] Anne Lester: You made a decision that you regret and it’s ’cause you’re stupid. No, it’s ’cause I’m wired like that. I actually don’t allow myself to go into many stores unless I know I have something I need to buy there because I’m an impulse buyer.

[00:13:52] Jonathan DeYoe: Hmm.

[00:13:53] Anne Lester: So I’ve stopped blaming myself for it. ’cause I, am like that.

[00:13:56] Anne Lester: Okay, well now that I, know, I’m like that. What can I do in my environment to [00:14:00] make it less likely to fall into those traps?

[00:14:02] Jonathan DeYoe: I wanna sort of go back a little bit because, there’s a couple things I like to do in these podcasts, and one of them is to, is to sort of talk about career track.

[00:14:08] Jonathan DeYoe: How

[00:14:09] Anne Lester: Mm-hmm.

[00:14:09] Jonathan DeYoe: there? How do people get from, and I know that Baron’s did a flattering piece and, people can go read that, but can you give us a thumbnail sketch how did you, what is your arc of your career?

[00:14:17] Anne Lester: the through line in my career is, that sounds fun. I think I’ll go do that. so I got out of Princeton, as we we’ve said. I went to Princeton, got a degree in economics and politics, and was unable to get a job on Wall Street in the mid eighties, because I spent all my time in my job interviews, telling people that the fact that I was an accomplished classical musician would make me a good investment banker.

[00:14:39] Anne Lester: Which I think is true, but it was not, it didn’t work as a line. Just not, no, there was no, there was no meeting of the minds there. So I said, all right, to heck with this finance thing. I’ll go do politics the other half of my degree. And so I worked on Capitol Hill for four years, got a great education, working on Capitol Hill.

[00:14:54] Anne Lester: Loved what I did, but ultimately started finding it frustrating. you’re always behind the scenes when you’re [00:15:00] being a staffer in, in Washington. That’s your job. and I guess I was a little too, I don’t know. I found that unsatisfying. So I got a master’s degree and took the right kind of finance classes and did a much more, successful job interviewing, and got offered a couple of jobs, on Wall Street, but I also applied for, and got a Fulbright scholarship.

[00:15:17] Anne Lester: So I did that. I moved to Tokyo, spent a year working there, for a member of the Japanese Parliament and then. Having in graduate school met this cool guy who moved to Milan thought, let me see if I can get a job in finance in Milan. So I moved to Italy and got hired by JP Morgan as a bond trader. Um, so there’s, there, there, there’s a long version of that.

[00:15:37] Anne Lester: but that’s basically what happened. and so I started working for JP Morgan Asset Management as a bond trader in the, early nineties in Milan, and we moved back to New York. Area in 97, and I joined the team that, I stayed with eventually and spent the rest of my career with in 2000 running balanced portfolios.

[00:15:54] Anne Lester: So, portfolios that have stocks and bonds in them. And one of the things I was asked to do when I joined that team was to try [00:16:00] to figure out what kind of products we should be managing for defined contribution plans, because back then it was all risk-based funds, conservative, moderate, aggressive, or just a balanced fund, which I did.

[00:16:10] Anne Lester: So I helped, design, develop, and launch and manage the firm’s target date funds. So I spent, you know, 20 years basically, in defined contribution, understanding a lot about not just like what the right investment strategy is, but also because JP Morgan had a record keeping arm. So the sort of people that do the accounting for 401k plans, I was able to look at.

[00:16:34] Anne Lester: Not the theory about how people should save, but what the reality was when people do save in and out of a 401k plan and learned that there’s a lot of volatility, people don’t just put in 10% a month, they put in 6%, they lower their savings rate, they raise it, they stop making contributions, they take loans, right?

[00:16:52] Anne Lester: All kinds of things happen in people’s financial lives, and I just thought it was really important to understand What [00:17:00] was really happening in, in the, like, the real lives of, of human beings. Because as portfolio managers, we need to understand that and, and not judge it, but just say, okay, this is what happens.

[00:17:11] Anne Lester: How can we make sure we make the best use of your money? If this is what’s going on,

[00:17:15] Jonathan DeYoe: dig into that just a little bit. ’cause I, I, I guess I’m an advisor,

[00:17:19] Jonathan DeYoe: so.

[00:17:20] Anne Lester: you should know this.

[00:17:21] Jonathan DeYoe: always recommended that people do their 10% or 20% or whatever and just do it forever and never question it and never second guess it. And I’d have friends who do exactly what you say, like they go, I’m gonna do 10%, but then I have a bad month, so I drop it to 3% so I have some liquidity.

[00:17:35] Jonathan DeYoe: And do people do that? Like what is it that you’ve got the research, what makes people do that?

[00:17:40] Anne Lester: Well, let’s remember that you know, the median income in this country is under a hundred thousand dollars a year. Depending on where you’re living, There’s just not much cushion. And for a lot of people, the 401k plan is the place where they have liquid or semi-liquid investments in savings.

[00:17:57] Anne Lester: So. you know, there’s that wildly [00:18:00] overused statistic that, you know, 60% of Americans can’t come up with 500 or a thousand or whatever, you know, I mean, like we can argue about what the real stats are, but like, most Americans have trouble putting their hands on a couple thousand bucks if they need it.

[00:18:11] Anne Lester: Right. For a car repair for, you know, the furnace goes out. Like it’s, it’s hard. So Let’s also acknowledge that something like 40% of Americans don’t work for an employer who offers a workplace savings program. So, we are already talking about people who’ve got, some luck involved if they’ve got a 401k plan because they happen to have gotten a job with that employer.

[00:18:32] Anne Lester: But what happens is

[00:18:35] Anne Lester: you start saving and. Something happens in your life. I mean, I lowered my savings, right? we bought a new house. We, I read about this in the book. We stretched to the max to buy it in terms of cash, right? We used up our emergency savings, which you know, maybe didn’t really exist. Like we’d spent all of our money on the house and then a couple months in we had to replace the roof, which we knew it needed doing.

[00:18:59] Anne Lester: But [00:19:00] it was like suddenly a tragedy that needed doing immediately, and we didn’t have the money. And it was like, well, we could take out a personal loan or I could borrow the money from the 401k plan and pay myself back. Okay. That seems like a better idea. Except then I also stopped making contributions ’cause I had to pay the loan back.

[00:19:16] Anne Lester: So I did it ‘ cause we didn’t have the money.

[00:19:19] Jonathan DeYoe: it. now that I think about it, early in the career, I’ve cashed out a 401k. I’ve made some mistakes

[00:19:23] Anne Lester: I, people do and, and, and when you’re young, Unless you have, again, the luck to have a family that can backstop you, Right,

[00:19:30] Anne Lester: Sometimes that’s the money, like you need the money. regulations have changed so that employers are no longer quite as encouraged to cash out small balances.

[00:19:39] Anne Lester: But small balances are, you know, annoying For people to process and deal with. And if you’re, you know, the. 24-year-old who’s moving to Tokyo and you know, there’s 800 bucks or a thousand bucks sitting in the federal thrift savings program They wanna send you a check because they don’t want that sitting on their account balances.

[00:19:57] Anne Lester: Oh my gosh. This is free money. Like, I didn’t know I even had [00:20:00] this, I didn’t realize I’d signed up for this savings program, cash it out, and then, oh, by the way, you have to pay income tax on it. Like there goes half of it right there. . A very expensive lesson I learned and I had no understanding of the, opportunity cost of cashing that out, right.

[00:20:17] Anne Lester: And what that would’ve turned into. I mean, it’s just ridiculous.

[00:20:20] Jonathan DeYoe: I wonder if, and I’ve read, I’ve read both sides of this. I wonder if a little bit more financial education would actually help people with this, or if financial education only matters in the moment when you need it, and then you’re less open to it right?

[00:20:34] Anne Lester: A couple of things. I think financial education tends to, education in general tends to stick when you need it, and if it’s abstract and you don’t happen to find it interesting because you find it interesting. I think it’s hard for people to retain. that’s not a, like a good enough reason not to try.

[00:20:49] Anne Lester: I also think that the way we tend to teach these things is really boring and no, disrespect to our profession of financial service professionals. But I did a lot of research from my book and [00:21:00] a lot of what I learned in surveys and focus groups was that people.

[00:21:05] Anne Lester: You know when, when financial service professionals talk to human beings, we sound like Charlie Brown’s teacher. I mean, we just do. And we don’t realize that most people think this is some combination of boring and terrifying, right? These are existentially important things, and they know they’re doing it wrong, and it’s overwhelming and scary and.

[00:21:30] Anne Lester: They just can imagine somebody in their life wagging their finger at them saying, no.

[00:21:34] Anne Lester: I told you not to do that. You should be saving more. and when we are in that place of judgy shame, boredom and terror, we don’t make good decisions.

[00:21:47] Anne Lester: I wanted to call my book Money Fear, greed and Death. Why No One Plans for Retirement. And I thought it was a great title, and my publisher and major were like, Yeah.

[00:21:55] Anne Lester: no, that’s, that’s too much of a bummer. Like, no, that’s, that’s a negative title. We want, we want a [00:22:00] positive title. So it’s like.

[00:22:01] Jonathan DeYoe: I just, it dawns me as you’re saying this, that I, I actually have, one of the greatest lessons I think in my career was a client came on who was a great saver, was a horrible investor. and they never invested it. And they actually asked me as they came on, the first conversation we had with them, and, and they said, before I show you everything.

[00:22:15] Jonathan DeYoe: I want you to make sure that you check anything that would be shameful to me, they’re talking to me. we don’t want you to judge us for our stupidity. And I’m like, I’m not gonna judge you for your stupid, that’s insane. But I guess that’s what they, that’s what they expect.

[00:22:29] Anne Lester: I think partly because people who are in financial services tend to find this stuff really cool. And partly ’cause we are trained to demonstrate expertise. That’s what we think our value proposition is to our clients. We come off sounding like SmartyAnts and I think people feel judged by SmartyAnts like you just do.

[00:22:51] Anne Lester: Right? And we use, we use terms that people don’t understand and we don’t know it?

[00:22:56] Jonathan DeYoe: Yep.

[00:22:57] Anne Lester: My dad was an English linguistics professor [00:23:00] has an MBA, and he’d call me up after he met with their financial advisor and he’d say, so. You know, and I know what their conversations were like, right?

[00:23:08] Anne Lester: They’re talking about the markets, they’re talking about exchange rates, they’re talking about, you know, interest curves and value versus growth and all the things. And they have this great conversation. They hang up and they, my dad calls me and says, so our account was up 12%. Was that, what do you think about that?

[00:23:23] Anne Lester: I’m like, I don’t know, dad, that’s kind, that’s kind of a stupid question, dad. ’cause what are you trying to do? Like, what’s your benchmark? What are your objectives? 12. He’s like, well the, the market was up 16. And I’m like, well, I don’t know, dad. Maybe that’s brilliant. Maybe that’s terrible. Like I. There’s, and I know his financial advisor didn’t know he was calling me up saying, so what do I think?

[00:23:41] Anne Lester: I’m sure the financial advisor’s like, oh, this is a great client. He understands everything we’re talking about. They’re super interesting conversations, super engaged. My dad didn’t actually understand what he was talking about fundamentally.

[00:23:53] Jonathan DeYoe: Yeah.

[00:23:54] Jonathan DeYoe: So I, I generally think that the job of a financial advisor is not at all to talk [00:24:00] about portfolios.

[00:24:02] Anne Lester: I agree.

[00:24:02] Jonathan DeYoe: know? I know we have to, we all offer them, but mine is no better than, my neighbor’s is no better than the guy down the street is no better than somebody in a different city.

[00:24:10] Jonathan DeYoe: Like the portfolio’s the same. Don’t worry about, I mean, that’s assuming you have just the basics. What is the role of a financial advisor? What should we be talking about?

[00:24:18] Anne Lester: I think the role of a financial advisor, and Dave Blanchett, when he was at Morningstar, wrote a great article. It was like 10 years ago on the gamma, right? You’ve got alpha and beta and gamma and okay, now we’re getting geeky for any of your, now I’m doing, now I’m doing the thing. Right? Gamma beta.

[00:24:35] Anne Lester: so there’s this intangible thing that’s really hard to measure. That is if you can help a client not freak out because the markets are going crazy and to say, look, I know it’s scary, but we’ve got a plan. We’ve taken the right amount of risk in your portfolio and let’s look back over the last five years, the last 10 years.

[00:24:56] Anne Lester: And although there were some crazy rollercoaster moments in those last five and [00:25:00] 10 years, look where you are. It’s okay. And we’re gonna stay the course and I’m gonna hold your hand and make sure that, you know, maybe we’ll make some adjustments. because maybe, maybe like I. Tinkered a little more than I normally do with my portfolio.

[00:25:11] Anne Lester: ’cause we rolled into this volatile environment with more risk than we should have. So I’m like, all right, I’m gonna take some risk off the table. It’s not too late. it didn’t take it all off the table. Um, but I think the role of the advisor is to help determine long-term goals, help their client understand the power of compound returns, which is magic, and to help them understand consequences of decisions they may not know they’re making.

[00:25:37] Jonathan DeYoe: Yep.

[00:25:37] Anne Lester: Right. So to me that’s something worth unpacking, like when you’re 24 years old and cash out of your 401k plan. because you need the money and you have no clue that A, you’re gonna owe a whopping big tax bill on that. Like half of the money is gonna go in taxes. So that really was expensive. And B, what that would have turned into is something like over 30, $36,000 today.

[00:25:59] Anne Lester: [00:26:00] Like insane. Insane amount of growth that I gave up because I didn’t understand that I was making a decision with these big future consequences. So to me, a financial advisor, 1 has a plan. 2 keeps people on track, holds their hand when it gets really scary, helps them navigate the bumps in the crises that will happen, right?

[00:26:18] Anne Lester: You will get derailed on this journey. Something will go wrong somewhere and helps you. Understand that at certain moments you’re gonna have decisions to make about, to put assets to save into a Roth or a non Roth account, to, maybe wait on some purchase that you’re thinking about doing, or maybe it’s okay to spend money and give you permission to spend money if you’re anxious about doing that.

[00:26:41] Anne Lester: But those, those are decisions that sometimes individuals don’t know that they’re making in the moment they’re making them. And that to me is probably one of the most important things a financial advisor can do.

[00:26:51] Jonathan DeYoe: I love it. That’s, I a hundred percent agree with all of that. I don’t think the advisory community’s there yet. I think we’re moving in that direction generally,

[00:26:57] Jonathan DeYoe: and

[00:26:57] Jonathan DeYoe: I

[00:26:57] Anne Lester: hope so.

[00:26:58] Jonathan DeYoe: because of your work and because of [00:27:00] Morningstar and because of some other work, it’s just, we’re moving there.

[00:27:02] Jonathan DeYoe: But right now it’s a lot of people still talk about investments. I mean, I was on a five hour call today with the, I guess the. The national, across the country. And we talked a lot about portfolio and I’m like, ah, you know, this is not quite, we do planning and all that stuff and it’s great, but a lot of portfolio talk.

[00:27:17] Anne Lester: so when I started working on defined contribution, I decided the best way to learn about this whole thing was to go attend client meetings of the record keeper. And so I’d listened to these like four hour meetings that went through everything from, you know.

[00:27:31] Anne Lester: Quadros, which are these forms that you have to file for somebody who gets divorced and you know, accounting and asset location and savings rates and loan usages and hardship withdrawals, and all of the kind of, there’s a lot of nuts and bolts and nitty gritty kind of plumbing. Then I, I listened to the conversations that the clients wanted to have about, and this was back in the nineties, Right.

[00:27:52] Anne Lester: So everybody was all excited about the markets are going crazy and everything was going up and, you know, we need small caps and growth and value and all the, the fun we could have. [00:28:00] And I was really struck by the amount of energy that most of the committees put into picking the right. Small cap growth fund and none of them were talking about how can we help people save more money and how can we make sure that participants actually have the right mix of stocks and bonds.

[00:28:18] Anne Lester: so to me, one of the great innovations of the last 30 years in financial services has been that 401k plans are automating more stuff so that most individuals now are automatically signed up, hopefully. If they’re having the amount that they save go up automatically. We call that escalation. Like you’re on an escalator going up.

[00:28:35] Anne Lester: and if check, check and make sure you are getting that. ’cause if you’re not, you need to do it yourself. That’s really important. But then also that they’re getting defaulted into something like a target date fund or a managed account, unless they choose to, to choose differently. And I think for people who wanna do it themselves, that’s great, but most people probably would be better off in a target date fund.

[00:28:53] Jonathan DeYoe: I hate Target day funds.

[00:28:55] Anne Lester: I know. Well see. I did that for 20 years and I kind of like them a lot. I think they’re [00:29:00] great.

[00:29:00] Jonathan DeYoe: So I, I love the pick a 80 20 or a 70

[00:29:03] Anne Lester: Hmm.

[00:29:04] Jonathan DeYoe: and let it stick with it. I love that. I love the concept of a balance of some kind. You pick your balance, you stick with your balance. think that there’s this, there’s this rule of thumb we’ve had for years and years and years that the older you get, the less equity exposure you should have.

[00:29:16] Jonathan DeYoe: But Wade files a lot of people doing research on this saying, you know what, there’s this four year, five year window around retirement. You gotta be careful. But actually You improve your probabilities if you add equities in retirement as you get older. Right. And so that’s, I’m curious about your thoughts

[00:29:31] Anne Lester: Yeah.

[00:29:32] Jonathan DeYoe: research that says that versus targeted funds that decline.

[00:29:35] Anne Lester: the right answer academically is what would be the U-shaped glide path where you should have the lowest amount of equity the day you retire and then you can actually increase equity risk the longer you go, because the net present value of your future income stream, right? The amount of volatility I know, here I go, geeking out again.

[00:29:55] Anne Lester: If you have a hundred percent of your money in stocks and you need to take out 5% a year, and the [00:30:00] market goes down 20%, right? You’ve just given yourself a big pay cut.

[00:30:04] Jonathan DeYoe: Unless you have an emergency fund that is there to cover it

[00:30:07] Jonathan DeYoe: for Well, okay. And hopefully your financial advisor has built you a three to five year cushion so that you never worry about doing that. But let’s just say theoretically you’re not doing that, right? So you wanna avoid having to sell to live not because. You have to worry about money today or tomorrow, but that balance that you have when you turn 65 or 67 or 70, let’s say when you retire, needs to last another 20 years.

[00:30:28] Anne Lester: So what you’re worried about isn’t what you’re taking out today. It’s the pool of assets that you have to drive the next 20 or 30 years of growth is gonna be permanently damaged. Now, that equation changes when you’re 95. You don’t have to worry about another 30 years of growth.

[00:30:46] Jonathan DeYoe: yeah.

[00:30:47] Anne Lester: that’s the reason why you can afford to take a little more risk the older you get because you’re not damaging your future as much.

[00:30:54] Anne Lester: But it is psychologically extremely uncomfortable for people to embrace the [00:31:00] U-Shape Glide path. I’m gonna put another hat of mine on. I’m a education fellow for the Alliance for Lifetime Income, which is a, uh, not-for-profit that does actually Wade file as part of this. and David Blanche.

[00:31:09] Anne Lester: There are a bunch of researchers who are part of this, and I’m a education fellow. Part of my job is translating all this stuff into English, although they do a great job of it too. but one of the things we’re trying to do is help people understand that if you. Have some kind of guaranteed income stream.

[00:31:24] Anne Lester: Social security is definitely one of them. A company pension would be another, or an annuity would be a third kind. You can actually afford to take more risk with your investment portfolio. I. And so, and this is something that we actually, when I designed the target date Fun glide path, with my colleagues, in JP Morgan 20 plus years.

[00:31:42] Anne Lester: ago now, one of the things we hypothesized was that the sensible thing to do would be to take half of that balance at retirement and buy an annuity with it and leave the other half invested, and then you could take a lot more risk with it.

[00:31:52] Anne Lester: but that in fact, if you were trying to kind of have your cake and eat it too, in terms of making sure that [00:32:00] your base. Standard of living was covered and you wouldn’t have to worry about it. And you were protecting, what if I lived to be 105 and you still wanted to have some growth in your portfolio?

[00:32:10] Anne Lester: That’s actually a very sensible way of doing it. So, you know, we can talk about annuities if you want to, but I, I do think they’ve got a bit of a bad rap and, just a plain old simple, like, I gave you my money, you give me a paycheck for life. I think that’s, that’s very sensible. And, and depending on how big your social security payment is in terms of.

[00:32:27] Anne Lester: How much you need to spend in retirement. That can be a really efficient way to actually get a lot more growth out of your portfolio and give yourself more room to, continue to enjoy as Long

[00:32:38] Anne Lester: as it’s, stuff you can also afford to trim in a bad year. Right. But that’s actually, I think, a very sensible way to do things.

[00:32:43] Anne Lester: It

[00:32:43] Jonathan DeYoe: you know, people say, do, do you like annuities? You don’t like annuities? And I’m like,

[00:32:47] Anne Lester: depends.

[00:32:47] Jonathan DeYoe: of annuities that are garbage. And then there’s some annuities that are incredible. Like there’s some annuities, like the, I love the single premium, immediate just Income I’m a fan of those. Uh, you know, I’m a big fan of those They, they’re simple to [00:33:00] understand. They’re pretty transparent. You know what you’re getting and they work really well.

[00:33:05] Jonathan DeYoe: Yep. Yep. I, I agree. I agree. I’m glad I got to poke at that. I’m, I’m, one more question about the

[00:33:10] Jonathan DeYoe: target

[00:33:10] Anne Lester: Yeah.

[00:33:10] Jonathan DeYoe: How deep is the UI is it like a 5%

[00:33:14] Anne Lester: no, no, it was like a 20

[00:33:16] Anne Lester: or 30%. It’s big. I mean, statistically, economically, and this is the other thing that took me a while to understand. We actually built it into the design of the JP Morgan target date funds is, just because there’s a rational economic answer does not mean it’s the right answer for an individual person because penalty of loss is real.

[00:33:35] Anne Lester: So what that means is the pain of losing is two times. Bigger than the happiness you get from winning. and it’s, so, it’s like, Yeah. what does that mean? And it’s like, okay, so the, the analogy we used in this white paper we wrote 20 years ago now is imagine you’re in the cafeteria at lunchtime and you’ve got four bucks in your pocket and the cheeseburger is $5.

[00:33:54] Anne Lester: not eating lunch if you’ve got $6, you’re like, yeah, great. I’ll get a coke. there’s [00:34:00] failure. you know, it’s, it’s shortfall and if you’re retiring, like being 10 or 20% short is like serious, painful lifetime adjustment. Not seeing your grandkids skimping on like whatever your, terrible scenario is.

[00:34:11] Anne Lester: If you’ve got 10% extra, that’s great. That, that you’ll be happy. But on the balance, we don’t appreciate how. So, so when we think about rational economic solutions, we say, oh, well if you’ve got a 50 50 shot at something, that’s the rational answer. And it’s like, actually, maybe not. So I think we need to do a better job of also thinking about those trade-offs when we’re thinking about investment portfolios.

[00:34:32] Anne Lester: And that’s why, although in theory, that U shape is the right answer it, it is emotionally very difficult to say. Well. I may not be comfortable with that risk. I may want lower returns, but a higher probability of knowing I’ll have it because not getting what I want or need is, is too painful.

[00:34:47] Jonathan DeYoe: Yeah, there’s also this, uh, I mean, there’s one sort of a investment category that’s outperformed for, you know, over a long periods of time. Every single time, all the time. Small cap value has been this thing that’s done all, but nobody can hold it forever. No one can hold

[00:34:59] Jonathan DeYoe: it

[00:34:59] Anne Lester: it’s painful. [00:35:00] It’s.

[00:35:00] Anne Lester: painful. It’s

[00:35:00] Anne Lester: really painful.

[00:35:02] Jonathan DeYoe: So there’s so many little things that people are, you know, that we know the research shows, but you can’t, you can’t implement on those things. You have to, sort of do a blend person by person, figure out what’s important to ’em, and, and it’s really, really important.

[00:35:13] Anne Lester: And you have to, I think this is again, a place of financial advisor could be offering a lot of value. I’m not sure many do, is really making sure you define success. And you know, just speaking of target dates, we talked about it a lot, which is, is success maximizing the upside or is it minimizing the downside?

[00:35:30] Anne Lester: Is success, being confident that it’ll be good enough, or is success going, oh yeah, I picked the best thing. And there’s a, there’s a word that I adore, which is satisficing, F-I-C-I-N-G, at the end. And that basically means settling, trying to be good enough and acknowledging that you’re not gonna swing for the fences and.

[00:35:49] Anne Lester: That’s really hard for people to accept emotionally. Well, you could have done, yeah, I could have, but I did. That’s not what I wanted to define as success. Like sometimes good enough is success [00:36:00] and knowing where your good enough line is, I think is really important.

[00:36:03] Jonathan DeYoe: high, high, high probability of good enough with low probability of knocking the

[00:36:07] Anne Lester: Yep, yep. And just let go of the extravagant stuff, like it’s not, you don’t need it.

[00:36:13] Jonathan DeYoe: I want to talk about the younger gener. We were talking about retirement and all that. I wanna talk about the younger generation a little bit.

[00:36:18] Jonathan DeYoe: gen Z, millennials, how can they think about retirement when you know the housing costs and there’s still, there’s student loan debts and how do they think about this

[00:36:27] Jonathan DeYoe: and

[00:36:27] Anne Lester: In, in this economy. Yeah. I, I think one of the great ways you can help think about this is to, Ask them not to think about it too much and to, take a little bit of it, uh, a little bit of it on faith. And, you know, the, the painful thing about compound returns is that you really need a decade or two to see how they work.

[00:36:46] Anne Lester: but what will happen is that if you are putting in 25 or 50 or a hundred bucks a month into an account and investing it, if you look at that account in two or three or four years, you’ll have a lot of money in there. That you won’t really have noticed yourself saving. And [00:37:00] it’s interesting, my younger son is a musician and, you know, doesn’t get a, he’s not, he’s working a whole bunch of small gigs, basically, he lives in California. So California has a state automatic savings program called Cal Savers, which is an automatic IRA, that all employers who have more than five people, I think have to, to offer their employees. And even though he is only working. he’s not working 20 hours anywhere, but, but two of them have enrolled him in this Cal Sabers thing and he said, mom, I’ve got, I’ve got like real money in there.

[00:37:26] Anne Lester: Suddenly after, you know, and he’s like, barely scraping by, but he’s got thousands of dollars. You know, it’s, after a couple of years off of these tiny little contributions. And I think one way of helping people understand the power of that is, a little bit, trust me, but if you do it for a year.

[00:37:46] Anne Lester: You got real money going on. So that’s one statement. the other thing I think is, speaking of Charlie Brown’s teacher and not going, um, helping people understand. What their own emotional [00:38:00] triggers are with money and, and trying to translate it into something that gives them meaning is helpful. You know, I talk about, I think in the book, we live in this old Victorian house, which has 53 windows and we were looking at replacing the windows and they’re all different sizes, right?

[00:38:16] Anne Lester: So the, you know, we can’t go to Home Depot and buy windows, right? ’cause the none of them would fit. So we had 53 custom windows. And for the longest time I was like, well, each of those windows is gonna be a thousand bucks. So anytime we thought about it, it’s like, Nope, don’t need a new tv. That’s two windows.

[00:38:31] Anne Lester: Nope, don’t need to do that. That’s three windows, that’s half a window. And we just kept, I just kept mentally doing window math and it’s like, I, we gotta, we gotta replace his windows. Like that’s, it’s a lot of money, right? How do I, as I’m making individual financial transactions, how do I keep my eye on this ball?

[00:38:47] Anne Lester: I know I need, so if you’re saving for a car, I. Right. You’re saving for a down payment. You can translate some of these things. Do you need to go on that trip? it’s that percentage of my goal, it can help with some of [00:39:00] the discretionary spending. And I think the other thing that’s so difficult now is it’s so frictionless to spend money.

[00:39:07] Jonathan DeYoe: Yes.

[00:39:08] Anne Lester: I mean, speaking of my magic phone here, tap right. Try to put friction in your life if you’re trying to save,

[00:39:16] Anne Lester: Make it hard for yourself to spend money, because let me tell you, it is hard to save. And then the flip side, do everything you can to automate the savings, have it come outta your paycheck before it hits your bank account, like have some money automatically deducted into your savings account.

[00:39:30] Anne Lester: Hopefully that’s happening for retirement too. And I also say it’s, it’s really helpful not to have it on your home screen of wherever you see your finances. Like you don’t wanna look at that little pile of money in your emergency savings fund. Like, don’t have that visible ’cause you don’t want it there tempting you.

[00:39:47] Anne Lester: That’s emergency money.

[00:39:49] Jonathan DeYoe: I lo I love it. Make the, make the, uh, savings happen automatically. Make it invisible. make the spending difficult. These are all ways to, and, and just maybe get rid of Amazon. ’cause that’s like, that’s like kryptonite for [00:40:00] all of our

[00:40:00] Jonathan DeYoe: spending.

[00:40:00] Anne Lester: Well, yeah, and for me it’s actually going into physical stores and trying on clothes is super kryptonite for me. But, um, the other thing I would say is housing the median price of a house has gone up six times since 1980.

[00:40:15] Anne Lester: Median salaries have doubled. So housing is, this is not a joke. It is way more expensive and it is way nicer. So part of that.

[00:40:26] Anne Lester: increase is not just that it’s, more expensive, but that you’re getting a heck of a lot more for what you’re spending. And that doesn’t make you feel any better when you’re trying to afford it.

[00:40:34] Anne Lester: But like it’s it’s not just sheer evil and lack of supply. It’s actually nicer.

[00:40:39] Jonathan DeYoe: I, I think geography plays a huge part. ’cause I’m, I’m from Rapid City, South Dakota and I invested in real estate there for

[00:40:43] Jonathan DeYoe: many,

[00:40:44] Anne Lester: It’s not gone up six times. no, not so much.

[00:40:47] Jonathan DeYoe: value.

[00:40:48] Anne Lester: But, but the other thing that people lose sight of is that things that used to be horrifically expensive, like travel and clothing and electronics are really, really cheap [00:41:00] now. So we are substituting spending people who don’t have houses, for other things that were literally impossible to contemplate.

[00:41:08] Anne Lester: So the amount of traveling that people do now that we think of is like. Of course we all take trips overseas. Like that was utterly incomprehensible. so another way of thinking about this is right, your, your peers are anchoring and choosing to spend money on what is relatively affordable. And if you you know, back when, you know your grandparents maybe, you know, if you’re in your twenties, right? Were starting out. They could, they could never have dreamed about flying anywhere in an airplane, but they could have buy a house. So that’s what they did when all of them bought houses and not got on trips.

[00:41:42] Anne Lester: I don’t know, maybe, maybe some of them would’ve made different choices if they could have, but that actually wasn’t a logic, that was like a crazy thing for them to think about doing ’cause they couldn’t afford it. So.

[00:41:51] Jonathan DeYoe: Unfortunately, rental prices are just

[00:41:52] Jonathan DeYoe: as

[00:41:52] Anne Lester: I know. I know, I know. It’s, it’s bad. It’s bad. It’s really bad. Now, I will also say [00:42:00] that again, not to sound like okay, boomer time here, but every single one of my friends, when they got outta college, lived in a group house.

[00:42:07] Anne Lester: Most of us shared bathrooms. If I look at my kids getting outta college, they’re living in group houses and sharing bathrooms, and I’m like, guys, this is just what happened. Like. That’s, I don’t, I don’t see a whole lot of difference here. I know, by the way, you’ve got Central Air, like that’s a lot nicer.

[00:42:25] Jonathan DeYoe: My, my first apartment had holes in the floor, uh, just to be clear,

[00:42:29] Anne Lester: Yeah, yeah, yeah. We had, we had some cockroaches and no dishwasher and yeah.

[00:42:33] Anne Lester: Anyway, we don’t need to go there about how poor we all were when we got outta school. But I’m just saying some of this is also. Legitimately, we are anchoring on aspirationally nicer lives than we should be because that’s what progress and economic like, that’s we, that this is a good thing that we can aspire to living better and better and richer lives.

[00:42:48] Anne Lester: But

[00:42:49] Jonathan DeYoe: Yep.

[00:42:50] Anne Lester: I guess another message I would have for my kids, and I’ve told them this, is you guys aren’t gonna be like leaving college and living at this lifestyle. Like, we didn’t trust me. [00:43:00]

[00:43:00] Jonathan DeYoe: you gotta

[00:43:00] Anne Lester: You gotta build.

[00:43:01] Anne Lester: And I, I think, and again, I think social media’s made that harder, right? Because everybody’s watching everybody else do all this stuff.

[00:43:06] Jonathan DeYoe: And half of that’s lies, just so everyone

[00:43:08] Jonathan DeYoe: knows.

[00:43:09] Anne Lester: I think there’s not, and it’s not just the lies. It’s that you can see with intimacy. A lot of different variation. Whereas, and I have this story in the book about, you know, keeping up with the Joneses when I was a kid, was watching the across the street neighbors get a car with air conditioning and an electric lawnmower.

[00:43:26] Anne Lester: And we, my parents did not value these things. Um, you know, no air conditioning in the car and, you know, Hawaii does get kinda hot. and we had to push lawnmower. And I had to move mow along with bush lists. Like it didn’t ruin my life at all, but like my definition of like, whoa, how come they have that and we don’t.

[00:43:43] Anne Lester: Okay. It was not anything other than literally the across the street neighbors.

[00:43:47] Jonathan DeYoe: Yeah.

[00:43:47] Anne Lester: I couldn’t anchor on anybody else ’cause you couldn’t see anybody else. So I think some of it is fism, but some of it is also just seeing a much wider stretch of, demographics than you might have been exposed to [00:44:00] 40 or 50 years ago.

[00:44:01] Jonathan DeYoe: And you can have, you can have desires about every category, not just the lawnmower,

[00:44:05] Jonathan DeYoe: it’s

[00:44:05] Anne Lester: I know

[00:44:06] Jonathan DeYoe: and the car, and the house size and the whatever, movie options and the

[00:44:11] Anne Lester: all of it. All of it.

[00:44:12] Jonathan DeYoe: of it. I’m realizing we’re coming, we’re coming close to time, but I

[00:44:15] Jonathan DeYoe: had

[00:44:15] Anne Lester: I know I’m terrible.

[00:44:17] Jonathan DeYoe: It’s been very quick. are there any emerging like financial tools for the DIY audience that you have seen run into? Would recommend?

[00:44:26] Anne Lester: I’m a little bit of a skeptic on the DIY thing, and I guess, what do you mean by DIY?

[00:44:34] Jonathan DeYoe: I mean there’s, there’s a lot of, there’s a, uh, just for an example, in terms of my spending, tracking

[00:44:39] Anne Lester: Oh.

[00:44:40] Jonathan DeYoe: money in terms of I just saw this the other day. Um, it was new retirement and it switched its name, and there’s this, sort of a financial planning software that I can subscribe to and I can run my own

[00:44:49] Jonathan DeYoe: scenarios.

[00:44:50] Anne Lester: I’m, I, I think anything that provides information and helps you again, understand consequences of decisions in real [00:45:00] time or close to it can be very helpful. I think it’s great to understand where your money’s going, and I think there are a lot of good apps out there. So, you know, I’m, I’m, I don’t, I don’t actually like recommending specific things, but, I will say that I also saw some research, and this is maybe six years ago, about everybody being all. excited about the power of all. these apps, giving people control over their lives and apparently.

[00:45:20] Anne Lester: The more online financially. This is six years ago, but the more online people were financially, the more they hit their emergency spending. So I guess I would just say that information is great and that’s why I asked that question about DIYing. There are absolutely brilliant day traders out there.

[00:45:39] Anne Lester: there are really good tactical asset allocators out there, and there are far, far, far far, far more people who lose a lot of money doing it. And so I just, I just get very nervous, when people start trading and, Gambling, I think is a word I wanna use here. And, and, Yeah,

[00:45:57] Anne Lester: Okay. So, so, I [00:46:00] think the better informed you are about where your money’s going and the more you understand about why you wanna do certain things with your money, the better off you’ll be, because I think your knowledge really is power.

[00:46:11] Anne Lester: But, I don’t have any particular apps, sorry.

[00:46:13] Jonathan DeYoe: yeah, no worries. There’s just tons of online

[00:46:16] Anne Lester: Yeah, there are, and, and, and any of those simulations are gonna give you different answers, but presumably they’re all gonna be in the same ballpark, and, the differences are kind of probably not very important.

[00:46:26] Jonathan DeYoe: Yeah, exactly. It’s marginal. So I, I want to ask you to simplify things for us. So, so if you’re talking to someone from Gen Z, they’re just starting out, got their degree, first job. What’s the one thing they should do right out of the gate to get started? I.

[00:46:41] Anne Lester: Okay. One thing is hard, but I’d say my priorities for people are make sure you’re saving for an emergency. Number one, do that before anything else. make sure you get insurance.

[00:46:53] Jonathan DeYoe: Hmm.

[00:46:54] Anne Lester: Health insurance, renter’s insurance. Sometimes your apartment complex will make you get it, but it’s [00:47:00] cheap and it is lifesaving if you don’t have a big discretionary budget, like really important.

[00:47:06] Anne Lester: so I’d say first, emergency savings. Second, do not overlook insurance. It’s really cheap and if something bad happens, you’ll be so grateful that you have it. And if you don’t need it, it’s not that expensive. renter’s insurance, right? Your stuff. and then third, if you can, if your employer offers a 401k plan or an equivalent and you get a company match, you should be trying to get the match.

[00:47:25] Anne Lester: ’cause it’s free money and you want all the free money.

[00:47:27] Jonathan DeYoe: Yeah.

[00:47:28] Anne Lester: Those are my starting out tips.

[00:47:30] Jonathan DeYoe: Those are, those are perfect. I’ve never, I’ve never had someone hit the insurance. And I

[00:47:33] Jonathan DeYoe: think

[00:47:33] Anne Lester: Uh,

[00:47:33] Jonathan DeYoe: really important, concept.

[00:47:34] Anne Lester: can you afford a new laptop out of pocket if your roommate forgets to lock the door?

[00:47:39] Jonathan DeYoe: Right. right. that’s that’s what to do. Three things to do. What’s one thing that they’re probably doing? Their friends told ’em to, they saw it on social media that they should stop doing immediately.

[00:47:48] Jonathan DeYoe: I.

[00:47:49] Anne Lester: Stop buying things on sale that you didn’t already plan to buy.

[00:47:55] Jonathan DeYoe: Right. Okay.

[00:47:56] Anne Lester: Like, Like, seriously stop. Responding to the, [00:48:00] oh my God, there’s this great thing and it’s, you know, stop it. Make a list. Don’t buy anything that’s not on your list. Like, just do not, do not do that. Do not buy things off of social media. Do not buy things on Instagram.

[00:48:10] Anne Lester: Do not buy things on TikTok because you did not plan to buy those.

[00:48:14] Jonathan DeYoe: I am. I’m just curious ‘ cause of our prior conversations, is that advice for you as well?

[00:48:19] Anne Lester: No, because I, I I never got into the habit, fortunately. I mean, there. A lot of my friends started smoking in college and I was just like, I know I cannot start doing that because I will instantly become addicted. I knew, I knew it in my bones. It’s just like I cannot, I cannot go there. ’cause I know how this will end and it’s really not, it’s not gonna be good. yeah, that kind of shopping, I, I really don’t shop online unless I have a list and I make myself stop and think about it. I really, really don’t. Do the impulse thing online? I do. I do it in person that, That’s harder though. There’s friction getting to the store, you know.

[00:48:54] Jonathan DeYoe: So just before we wrap up, what’s the, what’s the last thing you changed your mind about?

[00:48:58] Anne Lester: Oh, I have no [00:49:00] idea buying a phone. I was just gonna replace the battery on my iPhone 12 Mini, which I adored ’cause the battery is totally dying. But I have AppleCare and they wouldn’t replace it ’cause it’s 81% and it’s like I gotta wait another month for it to die all the way. And I’m like. So I’m gonna be taking this month long trip with a like a seven day trek on it, and I don’t need my phone to die while I’m on this trip overseas.

[00:49:22] Anne Lester: Like that would be really bad, which is why I have a new phone now. But yeah, I changed my mind on the phone about?

[00:49:27] Anne Lester: three hours ago.

[00:49:29] Jonathan DeYoe: tell people how they can find you, where they connect with you.

[00:49:31] Anne Lester: Oh, thank you so much. You can find me on my website, which is Ann Lester, A-N-E-L-E-S-T-E r.com. You can follow me on social media. I’m, my handle is the same everywhere, which is Save Smart w Ann. Save Smart with Ann.

[00:49:46] Jonathan DeYoe: And thanks so much for coming

[00:49:48] Anne Lester: Oh.

[00:49:48] Jonathan DeYoe: this is gonna be show notes. I really appreciate the conversation and all your education For the listeners.

[00:49:52] Anne Lester: Oh. Thank you so much. I’ve had a blast, Jonathan. Thanks.

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