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Manisha Thakor: Beware of 'Junk Personal Finance'

The author and financial educator discusses how social media affects financial well-being, how women can close the wealth gap, and why young people should steer clear of individual stock trading.

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Our guest on the podcast today is author and financial educator, Manisha Thakor. Manisha is founder of MoneyZen, a financial education consultancy. She's also the coauthor of two books with Sharon Kedar: On My Own Two Feet, published in 2007 and updated in 2013, and Get Financially Naked, which came out in 2009. Prior to founding MoneyZen, Manisha was vice president of financial well-being at Brighton Jones. Before that she was director of wealth strategies for women at Buckingham Strategic Wealth. Earlier in her career, Manisha held positions at several investment management firms, including Fayez Sarofim, Sands Capital Management, and Atalanta/Sosnoff Capital. Manisha is a chartered financial analyst and a certified financial planner. She received her bachelor's degree in American Studies from Wellesley College and her MBA from Harvard Business School.

Background

Bio

MoneyZen

On My Own Two Feet: A Modern Girl’s Guide to Personal Finance, by Manisha Thakor and Sharon Kedar.

Get Financially Naked: How to Talk Money With Your Honey, by Manisha Thakor and Sharon Kedar.

Women in Investing/Financial Planning

The White House Report on Women: 3 Surprising Insights,” by Manisha Thakor, moneyzen.com, March 8, 2011.

Women Are Quitting: How We Can Curb the ‘She-Cession’ and Support Working Women,” by Margie Warrell, forbes.com, Jan. 26, 2021.

The 5 Most Common Mistakes Investors Make,” by Manisha Thakor, moneyzen.com, Oct. 7, 2013.

Growing Up Comfortable With Money,” by Candice Helfand-Rogers, thestoryexchange.org, June 5, 2014.

Financial Wellness in Younger Generations and Couples

The Worst Financial Advice to Give to a College Grad,” by Manisha Thakor, wsj.com, June 18, 2015.

Gen X & Gen Y--Dialing Financial 911,” by Manisha Thakor, moneyzen.com, Sept. 29, 2010.

Priceless Financial Advice For Recent Graduates,” by Manisha Thakor, feminist.com.

The Math Behind a Pricey College Degree,” by Manisha Thakor, wsj.com, April 16, 2014.

Don’t Buy a Property Before Saying ‘I Do’,” by Manisha Thakor, wsj.com, Feb. 12, 2014.

All Your Worth: The Ultimate Lifetime Money Plan, by Elizabeth Warren and Amelia Warren Tyagi.

What is the 50/20/30 Budget Rule?” by Eric Whiteside, Investopedia.com, Oct. 29, 2020.

The Beauty of a Budget,” by Manisha Thakor, moneyzen.com, March 18, 2013.

The Quiet Wisdom of Saving,” by Manisha Thakor, moneyzen.com, Dec. 8, 2011.

Manisha Thakor on Managing Money in Uncertain Times,” by Kathleen Harris, thecru.com, April 10, 2020.

Teresa Ghilarducci: To Fix Retirement, Expand Social Security,” The Long View Podcast, Morningstar.com, May 19, 2021.

Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence, by Vicki Robin and Joe Dominguez.

The Marriage of Love & Money: How to Protect Yourself From Financial Heartbreak,” by Manisha Thakor, moneyzen, May 6, 2013.

How to Become a Financially Compatible Couple,” by Manisha Thakor, wsj.com, Feb. 13, 2015.

Financial Advice

Finding the Right Advisor: It’s Complicated,” by Jim Pavia, cnbc.com, Jan. 15, 2015.

Reboot Your Finances: A 3-Part Workshop for Women,” with Manisha Thakor, eomega.org.

Ellevest

Betterment

XY Planning Network

Mental Health

Slow Down to Do More: ‘Enjoy Life’ With Manisha Thakor,” by Ben Ari, thriveglobal.com, April 24, 2020.

“Walking the Tightrope Between Workaholism and Mental Health,” mmlafleur.com, April 5, 2019.

Transcript

Christine Benz: Hi, and welcome to The Long View. I'm Christine Benz, director of personal finance for Morningstar.

Jeff Ptak: And I am Jeff Ptak, chief ratings officer for Morningstar Research Services.

Benz: Our guest on the podcast today is author and financial educator, Manisha Thakor. Manisha is founder of MoneyZen, a financial education consultancy. She's also the coauthor of two books with Sharon Kedar: On My Own Two Feet, published in 2007 and updated in 2013, and Get Financially Naked, which came out in 2009. Prior to founding MoneyZen, Manisha was vice president of financial well-being at Brighton Jones. Before that she was director of wealth strategies for women at Buckingham Strategic Wealth. Earlier in her career, Manisha held positions at several investment management firms, including Fayez Sarofim, Sands Capital Management, and Atalanta/Sosnoff Capital. Manisha is a chartered financial analyst and a certified financial planner. She received her bachelor's degree in American Studies from Wellesley College and her MBA from Harvard Business School.

Manisha welcome to The Long View.

Manisha Thakor: Christine, thank you so much for having me.

Benz: I wanted to start by talking about women and money. You've made educating and helping women improve their financial positions a key priority throughout your career. What are the key reasons that women tend to be less financially well than men?

Thakor: For the longest time, we've cited three reasons. And I'll just cover them briefly. We spend more time out of the paid workforce caring for children and elderly parents. And we live longer. So, we have less money coming in, and yet we need it to last more years. But the biggest reason I'm starting to realize as we go further, is women, we don't invest in ourselves in terms of our knowledge about investing. And as a result, it's not just a wage gap we have, we have a wealth gap. And depending on which data point you want to look at, across women as a whole, we have roughly $0.34 in wealth for every dollar that men have. And it's much worse if we parse that by ethnicity and other demographics.

Ptak: I wanted to talk about one of those three reasons that you cited, which is women's caregiving responsibilities, which reduce their lifetime incomes, as you already referenced. That's a complicated problem. Obviously, that's deeply intertwined with cultural forces. In what ways do you think we can address it?

Thakor: Well, as we talk right now, Jeff, I am speaking to you--which is why our audio isn't as good as it would have been--from my parent's home. They're in their 80s and my dad was rushed to the ICU. And, luckily, I'm far enough along in my career that I have complete flexibility and I can move. But most people don't have that. And so, what I am hoping has come out of the pandemic, if there's any lasting silver lining from all of the chaos, it's that employers increasingly can see that flexibility can work. And so, what I'm hoping is that employers will be open to more out-of-the box solutions to help women, and men, deal with elder-care issues.

Benz: Well, you referenced the pandemic Manisha. The pandemic-related economic downturn has been called a “she-cession” because of its disproportionate impact on women. Many women have reduced their hours or quit paid work all together to help care for children and supervise education at home. Do you think there will be lasting effects from this? Or will it be fleeting and perhaps even an opportunity for things to get better for women?

Thakor: Well, I think it's going to be both. One of the things that you see when women leave the workforce voluntarily or are forced to because of family obligations or their own personal health issues is that when they return, they return to typically lower salaries and lower positions than they had before, if it's an extended time away. Men, that tends not to be quite so much the case and the problem is compounded. When you come back to a job that's $3,000, $5,000, $10,000 less depending on where you were in your career and you're saving 10%, 15%, 20% of your income. And then you compound that over time, that starting point really makes a difference. So, I worry very much from that standpoint, that was an issue that's pre-pandemic, that's always been an issue, particularly with women taking time out in peak earning years to have children. My hope, once again, is that the pandemic will encourage employers to really think about productivity and output as opposed to facetime and geography. And if they do focus on that, there's the old saying, “If you want to get more work done, give it to the busiest person you know.” And women are masters, has been my observation--particularly mothers--at juggling a lot of balls and getting a lot of things done really well.

Ptak: How would you urge women to examine the financial dimensions of the decisions about whether to reduce hours or quit paid work altogether? Do you think it's possible that women perhaps think too much about whether the family can afford that choice in the present, but not enough about the long-term implications of it?

Thakor: What I've observed Jeff is, oftentimes what happens is, many times women try and work through it, they try to stay working. And oftentimes through their first child they can, and then the lack of support from employers, I've noticed, tends with--depending on your level--child two or three, just push you over the edge. And so, I want to emphasize that women who want to stay in the workforce are having trouble. Another completely reasonable option is decide that you want to be home for those vital early years and study after study shows how important early childhood education and nurturing is on long-term health and well-being for all of us humans. And I think, your point Jeff, is a very poignant one, which is that when you're trying to weigh the future consequences, even if you do add that into the equation, against a life that you love, how do you value that? And so, yes, I do think oftentimes women, particularly of younger childbearing years, predominantly focus on, do we have enough money as a household to make it through this period, rather than what is the impact this is going to have over my compounded or aggregate earnings over the long run? But I think it's compounded by the fact that what we're comparing it to is quite literally unpriceable.

Benz: You referenced the investment piece of all of this earlier. When I've looked at the data on how women invest relative to men, it appears that once you control for incomes, women do invest pretty similarly to men in terms of their investment allocations, how willing they are to invest in stocks and so forth. Do you think that the “women are more conservative” narrative is overdone, or maybe oversimplified, at least?

Thakor: I think it's oversimplified. I had the honor and pleasure of working with Larry Swedroe when I was at Buckingham Asset Management. And Larry had a framework that I just thought was brilliant. He said, risk tolerance really has three components: its willingness, ability, and need to take risks. And all too often we focus on the first component, your willingness to take risk. And this, if the market goes down x, how would you feel? Which is a ridiculous question, because most people would feel crappy, when the market goes down.

Benz: Right.

Thakor: But the second question, what is your ability to take risk? Oftentimes, women have an intuitive sense of this. And I don't think women are getting enough credit for this. So, for example, if you ask an entrepreneur, what is your risk tolerance? Well, it's high, they're an entrepreneur. But what is the steadiness of their cash flow? Not high; lumpy, therefore their business is risky, so perhaps their investments should not be. And in reverse, you've got a tenured professor. My mom was a professor, so, I mean this in the most loving of ways that professors oftentimes, especially those with tenure, can feel a little bit more conservative than an entrepreneur, yet they can take on more risk.

And then the last piece, what is your need to take risk? I see this particularly with higher-net-worth individuals where the risk you took to get where you are, you no longer need in order to maintain the standard of living that you want, not oftentimes just for your own lives, but in a legacy standpoint. And so, what I see with women is heightened risk awareness of those second two elements, and it may not be that crisply defined in their heads, but that's what I'm sensing in their guts. And then the final overlay I would have, that I would point out, is that I have observed qualitatively--I've not seen any quantitative data on this--that women are much more interested in cash flow, which is incredibly logical. We talk about the need for emergency funds, and so forth.

But I feel like if the industry and advisors in particular, if we were very clear with where funds are going to be coming from, if there's a three- to five-year decline in the market, that we've got, not just an emergency fund, but we've got a laddered portfolio for at least a portion of our fixed-income allocation. Then what happens is, you can take more risk on the equity side, because you know you're going to be OK, and you know you're not going to have a need to sell funds in a downturn. And I think those are the pieces that women inherently are sensing. And I don't think we as an industry are focusing enough on that in our dialogue with clients. I'm not saying we don't think about it, with our advisor hats on, there's a disconnect between that dialogue and the end client, particularly if the end client is a woman.

Ptak: Given that, do you think there's a continuing need for women-oriented financial education or advisory services. For instance, Ellevest which is an RIA that's oriented toward female investors, to RIAs that are hosting women-in-wealth events for their clients and prospects. And, if so, how can these firms best serve their female clients? What sorts of issues should they emphasize? And what should they de-emphasize?

Thakor: It’s interesting, Jeff. When I was at, I'll just say at a large multibillion-dollar unnamed wealth RIA, I was asked to lead up a women-in-wealth initiative, and I was actually really surprised--the younger generation was actually kind of punching with me. Like, $1 is $1. It doesn't know what my gender is. Why are you treating me any differently? Financial advice, would it be any different for me? And, with the exception of the importance of needing to start saving earlier and more aggressively in terms of dollar amount, if you plan to take time out of the workforce to care for children, I really don't feel that there is that much that's different between advice that I would give at any stage in life to a man versus a woman. But that's the kind of the early-20s set that I was feeling that from. What I've noticed is as women spend more time in the workforce, and just in life in general, they start often to find that when they are around the industry as a whole, there's a lot of testosterone-esque language: we're crushing the competitors, we're going to beat the market, we're going to dominate returns. I have a Harvard MBA, a CFA and a CFP. And that doesn't resonate with me. So, it has nothing to do with intellect or training. It's just stylistically.

I like to say if you have one piece of rotten apple in a fruit salad, it kind of ruins the whole thing. I don't mean to equate men with rotten pieces of fruit in the salad. But what I've noticed is when you are in a group of all women, there is a certain kind of dialogue that happens. And if you bring in just one male, the whole tone will change. And I'll give you this an example. I don't mean this in kind of a pink it and shrink it, or demeaning way, I've done it. Dimensional Fund Advisors is doing some wonderful work around women in wealth. And I can remember I was part of the inaugural group, and we came to the headquarters in Austin, and it was amazing. And we had a day and a half of workshops and brainstorming, and it was only women in the room. We were on fire. And then for the final session, two men, who are so pro-women joined. And I noticed halfway through I was using my little girl voice, not my big girl voice. And I pointed that out, and the other women acknowledged, yeah, you do sound different. And I feel like if it can happen to me, and I've spent my whole career pretty much thinking about this topic, I can't be alone.

And so that's what I feel like there's still a need. And it's not a demeaning need; it's more of a comfort, a community, a worldview. And then the last thing I'll say on this is, I've been in the business for 25 years, and I spent the first half on the institutional side and the second half on the individual side. And I literally can't remember the last time I spoke to a group of all men prior to five years ago, where a man asked me about ESG, socially responsible investing, MRI, pick your name. I can't remember ever, over the last 25 years, speaking to a group of women about investing where that was not asked about. And so that speaks to just a different lens on the use of, purpose of, meaning for money. So, this is a very long-winded way of saying, yes, I think it's still a need. And I still think it's filling a very useful purpose. And I'm going to take a break, see if you have any questions before I tell you whether or not I think it's working, and what needs to happen.

Benz: Let's talk about that, whether you think it's working?

Thakor: No, I don't think it's working. And the reason I don't think it’s working is it's still a very male-dominated industry. And what I have found personally, when it comes to these programs, is they are very poorly funded, and there is no acknowledgement that the sales cycle for women, and I hate to use that term, but in the industry, for advisors, let's be blunt, that's what it is--it's a sales cycle. The sales cycle for women is much slower. But the flip side is, statistically, there's plenty of research that show women are more loyal clients, and they refer more than men, but it takes a lot longer for them to trust. And that's for all the reasons I've mentioned earlier. And so what I see happening is these women in wealth initiatives get started off with a bang. And then when there's not an immediate increase in assets under management as a result of these programs by the next year, the budget is cut in half or more. And then two to three years into the program, unless you have a very powerful internal sponsor--male or female--the programs often go by the wayside.

Benz: Wanted to switch over to discuss young people and financial wellness. Helping young people get off to a healthy start financially is another issue that you focused on in your career. Is the trading frenzy and so-called meme stocks, cryptocurrency, and NFTs, concerning to you or do you think it's a healthy low-stakes experimentation that could help young investors become better investors down the line?

Thakor: I think it's an absolute horror. I think it's like feeding your child nothing but Twinkies and Pop-Tarts for five years. And the reason I say this is I feel like this is junk personal finance. The core of personal finance that young people need to learn, whether it's college, or their 20s, into their early 30s, basically revolves around making sure that you're living within your means, making sure that you are saving enough for the future. And I'll come back to the investment piece of how you invest that money. Protecting yourself, whether it's as simple as having the appropriate renter and car insurance, or if you're getting married, having the awkward money talk prior to getting married to make sure that you're financially compatible. And I feel like these are the core skills. And then if you have debt, which so many young people are dealing with student loan debt right now--many young people are graduating with a mortgage, that's how large their student loan debt is. And so, understanding where buying a house fits into that picture, because it's very different than the picture their parents faced when they were their age.

And so, by focusing on these--we can call them risky, esoteric, some people may say cutting edge. And I feel like if that's 5% of your investments, great, but 95% of that hard-earned money that you are living within your means, which is no easy thing to do, particularly on either coast, really should be invested in a manner that I would argue is more tried and true. And, a while back, I had penned a short piece for The Wall Street Journal's wealth panel experts online. And they were asking what is the worst piece of advice parents can give their kids? And I said, telling them to invest in the stock of a company they know about. Oh my God did I get slings and arrows for saying that. And I just think there's this widespread belief that you are putting your young adult child on the path to financial success by encouraging them to invest. When investing of course is incredibly important, but it has to be done in the context of your total financial life. And the other pieces are missing. So, you're basically doing the financial equivalent again, in my opinion of eating Pop-Tarts and Twinkies, and no one's talking to you about nutrient-dense fruits, vegetables, high-quality fish and meat, and so on.

Ptak: Buying a home is a big financial goal for many younger people. How would you suggest they proceed in the current environment where interest rates are very low, but home prices are high, and inventory is low?

Thakor: Very, very carefully. I think there's this misnomer that we really need to change. And this can be one area where financial professionals can be of great help, which is this notion that owning your own home is the American dream. It was for our parents. And a big part of the reason for that is they took out 30-year mortgages in a time period where that payment was steady, home equity lines of credit and HELOCs were a very rare entity. And they had this steady payment that they were making over that 30-year period, and 10 to 15 years of that period was crazy high inflation. So, they were getting really nice annual increases in their income, as in salaries, but their home price payment stayed the same. And they lived in that house for a good 30 years. So, they were heading into retirement with an asset that was completely paid off. And, again, turbocharged by the rising salaries, in nominal terms, relative to the debt payments.

Today, buying and selling a home costs roughly 10% by the time you factor in all the different expenses. And so, the question is, if you are a young person today, where mobility is the name of the game, and if you're at the same place for longer than five years, it's no longer considered a badge of honor. People might ask, are you not motivated? And so, you buy a home, but your dream job may pop up anytime across the country. And then, with women increasingly becoming co-breadwinners and primary breadwinners, now you have two careers to think about. And so I feel like the mobility of the modern era has not kept up, or the notion of the home being the greatest source of wealth for most people, has not kept up with the reality of the number of jobs, locations, and homes, people will have going forward.

So, I'm not anti-buying a home. But I encourage people not to buy home until they can put 20% down, until they have a solid six-month emergency fund. And, until they reasonably think that they're going to be in that home for five to seven years, so they have reasonable odds of offsetting the price of selling the home with house-price appreciation. And on top of all of that, making sure, especially if you have student loans, that your total all-in housing costs is not more than a third of your take-home pay. And when you stir all of that up, maybe you need to rent a little bit longer. And there's nothing wrong with that. It's not throwing money out the window; I think we need to disabuse that notion--it's giving you an option on the most important asset that you have at a young stage, which is your income stream, future income stream.

Benz: You referenced this multitasking that goes on for young people where they're balancing all of these competing financial goals like college debt paydown, retirement savings, emergency funding, and perhaps home purchases, and other short- and intermediate-term goals that they might have. So, is there any sort of framework that you encourage young people to use when thinking about how to approach these multiple things that are bidding for those first paychecks?

Thakor: Elizabeth Warren wrote a book, I believe it was in 1992-ish, with her daughter called All Your Worth. And in it, she talked about the 50-30-20 rule, which is now quoted everywhere. But me, whenever I present it, I'm amazed at how many people are like, whoa, wow, how powerful. And that's the message that I'd like to get across to younger folks, is that in an ideal world, for all of this to work, no more than 50% of your take-home pay can go to needs, if you're going to set aside 20% of your income to invest for the future. And that leaves you with 30% wants--and all of us have a pie that is 100. And if you think that 20% number is insane…

I saw a stat today--have not fact-checked it--but that a child today, born today has a 50-50 chance of living to 125. I don't know if that's true. But what I do know is true is that these days, many people are currently living in retirement longer than they worked. I see people working for 30 years and retiring at 55 or 60. And they live to 90 or 95, which literally means for each year that you work, you need to meet your current living expenses, plus set aside enough so that it compounds to meet your expenses in the future. And so, if we start with that as the nugget and we know that needs are going to include, for some people, things like you need to pay back your student loans. Some people’s needs are going to have to go up to 60% or more because of those debt obligations from student loans. Which means there's not a lot left for wants unless you're willing to be a little more creative and flexible on other needs: buying the 3-year-old dealer-certified used car, not a brand-new car; renting and having slightly smaller space than you would like to have.

And so I think if you live your life aiming for the 50-30-20 rule, knowing very few people are going to hit it exactly, but if you aim for that, or at least have an understanding of the thought process behind it, that can really help you prioritize all of these competing demands.

Ptak: Saving regularly is the real key to financial well-being. And you've alluded to that during this conversation, but it's a hard sell in an era in which looking good on social media might be a preoccupation for many young people. So, the question is, is there a way to make the “save more and live within your means” message sexy?

Thakor: I pray that some economics student does their Ph.D. on comparing the cost of what it would take in real life to live and groom like the images we see in all forms of media: social media, TV, movies. I have a bizarre obsession with the U.K. Royal family I think. I spent a year abroad when I was in college at Oxford, and ever since then, I'm an Anglophile. I will point to Meghan Markle's TV show before she got married, Suits. That show takes place in a town that is exceptionally humid. Yet every woman who works in her law office, from the senior partners down to the paralegals down to the executive assistants, have completely frizz-free hair. Which means they had to get a blowout before going to the office at 8 in the morning, and their nails are always perfect. And, we're all on computers all day, which means they're getting mani-pedi a couple times a week. And then their clothes, if you look at the way they're cut, and the fit, and the fabric. And then you see the homes they live in, and the cars they drive. I suspect you'd have to earn 20% to 30% more than those jobs actually pay. And this goes for anything. Go look at Law & Order or CSI, pick any show you want: Grey's Anatomy, Scandal. They all have these outsize images of lifestyles relative to what those jobs pay in real life.

And, of course, social media doesn't make it any better. You see somebody’s photo from vacation, and you don't see the kids having a food fight and mom and dad giving each other the silent treatment; you just see the “Kumbaya” photo at the end. And so, we are constantly bombarded by what I call “funny mirror images.” And what I'd like is for somebody to blast that. When I was in college in late-‘80s, early ‘90s, the magazines were very reticent to say that they airbrushed photos. And so, we're all comparing ourselves to cellulite-free, super-skinny size-zero women, which we may still be doing. But at least we all know that photos get airbrushed. And so that's the message that I would like to get out there. We live in a world of funny mirror images.

Benz: We recently interviewed Teresa Ghilarducci, economist for the podcast, and she brought up issue of what she called financial shame that so many people conflate their self-worth with their net worths. You've alluded to some of the forces driving that, but how do you go about making people feel better and more empowered, even if they have a low or negative net worth?

Thakor: I think this issue is ginormous. Every time I bring up just the two words, financial shame, people almost light up, like “Who yeah, yeah, I got that!” And I think it's endemic. It's also the subject of my next book, and I'm, to be honest, struggling to find an answer. I think it's going to end up being a financial memoir, rather than a how-to book because I still struggle with that. And I think that the one thing that I can say is that I have observed that we have been almost hardwired by society, by cultural norms, to try and optimize our lives for the equation, self-worth equals net worth. And for many of us, that's a financial equation. But then I've noticed in the fitness industry, there's a similar kind of, self-worth equals body fat levels--the leaner you are, the more you're… It can vary for different areas of interest. But I think for many people, it is financial.

And what I'd like people who are struggling to know is it's so easy to think, if I just had more money, I would not feel this way. And what I've observed is, it doesn't matter if you are $100,000 in debt, or you make $1,100,000 a year, you can still feel that your self-worth equals your net worth and your net worth is too low. And that's just human nature. And I think my early thoughts on all of this is that the answer is that we need, as a society, to shift it up and basically say, financial health is what we'd like everyone in America to have the basics of financial education and financial literacy. So, people aren't in financially painful situations. And that involves, of course, a whole bunch of other things, living wages, and so on. But financial health being the focus, not accumulating as much wealth as possible. So financial health, plus emotional wealth, and human connection, and giving back to the collective community. I think we've lost so much of that. And I think we'd all be a lot richer, for shifting paradigms. But I'm still working on it for myself. So, I'll let you know how that test goes.

Ptak: What's your take on the FIRE movement? Do you think it's a healthy trend with staying power or more of a bull market phenomenon, given that investment balances are so high right now?

Thakor: I have a total girl crush on Vicki Robin, who wrote Your Money or Your Life with Joe Dominguez, back when it came out in '92. And it was rereleased and updated in 2018, and I had a chance to interview Vicki and it was really interesting talking to her. First let me back up and say, I read the book in '92, '93. And it is the book that had the single biggest influence on my financial life. And primarily the concept that most of us have money in our lives, because either we or someone near and dear to us, spent time working for it. And thus, when we spend our money, we are spending our time, and the purpose of thinking about your money or your life is making sure that you are optimizing your life's energy when you spend your money. And it was part of the Voluntary Simplicity Movement when the book first came out. Starting in 2018 or even a little bit before that, we had all kinds of Reddit subgroups and now there are conferences devoted to the FIRE movement. And, I'm all for financial independence, retire early. I myself have entered what I would prefer to call vocational freedom rather than retire early.

But the thing that I'm missing from the current execution of the movement is A) it feels like it's become really competitive; B) it feels like it's not honoring the original principles of connection to something bigger than ourselves, which is what Vicki and Joe intended it to be. And I feel like it's also lacking an emphasis on what comes after that. And so, you do it, great. You may have another 50 years after that, and how are you going to use it and what are you going to do, and I'm not hearing that as part of the dialogue. It just feels like The Biggest Loser, in terms of like a TV show and a race and not something that is part of a larger, more mindful, conscious discussion. I'm sure I'll get a whole bunch of hate emails from folks in the FIRE movement. I do want to emphasize that I think the underlying principles of it are great; the way it's just being manifested today, I think is at odds with the original intention of the concept.

Benz: Wanted to spend a little bit of time on financial planning for couples. You cowrote a book about how couples can find compatibility in their financial lives. When is the right time in a relationship to start talking about financial matters? And what's the right way to go about it?

Thakor: Well, I'd say the right time is before you get divorced. I wrote this book, cowrote it while I was getting divorced. So once again, it's a book based on hard-earned lessons. But my thought process has been when you meet someone you are asked, are you physically compatible? Are you spiritually compatible? Are you intellectually compatible? Nobody asks you if you're financially compatible. And so I encourage people, when you think there's something serious going on that could lead to you moving in together, or possibly heading toward marriage, that is the time where you need to start opening up the financial kimono. I feel like having an understanding of where each other stand, at least in terms of net worth, in the beginning, in terms of do you have a bunch of debt or not, is a great place to start. I think sharing credit scores can also be a great place to start. You may feel a little awkward about income in the beginning. But I think talking about where you are in terms of savings, your attitude toward it, where you're doing it, how you're saving your 401(k), and how you chose your investment selections, or your 403(b).

I feel like start with some of the hopefully more positive parts or the parts that can really impact where the relationship is going. Now, you don't have to jump right into that. You can start off with a gentler conversation about how the American Psychological Association will give you all the data--year after year, money is one of the top causes of fights in relationships and top causes of divorce. And you can say I want to invest in our relationship, I don't want us to end up like these statistics, so let's start talking about it. And, let's start with talking about where we each learned about money. And what we think our best money move has been. So you can start with, what was the best piece of financial advice you've ever received; you can start with these positive conversations, then move into some of the tougher ones that I spoke about. And I want to say it's not a one-and-done conversation either, and that's why I think it can really ruin marriages. In my case, I did have the conversations early on, but then things really evolved and got really busy--you're doing well, your careers are going, and you can easily realize that you didn't reset expectations as circumstances changed.

Ptak: I wanted to ask about that. If one partner in a relationship is financially healthy and the other is not, is there ever a successful resolution where the couple essentially adopts the good habits of the financially well person?

Thakor: Frequently. There are so many ways that this can be--I call it the financial three way--the three buckets: yours, mine, and ours. And some couples feel strongly that everything goes into “ours” bucket. And if you come together your debt is my debt and that's our decision. Other couples will say, what we come into it is yours and mine and what is ours is only the moves that we make going forward. And these are the agreements we make. For instance, neither of us spends more than $100 without checking with the other, but at the same time, each of us has $50 a month, if you're just getting started, that you can spend no questions asked. So, you can come up with whatever rules you need to and as your income goes up, add a couple of zeros to those numbers. But it's definitely not a romance killer, or a relationship killer if you're wildly different. In fact, I wish I could think of the study, but somewhere I read--and again, not fact-checked--that in the early stages of courting there is something intoxicating about financial otherness. And so, oftentimes, that's why savers and spenders attract. But the long-term studies show that shared values around finances are what keep couples together long term. So, use the financial three way--yours, mine, and ours--to figure out how you want to populate those buckets.

Benz: Wanted to talk about financial advice and finding a financial advisor. How would you counsel people who don't have a lot of assets to find a good-quality financial advisor? Where should someone look and what business models would tend to be most appropriate?

Thakor: This has always been a big, gaping hole in the industry prior to the last, let's call it 10 years, because a lot of advisors have $500,000 or $1-million minimum or more. And, how do you get to those levels when you don't have an advisor? And from the advisor standpoint, when I had my own practice, I had a $3-million minimum, because as a boutique practice, that's what made economically the most sense for me. And so, it's not like advisors are doing this because they're trying to be exclusionary; it's that the economics push them in this direction. And now technology is giving people a way to come back in the other direction. Of course, the earliest manifestation of this was the so-called robo-advisors. And I hate that term, because it sounds derogatory, and they are wonderful offerings--whether it's Betterment or Ellevest. And I think what each of those firms have found is what we started off talking about: It's not just the investing good financial health when you're getting started and you have limited funds—it’s about much more.

Let me backtrack. So up until that point, the advice that I gave was go to Garrett Planning Network, which I still wholeheartedly support, find an hourly CFP, and work with them. You won't need that many hours when you're young, because you don't have that many problems. But the problem is CFPs only have so many hours in the week. So, it's not scalable. A lot of the really great ones have waiting lists. What I have been really encouraged by is seeing some of the so-called robo-advisors, adding on additional services, so that you can access financial advice and guidance on an a la carte basis. I'm also seeing firms develop white labels. One example would be open plan where you are getting the subsidiary, if you will, of a larger traditional wealth manager that offers what I would call a mass-customized offering. In other words, there's a set of pieces of the investment plan that are walked through with each client based on their needs, but you're not going off the reservation. There's a set price. And then if you need ongoing--it can either be a la carte or hand it off to an estate lawyer, hand it off to an accountant.

I just encourage people to take a look at some of these larger organizations. And then also to see in their local areas. If you Google fiduciary, low minimum or fiduciary, financial planning, oftentimes those keywords can help you find someone in your area. And, of course, with technology, and again, going back to the beginning, thanks to the pandemic, now many of us are so comfortable having an advisor somewhere else where we wouldn't have been in in the past. Places like the XY Planning Network that will have younger advisors, but advisors who are completely capable with helping other younger folks deal with the level of complexities matching their experience and the customer need.

Ptak: You're a Certified Financial Planner and a Chartered Financial Analyst. For people listening who might be considering a career in the financial industry, how can they figure out which designation is the right one for them, if they decide to pursue either? What sort of questions should they be asking themselves?

Thakor: To me, it all boils down to investing versus planning. If you are going to be an investor with a capital I, and I don't mean doing asset allocation or helping clients construct a portfolio from perhaps a short list if you're an RIA working under a larger umbrella with a communal investment-policy committee that you can rely on. When I'm saying investor, what I mean is somebody who is actively acting as a buy-side analyst or acting as what I'll call an old-school portfolio manager, and really getting into the nitty gritty of either fundamental analysis or quantitative analysis. And, ironically, in the first half of my career when I was a CFA, I literally had no conception of all of the other elements that went into financial planning. And when I shifted sides, I just felt embarrassed and horrified by my lack of broader understanding of how many more issues. In some sense, I'd say it's internal and external.

So, being investor large is often about creating the product or the investment vehicle. And wearing the CFP hat is almost more external in terms of helping individuals figure out the big questions. How much do I need to save for retirement? How much can I spend in retirement? How do I set up my legacy planning? How do we minimize taxes using tax-loss harvesting or other charitable giving techniques? And what I've learned from being on the capital I side is that so often large institutional money management firms have clients that come to them because the client either internally, with an internal CIO or CFO or with the help of an external institutional consultant, has set their asset allocation and is talking to this particular manager, giving this particular fund their assets because they have the big picture sorted out from another construct. Whereas on the individual side, it is this CFP oftentimes who is acting, in a sense, like the institutional consultant or the CFO of a client's life.

Benz: I want to delve into a personal question, which you've been generous enough to say you're OK with my asking. Naomi Osaka made headlines recently when she withdrew from the French Open. She cited issues with depression and anxiety and noted that she wanted to concentrate on taking care of herself. You've been very public about having bipolar disorder and getting treatment for it. Do you think we're finally ready to discuss and destigmatize the mental health challenges that many among us are dealing with?

Thakor: Oh, gosh, I really, really hope so, Christine, because the more I talk about it, I cannot tell you there's not a single time that I bring it up where somebody doesn't express having had some kind of interaction with a mental health issue. It may not be themselves; it may be a friend, it may be a parent, it may be a spouse or a sibling. And there's two types of mental health issues. One is situational, and one is chemical, and chemical ones can be triggered or exacerbated by situational circumstances. And in my case, it's chemical. You don't end up with bipolar simply because there's a situation, although that can help psychiatrists appropriately diagnose. Part of the reason I think it's so important to talk about it is to encourage people to seek help. If it's situational, a psychologist may be the right answer; if it's chemical, a psychiatrist may be the right answer, or it may be a combination of both. There are a lot of wonderful new therapies, whether it's tapping or EMDR, on more of the situational side, or typical antipsychotics on the chemical side.

But the root issue is that you can't get better if you don't seek help. And as long as we treat people like they have three noses coming out of their face when they talk about this topic, they're not going to go seek help. And even once you do seek help, it's not an immediate solution. It takes time to work through a situational series of depression or anxiety or PTSD. And on the chemical side, one of the problems is you can't just take a blood test. For years, I was diagnosed as having major depressive disorder. And so I took meds for major depressive disorder, and that was not my problem. And till you get the right diagnosis, which again, cannot be done by a blood test, it's difficult to get the right medicines. And even when you get the right diagnosis, we all have individual chemistry. And so, the way doctors prescribe medicine is through trial and error. And in the case of bipolar, you often have to take two, three, four different types of medicines and think about it as a cocktail. And you have to play around, not only with what those medicines are, but the dosage.

So, it's an elaborate process, no matter which side, what's causing the mental anguish. And when you have to hide it, oh my God, it's like, how can you go through all of the other stuff if you have to pretend that nothing is happening to you? And it's scary. I'll be honest, when I had my own practice, I did not feel comfortable putting up a neon sign saying, I have bipolar. I did talk honestly with clients about having periods where I felt depressed or a bit anxious and sometimes we’d bond on that. But I can see in certain industries where people might feel reticent speaking about it. But when you get the right help, now that I've been appropriately diagnosed, I live a normal life. And so that's why I want to talk about it and normalize it, encourage people to get help, because with help you really can lead a normal life.

Benz: Well, Manisha, you have been so thoughtful and so generous with your time and insights today. Thanks so much for taking time out of your schedule to be here. We really appreciate it.

Thakor: Well, Christine and Jeff it has been such an honor, and I feel like I grew up in the business with Morningstar in so many different capacities. So it's an extra honor, given the tremendous work Morningstar does in the industry.

Ptak: Thanks so much. The pleasure was ours. Thanks again.

Thakor: Take care.

Benz: Thanks for joining us on The Long View. If you liked what you heard, please subscribe to and rate The Long View from Morningstar on iTunes, Google Play, Spotify, or wherever you get your podcasts.

You can follow us on Twitter @Christine_Benz.

Ptak: And @Syouth1, which is, S-Y-O-U-T-H and the number 1.

Benz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.

Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email us at TheLongView@Morningstar.com. Until next time, thanks for joining us.

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis, or opinions, or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)