Moderator:
Amanda Agati
Chief Investment Officer of PNC's Asset Management Group
Speakers:
Michelle Christian, SVP, Sr. Financial Advisor, PNC Investments
Victoria Cavolo, AVP, Wealth Strategist, PNC Investments
Kim Eilber, SVP, Sr. Relationship Strategist, PNC Private Bank
Webcast Transcript:
Operator: Hello, everyone, and welcome to today's webinar in our 14th annual Women in Business Week series titled Building Wealth at Any Stage. Before we get started, I'd like to acquaint you with some of the ways you can participate today. The On 24 room you are in allows you to adjust and resize all panels that appear on your screen. To resize any of these panels, just click on the lower right corner and drag to adjust. To move a panel, click the top title bar and drag it anywhere within the console.
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Now, without further delay, let's begin today's Women in Business Week webinar, Building Wealth at Any Stage. I'd like to introduce you to your moderator for today, and that is Amanda Agati. Amanda, you have the floor.
Amanda Agati: Good afternoon, and welcome to today's webinar kicking off PNC's 14th annual Women in Business Week. I'm Amanda Agati, Chief Investment Officer for PNC's Asset Management Group, and I'm really excited to be with some of my wonderful PNC colleagues today who will share their expertise when it comes to helping us develop plans for building wealth at any stage of life.
Feeling financially secure is empowering. And so, our goal with today's discussion is to highlight some practical ways to help you feel more in control of your financial future, regardless of what life throws at you. Before I turn it over to our panelists, it's time for me to spill the tea. I spent my entire career in finance and investments in what I think are pretty analytical roles. I'm a student and a practitioner of the markets, but when I first realized I needed to start thinking about my finances and saving and building my own wealth, I have to be honest, it was a little intimidating. Where do you even begin? There's just so much to consider, particularly as your needs and wants and goals change throughout your life.
So, regardless of whether you're beginning on your wealth journey or you're well on your way, or even if you're just thinking about thinking about getting started, I think our tendency as humans is to really want some sort of barometer or gauge to tell us how we're doing on this building wealth journey.
The truth is wealth is uniquely personal because it's really defined by your own goals and objectives. And of course, goals-based investing is a topic that is very much near and dear to our hearts in PNC's Asset Management Group. Some would even say it's our philosophy or mantra. We think of goal-based investing as investing with purpose, and that by pursuing a goals based investment strategy, we can really enable our clients to align their wealth creation with their specific needs and objectives, whether that be to retire by a certain age, pay for their children's college tuition, provide care for aging parents, or even support meaningful charitable missions.
The key question is, what's your why? You might be thinking, all right, that's enough with the lofty ideals. Let's get to business here. I want some practical advice, and so, don't worry. Our panelists are excited to share their pro tips with all of you today. My best advice? For what it's worth, a hashtag brilliantly boring strategy can literally pay dividends. And that is yes, pun intended. If you start early, work with someone you trust, develop and stick to a plan and play an active, engaged role in defining what you want for your financial future.
This sounds easy peasy, right? With that setting of the stage, I'm pleased to introduce today's panelists. First up, is Michelle Christian, who's a financial advisor for PNC investments, where she helps clients with a variety of financial matters, including retirement planning, investment planning, education planning and protection planning.
Next, we have Victoria Cavolo, who is a wealth strategist on the PNC investments financial planning team, where she supports a range of client needs from small investors to high-net-worth clients with complex needs, including developing strategies around executive compensation and estate planning.
And last but certainly not least, we have Kim Eilber, who is a senior relationship strategist with PNC private Bank, where she helps her clients and their families with the development and achievement of their financial goals and aspirations. Welcome, ladies. I'm thrilled to have you joining me today for the conversation.
So, let's get right to it. And my first question is aimed right at Michelle. How do you approach financial planning when working with clients? Where do you begin? What's the starting point and what are some of the key components of any strong financial plan?
Michelle Christian: Thank you, Amanda. I am definitely someone who loves financial planning. I feel very passionate about it and I think because I feel passionate about it, I help clients to feel more comfortable going through that process. And it really starts with stepping back and thinking about what you want your life to look like. Sounds like a really big question, big place to start. But so often in our everyday lives, we get busy, and we don't take time to think about what really matters to us. So, I hope that when clients meet with me, it's like chatting with a friend about what you dream about, what you want life to look like, whether it's about retiring at a certain age, or whether it's about educating your children or buying a house that you really want.
So, breaking it down into, you know, short term goals, mid-term goals and long-term goals. So, short term goals are typically things that we're looking to achieve within two years or less. That might be like buying a car, mid-term goals, maybe looking at buying a house, something that's going to take place ten years, you know, between that two- and ten-year time frame. And then, the bigger things like our long-term retirement goals, educating our children and estate planning. So, breaking it out like that and then thinking about applying what those things are to us personally, it's a lot. It's a lot to go through. But I help clients think about what all of that means to them, and I do hope that they feel it's a friendly conversation where we're figuring out together what's important to them, and then, quantifying that through a plan.
Amanda Agati: That's great, I love that. A friendly conversation. I'm putting you on speed dial for later so we can have a friendly conversation of our own. I need help with my own plan, so, I'm going right to the source. Thank you for that.
Kim, how should we go about determining what our financial goals and priorities and considerations should be? And how can, I think this is really critically important, how can individuals really ensure their financial plan remains dynamic and adaptable? Life throws a lot of different scenarios and challenges at us. Even the economy and the economic cycle fluctuates a lot. And so, that can have a really significant impact on a plan. What are your thoughts and reactions and how should we go about building this plan out together?
Kim Eilber: Yeah, yeah. Perfect. As you as you mentioned, Amanda, we're deeply driven and guided by goals. And as Michelle said, it can be super daunting to sit down with a blank page and start with, what do you want? Where do you go? What goals do you have? It's kind of like the interview question where do you see yourself in five years, ten years, 15 plus years?
And echoing what Michelle said about near-term goals, which could be not just the home she mentioned, but furnishing the home and then, the long-dated goals about retirement and possibly leaving a legacy of inheritance for your beneficiaries and future generations.
Determining your goals is deeply personal, and it may be present throughout your life. We met with a client today that is fully retired, has plenty of assets for their life, but they're still actively planning. It can encompass from early on and that's what we'll talk about right now. To your point, Amanda, is how do you start and how do you adapt and how do you how do you adjust when things change in your life, whether you are in your 20s, 30s, 40s, 50s, whatever phase of the life you are in.
A goal is anything that is definable and generally quantifiable. A basic goal, we often talk about it, that should be universal for everyone is saving and building an emergency fund. And that goes also to adapting, Amanda, to your point about how do we adjust throughout our planning and as we build a plan throughout our lives?
Common guidance for an emergency fund is 3 to 6 months. I personally like more, and I think that's something important to keep in mind as you listen and you hear advice given to you and adopt it, but also, adapt it, adapt it to how it works for your life and then do it. And then, also thinking about your goals, the short-term smaller goals, the longer dated goals, and then, how to approach them.
And so, we actually have a few clients who like to do buckets. So, they have a separate account for an individual goal. And then, they start to fund that goal through that account. It's that out of sight out of mind mentality. But then, as you mentioned, life happens. You've defined your goals, you prioritize your goals, you're saving towards your goals, and things change.
But that's the beauty of planning because they are, it is adaptable. You have certain levers you can pull throughout your planning life cycle. The levers you have most control over are how much you earn and how much you spend. And I think engaging the right partners, as Michelle mentioned, can really help figure out how to adapt to those life changes, whether it be family changes, economy changes, a temporary loss of a job. There're calculators or advisors that can help you decide to figure out how to reach that goal, how to adjust in that moment should you need to pivot.
And maybe, if you have those buckets, if you've adopted that system, maybe you don't need a couple of those buckets temporarily and divert into the other one. But the goal is to really just keep going forward, keep doing something. As you mentioned, Amanda, you can look back after doing very small things through your whole life. And in 20 years, you look back and you're like, gosh, how did I get here? So, it's just working towards those goals and seeking guidance and building the right team around you.
Amanda Agati: I love that. That's really great advice. Thank you. I also love the concept of buckets. As I was listening to you talk, I was thinking, I need a bucket list bucket, pun intended. And we're going to put a lot of stuff in that in that bucket. So, I'm going to put you on speed dial as well. So, we can talk about how to make that, make all those bucket list dreams come true. That's great. Thank you.
I think it's pretty unanimous at this point, even though we haven't yet heard from Victoria that having a plan is critically important. But just having one isn't enough. And so, in the world of investing and portfolio management and asset allocation, which is very much the front and center for me, we always talk about, like, don't set it and forget it. It's the same story here as it relates to developing a plan.
So, Michelle, with that sort of being said, once you've created that plan, what comes next? How do you ensure that it is and remains dynamic as your life experience and life circumstances change?
Michelle Christian: And just like I think everyone is in agreement upon the plan is the foundation. And once you have the foundation, it's important that you're revisiting it to make sure that it's still working for you. So, as far as the planning process goes, for me, once we build the plan, I make sure that we're actually executing on the plan. So, we're updating our plans at least annually. And then, as client's needs grow and change, the plan is going to grow and change with them. So, if we set in the plan that it's critical that we fund a Roth IRA or that we're a maximizing a 401 K, we're going to revisit that. We're going to revisit the goals that we set for ourselves and make sure that we're still on track. So, getting the plan in place and then, making sure that we're revisiting it on a consistent basis, and that we're following through on everything that we set out to accomplish along the way.
Amanda Agati: Love it. So, we've set the foundation, as you said. So, now, I think, comes the portion of our conversation today where we're going to start walking down the path of life together, talking through some key considerations that sort of each critical or pivotal stage. So, Victoria, I'm coming at you for the next one. For women who may be just starting out in their career, and I fully recognize starting out can be defined in multiple ways. You have some thoughts on certain factors or circumstances that we need to keep in mind in thinking about developing a plan.
Victoria Cavolo: Yeah. When you're first starting out your career, first off, it's important to understand the different benefits that your company may offer. So, understanding those benefits like retirement plans, pensions, what's the company contributing to those options, but also, understanding the more hidden options for lack of a better term, like life insurance benefits. Does your company offer life insurance benefit paid for? Do you have the ability to purchase additional life insurance at a group discount rate? But also, does your company offer a health savings account? So, that's another funding source that you can use towards your medical expenses, whether that's currently or whether you start saving that to retirement.
Another option to consider is if you're not working for an employer and you're self-employed, there are plenty of different options for you to begin saving as well. So, you might not have the same option as your friend who works for a big company and she has a 401 K plan, you might be looking at different options like a Sep IRA, a traditional IRA, a Roth IRA. The most important part about starting out is just saving whatever you can, whatever that number is. Maybe it's maximizing the amount that your employer contributes for a match. Whatever that number is most important to get started out.
Amanda Agati: Love it. That's such great advice. Thank you. I feel like we could spend an entire webinar together talking through all of those potential paths to explore benefit options, but that's great. I appreciate us getting the cliff notes version on that.
You know, I always feel like when you're starting off anything new, whether it's a career or another stage of life, it can be really daunting to kind of zoom out. It's oftentimes I feel like we get so laser focused on what's sitting right in front of us, that zooming out and thinking longer term can be really challenging. You're just trying to kind of keep up or accelerate and build some momentum there. And so, I think, what's really important in the world of investing, but also, in the world of just developing a plan for wealth creation, is time and the compounding effect that comes with time. It's just so powerful. There's no question that you can build a plan at any stage of life. It's not too early and it's certainly not too late, but that compounding effect of time is really, really important. It creates such a tailwind for plans that we always think, you know, as Victoria said and I'll reiterate, starting early and no matter how small it is, just starting and taking that step is really, really important because compounding helps a ton.
So, let's take the next step in our journey today and talk about some considerations for those who may be getting married or considering getting married or newly married, but we don't have those all-important kiddos in the equation yet. So, Kim, can you talk a little bit about when or perhaps if it might make sense to bring your individual financial plans together and start planning as a couple or as a family unit?
Kim Eilber: Yes, yes. So, we know that people get married at various stages in their lives, whether they are high school and college sweethearts, where they may wait to get their career established first. It could be a second marriage, second first marriage anywhere in between. So, that can mean that you're bringing your merging financial lives at a point where you're just starting out before you've accumulated a lot of wealth, or you can be bringing together financial lives that are already a bit complex.
Communication and over communication, I think, is important in any partnership, but especially in the area of financial lives. Be involved and aware in, even if you're not the primary in that aspect of your lives together. Full confession. My husband isn't involved in running our household from a financial perspective, mostly because I like it. And I might have a tiny control issue, but it does worry me when he doesn't know these things.
And I don't want to be setting him up for some, you know, point where he needs to know those things, and he doesn't. So, I think, communicate together, be involved again, even if you don't like it, be aware and be involved. Talk about money. Many couples talk about everything else but money. They'll talk about how are you on a vacation? And can I travel with you? And where are we going to buy a home? But they don't talk directly about money.
So, speaking candidly about how you feel about money. Do it early and do it often. Because if you understand how somebody makes a financial decision and prioritizes that financial decision, it could help you reduce conflict around finances in the future. Okay, so, once the couple has taken that deep dive into that conversation, there're decisions about how you can combine your financial lives.
Many couples have combination of separate accounts and then, joint accounts. There a separate account can be sort of that judgment free spending zone and then, the joint accounts can be where you save together towards goals and where you spend for your everyday living expenses. I know couples who choose to keep everything separate and that works for them. In that scenario, they go back to that conversation, and they say, okay, you're going to keep everything separate. Who's contributing towards which expenses and in what percentages, because most likely your incomes aren't going to be directly the same. So, you want to really talk through who's covering what and if you switch off. But also, have some joint goals that you're working towards if you do keep things separate.
And then, obviously, there are some who choose to combine everything which is works for some people. And it just really comes down to after you have these conversations, what do you feel the best in from your relationship and how you communicate and how you approach your financial lives?
One thing I will say is that consider a prenuptial agreement. I think there's a misconception that you already have to have substantial wealth to need a prenup. They can also be used to protect a future gift or inheritance. They can be used to help define each partner's contributions towards those joint accounts we spoke about and other financial responsibilities. You know, we were talking with the family law attorney recently. Then she mentioned that she's seen much younger couples before they have a lot of wealth accumulation, choose to adopt a prenup agreement because it just, it helps them feel like they have something that's theirs should something happen down the road. So, I guess, there's no one way to bring a financial life together, but really, it's just communicate, talk about money and work together towards some common goals. Even if the separate accounting system is what fits your partnership best.
Amanda Agati: It sounds so simple, but that communication piece is so tough. But that is really great advice. Thank you. All right. So, let's take another step in the journey of life together and talk about those kiddos coming into the equation and draining my bucket list bucket. Michelle, help me avoid draining my bucket list bucket here. What are your thoughts on how to evolve and adjust the plan when the kids come into the equation there, what are the things that matter the most at this stage, what ultimately, is the impact? And I think, also, perhaps as an extension, do you have a few quick thoughts on how to set children up for financial success as a part of the planning process?
Michelle Christian: Absolutely. So, depending on when I start working with a couple or a parent will determine what kind of guidance I offer. So, if they're looking at education planning, we're often talking about 529 plans. Some parents feel differently. They think, well, I'd like to do some saving for my child, but I don't want it to be so rigid that it's 100% for education. So, they might be more open to an UTMA account, or just a brokerage account that they have set aside for their child in a more practical way.
And what you are referencing, Amanda, is kids are expensive. And so, I think that we have to be mindful that maybe there's less to go around for a little while, that when especially in those early years, if you're paying for childcare, some things might not be able to be funded at the same level that they were being funded. But again, that goes back to making sure that we're revisiting the plan so that we don't stop and then never start adding again, that we're, you know, maybe taking a little pause with certain things to accommodate childcare and then, picking back up with our saving.
And then, for older children, I would love talking to parents about that, because I think it's so important that parents work to educate their children, help them understand the importance of money and saving, and a great way to do that. A couple of things. One, that I think is a nice place to start is if your child has a summer job or an after-school job, and they've accumulated a little bit of money from that to establish a Roth IRA for them. And I have parents that will say, okay, if you put in $500, I'll put in $500. And it's a great way to get them started saving.
And another thing that I think really helps, finding things that they find interesting helps, I think, engage them in investing and get them a little bit excited about it, that they own some of a company that they like and that they patron themselves. So, there's a lot that we can do as parents to help guide our children and get them excited and interested and educated about investing. And then, of course, on the other side of things, determining what our goals are for our children and making sure we're planning appropriately to help them achieve those goals.
Amanda Agati: That's great advice. Thank you. We have an investing competition in our house. My girls are 12 and eight, and it is always a hot competition every year to see whose portfolio does the best. And you're exactly right. It's a function of investing in the things that they know and care about and have a passion in. So, we always have a good time with competition around that in our house, of course, it's near and dear to my heart too, but we always have a lot of fun with it.
I also want to just mention we actually did a webinar for Women in Business Week last year in 2023 on this very subject, how to Talk to Your Kids about Money. We gave a lot of practical tips and advice. We also had a lot of laughs as it relates to our collective experiences with our kids and sort of teaching them about money. So, it does help go into a lot more detail around some of the topics that Michelle just covered.
And you can actually find it in the related content section here today. So, definitely go check that out if you're interested, even though it was a year ago, the tips and advice are still very much relevant. So, check that out. All right,
Victoria, I'm coming back to you. Blended families. What are your thoughts on things to consider as it relates to blending families together? You know, we've talked kind of a lot about sort of traditional paths up to this point. We're going to segue into a couple of different directions from here. But what are your thoughts on blended families? Is there anything unique that we should have in mind in building a plan?
Victoria Cavolo: Yeah. So, the most important consideration regarding blending blended families is going to be communication, like we had talked about in the first place when we're talking about marriage is that communication, so, blended families the common misconception could be you have to bring your plan together no matter what stage.
If it's a second marriage, for example, and it may be a little bit later in life, I've done plenty of plans for clients who still keep their financial situation separately, and that could be for various different reasons. A lot of cases it tends to be for reasons because each have children from a previous relationship, so, their main priority is just leaving all their assets to their children. You know, they've well-established each other, they don't necessarily need each other's funds. If something were to happen, it's more so that plan for the children.
So, being again, being a blended family doesn't necessarily mean blending your finances. It's completely okay and completely normal to have those separate financial plans and separate, you know, financial accounts and separate conversations, though it's not something that's odd if you do want to combine your finances, that's something that's plenty normal as well. Regardless of the case, you know, the main point in talking about your financial situation is that communication.
Amanda Agati: That's great advice. Thank you. So far, we've focused on mostly happy occasions and life stages, but I think we have to face the reality that many of us will experience other, more challenging or difficult life events, and they can carry as much, if not even more, of a financial burden. So, here's a quick segue down a slightly different path.
And Kim, can you talk a little bit about the impact of divorce? I think it builds on the question I just asked with Victoria, what steps can we take to protect assets and financial interests before, during and even after a divorce? You have any tips on how individuals can navigate both the emotional and financial complexities while still trying to ensure their long term financial stability? It's a tall order I recognize as the question posed there, but a really important one. I'm curious as to your thoughts.
Kim Eilber: Yes, it is, and it's a really challenging time because if this is what you're faced with, it's like you're starting over, right? Both on your personal life and your financial life. And so, you're almost going back to that blank page we talked about in the very beginning about setting your goals. But some of the easy things, not easy because it's a hard time. But when we talked about coming together and marriage and joining lives, it comes it goes back to being empowered by being aware and knowing things. Be engaged.
We've had a client recently who is going through a divorce, and they've never logged into their banking accounts. Their investment accounts, paid a bill. And so, just, that really helps. It will help protect as well as just give you that, that assurance that you can do this going forward.
We've talked about keeping some separate property throughout your marriage that will help protect. Nothing's impenetrable, but it will help if you segment it off, if you want to keep some separate assets. That prenup we spoke about, if there's one in place, that will help safeguard separate assets, you can also fund and establish an irrevocable trust for some separate property assets that will help secure some of those assets through the division process should a divorce happen in your life.
Be sure that your emergency fund is funded and maintained just because that will also help in that moment of division of assets, open communication about if you do have children involved that you're both participating towards funding their education, health insurance, things of that nature. I think that also to protect things going forward, be sure that if you are going to be the recipient of spousal maintenance, that there is appropriate and adequate insurance on the payor spouse, because we often forget that something happened to that income stream and that payor is something happens to that person. We need to and make sure that that is available to you if you're relying on that to now define and redefine your goals and your financial future.
Consider your own in life insurance. If your net worth has then suddenly become half of what it was, and you still have goals of passing on an inheritance to your children or a philanthropic organization or something, you might want to consider adding or adopting new insurance. Revise your plan. When you go through this, just make sure that you are revisiting your goals and redefining your goals, revising your plan and your documents because everything has changed. Your people that you have you pick have changed. And we'll talk about this in a moment.
But I have a former client who inadvertently left an ex-spouse on as a primary beneficiary on a very large IRA. And that is a situation you probably don't want to be in because it wasn't a part of the settlement. And so, there're ways you can work in and protect what you do going forward in addition to what you're going through, through division, I think, finding the right team, finding good support, engaging people around you is really going to be invaluable. And then, of course, throughout the whole process, don't forget about self-care, and taking care of yourself.
Amanda Agati: Yeah, absolutely. So much complexity around this one for sure. And relying on trusted partners is essential, I think, especially when, you know, sometimes the emotion can really take center stage, as a function of what's going on there. So, thanks. I appreciate you sharing your thoughts on that.
Let's head down another path and let's talk a bit about retirement aka freedom, hopefully, financial freedom as well. But we're going to talk retirement here. And so, I'm going to lob this one at Victoria. When should we start planning? I think I know the answer, but I'm going to ask it anyway. When should we start planning for retirement and how do factors like my bucket list, obviously, other lifestyle expectations and a really hot topic right now in particular. Not always, but right now the role of inflation or the impact of inflation. How do all of these factors come into play when we're thinking about retirement planning?
Victoria Cavolo: Yeah, for starters, of course, the answer for starting retirement planning is the earlier the better. However, the main point is not to scare anyone. If you haven't started retirement planning quite yet, that's completely okay. It's never too late to start retirement planning, but if you haven't yet, it's something to consider doing. So, whether you're 23 years old or whether you're 63 years old, you know, go ahead and start getting those considerations into retirement planning. So that way we can make sure you have the most successful retirement.
So, if you're a little bit younger, there's plenty of time, but you might have those goals to retire early, and an early retirement could be something like 50. With that being said, time is going to be your best friend. And all of these situations, especially when it comes to investment, kind of like we've talked about a little bit earlier now when it comes to actually going into retirement, the number one misconception is I'm going to spend less in retirement. You might spend less in some categories, but you're probably not going to spend much less overall.
So, it's the main point of still focusing on a budget to an extent. And while you have that plan in place as you're getting close to retirement, making sure you have those buckets set, okay, I want to be able to travel, I want to go to Florida, just those normal trips, but I also want to go on the big trip to Italy or that big bucket list goal.
And, you know, it's important to make sure you're planning even well before that. So, you have those assets saved and you could go through that expense and enjoy without having to worry about if you spent a little bit too much on gelato or something along those lines.
Amanda Agati: I definitely run the risk of that.
Victoria Cavolo: Yeah, you and me both probably. So, you might read online a lot to when it comes to retirement, that you need to have a certain dollar amount to retire. That is not very much the case. I think Kim had mentioned it earlier, but it's really not about what you have, but it's about what you spend. So, going back to that whole point on the budget, the budget is your best friend in retirement. Now, not saying you have to be a complete stickler, but always making sure that you're providing wiggle room into that budget, whether it's wiggle room on your regular expenses, whether it's wiggle room on the effects of inflation.
So, as Amanda said, it is a hot topic right now. I talk about it all the time because we don't know what inflation is going to look like. We're planning for a long term run at inflation. When we talk about a financial plan, not necessarily the short term high inflationary period that we have been in, but still, these are things that are going to come around and could potentially affect your retirement planning, whether it's inflation, but also, things like market corrections too. It's likely that you're going to see one in your retirement. I'm not forecasting that, I'm not perfect.
But I can say with what the markets have done, it's probably likely going to happen. And it's important to understand how you can react. And it all goes back to that budget. So, you might tighten up the budget a little bit. You might not take that larger trip in that specific year. You know, we've talked about your routine expenses such as your utilities, your groceries, your maybe travel goals, things like that. But it's also important to make sure you understand that having a budget for bigger purchases, home improvement, that's something that's going to come up in retirement, too.
You might not think that you're going to renovate your kitchen again or something like that, but those minor things like you need to replace a door, your water heater broke. Anything like that is something that's going to be an expense and unforeseen in retirement. Same thing like new car purchases. It's not something we always think about, especially if you're someone who finances. But it's still important to consider that is going to be an extra expense in retirement, especially when you're not having that salary anymore and you're now becoming a consumer and using those portfolio assets. So, as we've talked about retirement here, the main focus is really all about your budget.
Amanda Agati: Love it. And all-important gelato budget. I wrote that down as a key addition to my plan going forward. But seriously, thank you. That was great. There's again, so much to consider. Clearly, at each stage that we're talking about here, there're so many complexities. And so, it's important to find somebody you trust and sort of work through in a very open, I'll say open hearted way, and transparent way, all of your goals and aspirations. So, we make sure that that plan can actually get you there.
All right, Michelle, I'm coming back to you, I think, and this is one that I think many women face, very, very often and very regularly the role of being a caregiver. And so, how does the role of caregiver translate into important financial planning considerations? And when we say caregiver, it's not so much about those kiddos we talked about earlier. It's aging or elderly parents, maybe an ill spouse or an aging spouse or other loved ones at an advanced age. And so, it's a lot, I think, for women to juggle and important to kind of think about where and how that might fit in, as it relates to building a financial plan.
Michelle Christian: Well, I think that this definitely falls into that category. We've been we've been hitting on unforeseen expenses and probably my least favorite part. As much as I love planning, the unforeseen tends to be the depressing part of things that happen in life that we have to be thoughtful about, you know, life insurance, long term care. What if my mom or dad gets sick? And a theme that I think has developed throughout this dialogue is really communication. Having loving, thoughtful conversations with the people we care about and trying to understand what they want if something unforeseen were to happen so that no one ideally is blindsided by something, someone got sick. We weren't planning for that. How are we going to handle that as a family?
And there's a lot of things we can do in the planning process trying to get ahead of that. We've spoken about doing things younger. Certainly, it's easier if we're talking about insurance to do that when you're young and healthy, then, later on in your life when maybe we're not as healthy, Victoria touched on plans being offered through your employer. Certainly, a great place to go if I'm catching you later in life, where maybe you do have some preexisting condition and getting insurance wouldn't be as easy for you, but there's an option for everybody.
So, determining what you're concerned about, is it if my spouse were to pass prematurely, is it I'm worried about my mom and dad getting older and their health? Is it a long-term care need and then, filling in whatever you're concerned with the appropriate type of coverage? There are so many different options in the insurance life and long-term care space to address all of those things.
And then, circling back, even if it isn't your financial responsibility to take care of your parents, as an example, understanding what they might want that to look like so that as a family, you can address any concerns that might come up in your life and thinking about it before it happens.
Amanda Agati: That's great. Great. Another key theme, starting early. Right? Planning early. Talking about insurance needs early makes such a huge difference. I want to go a little bit further into this insurance topic because I don't know, for whatever reason, it seems like insurance, whether it's life insurance, long term care or otherwise, can be a bit of a polarizing topic. Do I need it? Don't I need it? I don't need it. You know, there's a lot the full spectrum of views on the role of insurance.
And so, Victoria, can you demystify this a little bit for us? Can you talk about the important role that life insurance can play in the plan? I just want to dig into that a little bit deeper, because I think our audience could benefit from hearing some additional thoughts on that one.
Victoria Cavolo: Sure, life insurance is a bit of a tricky piece. First off, no one ever wants to talk about it. Whether, you know, you're talking to a family member about it or whether you're talking about it in general to clients, no one really wants to talk about the insurance need that they may have. So, there are various different types of insurance policies, and they could certainly depend on your life stages. For example, while you're young and just starting out work, or whether you're just having a family, purchasing a house, things like that, it might be something to consider of having term insurance, which is something that just lasts for a period of time just to cover until you get yourself established for the most part, if something were to happen.
While there's also more permanent life insurance policies that you may want to keep around for the rest of your life, whether that's to plan for your legacy, having something for your children, friends, neighbors, cousins, whoever your beneficiaries would be, just making sure that you're planning for them as well, and that there's always going to be something in the estate left over. So, there's a ton of different ways to look at life insurance, and it's more so just making sure that when we first talk about life insurance, it's making sure that those family members or those friends or whoever your beneficiaries are, are going to be protected in the event where something were to happen to you.
Now, I've talked about your family members and your friends. So, it's also important at some stage in life, whether that's, you know, a little bit earlier, whether that's later in life to begin to involve your beneficiaries. A lot of times clients will involve it later in life and start talking to their beneficiaries about what they have, understand, you know, their beneficiaries understanding who to go to. And again, whether that's your children or whether that's your friends, whoever those people may be, it's important to get them involved as early as you feel comfortable doing so. So, that way, you know that your estate plan is going to be taken care of in the way that you feel best.
Amanda Agati: That's great. Thank you. I appreciate you sharing that thought. So, it's late in our conversation but it's no less important. Don't blow off the idea of insurance is the punchline, right? All right, before we jump to the next question, I feel like we need a little bit of comic relief. I will restrain myself to some degree, but it feels very fitting to do like a lawyer and accountant and an investment adviser walk into a bar joke.
Again, I'm not going to go all the way there, but that probably should have set the stage for all of the topics that we're talking through here together. And so, even though I waited until now to say it sort of, it feels very fitting to tee Kim up for this next question. And so, can you talk, Kim, a little bit briefly about wills, trusts, powers of attorney directives and so on, what are some of the important differences that our audience should be aware of? And really, how do you go about determining which one or what collection of these solutions is really best fitted for each client situation?
Kim Eilber: Perfect. I like the lead in. Thanks.
Amanda Agati: You can finish the joke if you want. No pressure.
Kim Eilber: Yeah. So, up to this point, we've really spoken mostly about finances and goals. And another area of planning that is incredibly important is estate planning, as Amanda mentioned, which is actually an extension of another form of goal and financial planning. There are foundational documents that everyone should have, regardless of wealth accumulation or financial complexity. And that's what we'll touch on today.
And it's interesting because this is one of those planning areas that we find that clients. It's just it frequently drops to the bottom of that to do list. I'll get it done before the end of the year becomes, I'll do it next year, which becomes I'll do it the year after. Just keep in mind these the items we'll talk about are revocable and changeable. So, don't feel like you're doing something that is locked and loaded and it's one and done and you can't revisit it. There are additional strategies that are irrevocable, that you can layer on top of your core documents should that opportunity come up and it be appropriate for what you're planning and your financial life. But get the core documents in place.
They don't need to be overly complicated, and before beginning, just start before beginning working with outside counsel or whoever you're going to engage to get these things drafted and executed. Just start thinking about, really, your key people, who will be there for your kids? Who will be there for your beneficiaries? Who might be there if you're unable to act on your own behalf? And then, think about where you want your things to go.
I mean, a lot of us sort of think, well, why would I do a will? And all I have is debt. Please, please, please always do a will. Always do your powers. So, there's going to be four documents that I will be just touching on briefly. Three are mandatory. One is optional. So, mandatory, will. This one ensures the property that you own is distributed according to your wishes and not the state's wishes. Because if you don't do anything, they'll step in. And it'll name your key people, who is going to administer your estate, who your beneficiaries are, who your guardians might be if you have minor children. Okay, so, that's the first one.
Second one is your durable power of attorney. That is a document that appoints an agent or a person that you can assign to take care of and act on your behalf when you are unable to do so. So, in the event of incapacity, they can complete financial transactions, other legal decisions, and they just keep your life operating until you're able to do that again on your own behalf.
The third one is your medical power of attorney. That is where you appoint an agent, as you did in the durable power of attorney, over your financial life. This agent is over your medical life, and they will make important medical decisions on your behalf. That medical power of attorney works in conjunction with the directive, one of the ones that Amanda mentioned, which is your advanced health care directive, which we always call just a living will in that document that explains how you want medical decisions to be made.
And then, the agent that you appointed in your power of attorney, your medical power of attorney, can execute and carry out those decisions. The fourth document that I said is optional many, many clients use, and that's the revocable trust. And that works in coordination with your will. And a lot of the reasoning behind the revocable trust is for privacy and then, to keep your assets in your estate outside of the probate process.
Probate is just the legal process of what you have as a will, that will is reviewed. The court determines validity. They review your assets, and they determine your inheritors. But the revocable trust can bypass that process, which in certain states can be very time demanding and also expensive. So, it can make things more efficient if you own your assets inside of that revocable trust. Again, key term revocable. You can do it. You can put your assets in there, your home, but you can still change the terms of your trust if your life changes.
The last thing I want to talk, well, touch on, is, back to the beneficiary designations that we talked about with divorce, certain assets, such as 401Ks, IRAs, life insurance. They pass outside of that will and trust that you may have in place. So, be very aware. Always review your beneficiary designations not just for that accidental ex-spouse that's in there, but just be sure it's going to where you want it to be because that will pass those assets pass by that beneficiary designation, not by your will and your trust. So, be very aware of those.
In addition, if you have children who are 18 or over should have their own documents, they go away to college. They're not at your home anymore. Even if they are in your home, you actually don't automatically, as parents, get to step in and speak on their behalf should there be an incapacity situation. So, something to be aware of. We don't always think about that because they're so young and we're like, estate planning. That's not for you yet. But at least the powers of attorney should be.
The last thing is just review, review, review, review. Don't create it, put it in a drawer, so to speak. Adjust your documents as life changes, law changes. People in your life changes. Just get started and get something in place and then, adapt as you need.
Amanda Agati: Get those documents in order. Thank you. That was great. I got a lot of paperwork to do on my end, for sure. So, this is a well-timed conversation. Before we shift gear and try and take some audience questions, I hope you'll humor me. It wouldn't be an epic panel without a lightning round, but I think we've covered so much ground together today that I think it would be helpful to kind of do a mic drop from each of our panelists on two important questions.
So, the first one is, you know, what do you see as the greatest obstacle to financial planning success? What's that impediment? Is there one thing that sort of stands out in your mind as the obstacle or challenge? And then, the second question is, what's one thing you'd recommend as the single most important consideration? There are clearly many, but if you only had to pick one, what's the most important consideration related to all of what we've covered in today's discussion? So, who would like to go first? Considering you're all humoring me with this lightning round.
Victoria Cavolo: I'll take it.
Kim Eilber: Oh, Victoria, go for it.
Victoria Cavolo: Okay. So, one of the greatest obstacles, of course, is going to be starting out. I feel like that's, I'm going to say, maybe that's the obvious but for one thing that I would recommend, as part of the most important consideration is going back to that starting out. Understand your employer options for sure. Contact HR if you have to further understand the benefits that you have available to you, but definitely would recommend doing that.
Kim Eilber: Okay, I'll jump in. I would, yes, starting out, but I'll piggyback on that and say once you started, implementing it is also a big obstacle. We always have great plans and we can put them in place, but then, if we don't do them, they're only as good as the plan. And then, one thing I think, from our conversations today would be for me reach out, ask questions, seek advice and build your team.
Michelle Christian: That leaves me. Okay, so, I think that we're all pretty aligned here, that procrastination, putting it off for too long, not prioritizing yourself is what I see most. And it can be intimidating. But I can assure you, I've done many, many plans and it is truly an empowering process and something to be excited about. So, embrace it. Go with it. Get a plan done.
Amanda Agati: Love it. You achieved it. The lightning round. Thank you. I think we have time for, like, maybe 1 or 2 audience questions. We had some really good ones submitted. I wish that we had time to cover a lot of these, but maybe if I could just pick out 1 or 2 and you kind of give us some quick thoughts and reactions. I think the first one, which we didn't really, I mean, we touched on it, but we didn't really go there, probably makes sense for Michelle you to weigh in on.
And so, what advice do you have for single parents that are trying to accomplish these goals, many of which we've talked about today for their families? Do you have any thoughts or tips for single parents in particular?
Michelle Christian: Sure, absolutely. So, it's funny, I feel like throughout this panel, I've been on an episode of This Is Your Life because I've been married, divorced, remarried, blended my family. I've done it all. So, thank you. This has been a pleasant walk down my life and it's all great.
And being a single parent really isn't different than what I do for married parents and couples. It's the same. It's just instead of having maybe two buckets to pull from to fund, we're looking at one. But it's really the same in terms of thinking about what your priorities are, what you want your life to look like, how you want to approach anything financial with your child. So, it's truly the same process. It's no different than any other financial plan. It's just designed around what your goals and objectives are. So, once again, nothing to hold you back. It's something that you absolutely want to embrace and think about what's important to you, what's important to your family and put a plan together.
Amanda Agati: That's great. Thanks, and thanks for letting us walk down memory lane with you. Inadvertently speaking. Great. The next one is a topic that we didn't really touch on at all, and it's really around the role of debt. Or if there are, you know, financial obligations that exist in terms of liabilities.
And so, the question is, I think it makes sense for Kim to address this one. But the question is, please address the order of operations of investing when you're also in debt, when you have those financial liabilities, are there best practices or resources available to consider?
Kim Eilber: Yeah, that's a big topic, too, but we can touch on it just lightly. You know, it's usually, there are definitely good uses of debt. And then, what we do when we talk with clients about managing, investing, building towards goals while also maintaining and taking on some debt is really looking at the delta in the rates. And I would say easy question. If it's consumer debt, pay it off first and then, invest. But usually, you can balance both.
So, consumer debt, what I mean going back to that is credit card debt. And usually, what you're carrying there is 18 plus interest. And we would never recommend that. So, I would say, focus on that first, if that is in your life right now.
Other sources of debt, mortgages, common. You're always going to have a mortgage that should never prevent you and preclude you from investing and saving. But you might have other sources of debt as well, whether it be an intra family loan or a line of credit. And what we do there is really do we actively manage and look to what rates are. So, when we didn't have high interest rates, made total sense to carry some debt because your arbitrage in what you're earning in your investment account is definitely going to be higher than what we were paying at 2% on a debt. Now that we've seen interest increase and creep up back to, well, what we think is high, but it's really not in historical references but really managing both.
And that's where I think if you run some calculations, you can figure out and work with your advisors how to pay down, manage debt as well as investing and really getting more than what you're paying in that debt. So, it's really, it's a balancing act. And then, it's not just one decision at any one point in time.
Amanda Agati: Okay, great. One more. And I'm going to point this one at Victoria. You touched on it a little bit earlier, but we got a lot of questions about should I have a 401K? Should I have a Roth IRA? Is it one or the other? Should I have both? And sort of, what is the, what is or are the criteria you should use to determine which one is ultimately right for you?
Victoria Cavolo: So, it's definitely a hot topic, that's for sure. Between both of these options. Now, first, I will clarify that you are able to have both potentially able to have both, that's for sure. You can have the 401K contribute to that and also contribute to a Roth IRA. Now, it really depends on your goals and what you're looking to do.
Now, 401K, you know, one thing you might want to consider is at least reaching out your to meet your employer max. The maximum match is what I mean by that. So, at least being cognizant of that and doing that contribution. But also, if you have the ability to do so, you can always contribute more to a Roth IRA.
Now, the main difference between the two options is going to be the 401K is going to be pre-tax, for the most part pre-tax, meaning it comes out of your paycheck pre-tax. You don't pay taxes today, but you're going to pay taxes later on. A Roth IRA is funded after tax as an after-tax option, meaning it's going to continue to grow tax free. You're also going to be able to withdraw from that tax free. So, both have a ton of benefits. You can certainly consider both options would probably be one of the most successful for retirement as we've talked about buckets a lot. Now, we have a different bucket to pull from. One tax free option, one tax deferred option. Both have benefits in their own ways.
Amanda Agati: That's awesome. Thank you. Well, we did it, ladies. We're almost at the hour mark. I can't believe how fast our time together blew today. Thanks so much for sharing your expert advice and pro tips with us, I loved it. I learned a lot. I hope our audience did too. And thank you all, to the audience, for joining us today.
I want to just give you two housekeeping items. since we're kicking off Women in Business Week here, there's a lot more fun to come and a lot more information to be shared. So, don't forget to register for the week's remaining events. We have supporting employee financial wellness on May 15th, we're featuring PNC's Chief HR officer, Vicki Henn and our head of organizational financial wellness, Kaley Keeley. And then, we have planning for succession on May 16th, moderated by PNC's Head of Asset Management Group, Carole Brown, with a panel of leaders from PNC private Bank, private Bank Hawthorne and the Corporate and Institutional Bank.
To learn more about PNC support for women financial decision makers, visit PNC.com/women where replays of this week's Women in Business Week sessions will also be made available. Thanks everybody. I hope you have a great rest of your afternoon.
