This week, we speak with Kelly Milligan, managing partner at Quorum Private Wealth about the importance of financial literacy and how to best position your portfolio and protect your wallet during this time. Kelly also explains why it’s important for business students to be financially savvy and what common financial or money misconceptions there are.
Why does financial literacy and education matter today?
Basic financial literacy is often ignored in school curriculums. Most adults are unfamiliar with basic strategies for simplifying, organizing and optimizing their financial affairs. As inflation increases and money gets tighter, it is more important than ever to understand the basics and “pick up the nickels.”
With inflation, recession and stagflation fears rising, how can people prepare their wallets and position their portfolios?
First, it’s not a foregone conclusion that we are in a recession or headed to recession. It still may be avoided, and we typically don’t see 3.5% unemployment heading into a recession. If we are headed there, and if inflation is here to stay, we review client portfolios for the following:
· I-Bonds: Although these can only be purchased in limited quantities, I-bonds are a great deal right now as they are tied to an elevated level of inflation
· High quality dividend paying stocks: In uncertain times, quality usually prevails
· Diversification: Broad diversification, including assets like commercial real estate can be helpful in inflationary markets
· Debt levels: Clients should review liabilities, especially variable rate debt.
Can you tell us a bit about your financial literacy course and how you decided to start it?When I was in business school and law school at UCLA, I took every course I could find on financial literacy - from investment analysis to options to property and trusts & estates. After working in financial services for several years, I realized that 90% of what I spoke to clients about I learned on the job. They just didn’t teach the tactical aspects of wealth management in school - even in top business and law schools.
Why is it important for business students to be financially literate?
These students go out into the industry and they run companies and create new ones. It’s important that they understand basic wealth management for their own financial health. They also need to understand it so that they can help their future employees and colleagues. Company benefits (e.g., 401k or 403b plans), taxes, equity-based compensation and regulatory requirements can be complex and confusing. Having a basic familiarity with these topics helps these students spot any potential issues and go see competent counsel.
Do you have a topic or message you especially focus on for your students?
Our goal is NOT to make students experts in wealth management through this series. Rather, we want to expose them to concepts and encourage them to continue their own education and knowledge base. People are much more likely to seek experts on topics when they are aware of the options and how significant mistakes can have material consequences.
What are some common financial or money misconceptions?
This is a little self-serving, but I think a common misconception is that good financial advice is “expensive.” A good adviser looks at your financial goals, the risks you are taking and helps you make better decisions about diversification, taxes and cash flows. They can advise on borrowing options, retirement planning, corporate benefits, estate planning, insurance and a myriad of other topics. Unless you want to devote a significant amount of time to understanding and following these topics yourself, I would seek out advisors who have significant experience, a long list of academic and professional credentials, and familiarity with the financial issues faced by similarly situated clients.
Money can be a scary topic for many, what are some tips on creating a healthy relationship with money?
First, be honest with yourself about your own level of financial literacy. Find a financial advisor who is willing to fill in the gaps of your own understanding and explain things to you in a way that you understand.
Second, determine whether you have the time and/or inclination to manage your own financial affairs. Our clients are very intelligent, highly educated, successful people – they are all capable of managing their own wealth with a reasonable level of competency. They hire us because their time is far better spent doing what they love at work or with their families. We essentially manufacture time for our clients by thinking about their finances for them and bringing financial solutions to them proactively.
Kelly joined TradeTalks to discuss teaching financial literacy in a way that prepares business school students for all phases of their career and life. See the interview here: https://lnkd.in/ghy24JPe
