Swift Chat with Mary Beth Franklin and Laura Carstensen: Highlights from the 2023 Morningstar Investment Conference

In this special episode of Swift Chats, taped live at the #MICUS Podcast Stage, Hosts Jonny Swift and Marie Swift recap highlights and insights from the 2023 Morningstar Investment Conference with Mary Beth Franklin, Contributing Columnist at InvestmentNews and Laura Carstensen, Director of the Stanford Center on Longevity.

The group discusses the challenges and opportunities for financial advisors in the evolving landscape of retirement income planning, the importance of holistic financial planning, engaging the next generation in financial conversations, and finding a sense of purpose in later life. Dr. Carstensen emphasizes the significance of adapting to an era of increased life expectancy, while Mary Beth Franklin discusses the challenges and responsibilities faced by financial advisors in helping clients navigate financial decisions in retirement.

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   I think the basis of financial planning for its entire history was really focused on accumulation and growth and essentially investments. And now we are coming to realize, particularly in an era of disappearing pensions, erratic stock market returns, and what had been zero interest rate environments, is that retirement income distributions, it's a completely different animal from investing for accumulation. And because investing has become commoditized, that really, it's more about a holistic financial planning experience."

​~ Mary Beth Franklin, ​Contributing Columnist at InvestmentNews

Transcript of the Conversation

Jonny Swift: Hello everyone. Welcome to the Swift Chats podcast where we interview interesting guests in the financial services industry. I'm Jonny Swift of Impact Communications. I'm here with my co-host Marie Swift, founder and CEO of Impact Communications, and content creator and thought leader in the industry for nearly 30 years. We have two fabulous guests today and one of them, Dr. Laura Carstensen, is just getting off the main stage, so she'll be here in a little bit. But we have Mary Beth Franklin with us as well. Mary Beth is a contributing editor at InvestmentNews, specializing in Social Security, Medicare and retirement income. She's been a financial journalist for more than 40 years, covering everything from federal budget and tax policies as a Capitol Hill reporter for the United Press International, to consumer finances as a writer and editor at Kiplinger's Personal Finance Magazine. Mary Beth became a CFP in 2015 and is an in-demand speaker at conferences for financial professionals, as well as a frequent guest on numerous radio and television programs.
And she's the author of Maximizing Social Security Retirement Benefits and host of the Retirement Repair Shop podcast. Thank you for joining us Mary Beth.

Mary Beth Franklin: Thank you Jonny. Appreciate the intro.

Jonny: And you just got off the main stage not long ago and so we want to hear all about what you spoke about and why it's such an important topic for our audience.

Mary Beth: Well, I was thrilled to have the opportunity to talk to Christine Benz, personal finance manager here at Morningstar, and my dear friend and colleague Mark Miller, who writes for New York Times, Reuters, Morningstar, et cetera. We really got to geek out in the retirement income space. And Mark and I love to talk about Social Security, both from the practical claiming strategies, ideas to help financial advisors and their clients, and also from the overall public policy concept. Because each year when the Social Security Trustees issue their report on the long-term financing of the Social Security Trust Fund, it inches closer and closer to depletion. The latest trust fund report says within the next ten years, by 2033, the Social Security Trust funds that holds the extra reserves that helps pay benefits will be depleted. What does that mean for people's future benefits? And most importantly, what are we going to ask Congress to do about it?

Marie: What are we going to ask Congress to do about it?

Mary Beth: Well, I think people often say what are they going to do? I think it's time for we as American citizens to say, what are we going to demand of our lawmakers? We know how critical Social Security benefits are. Currently over 65 million Americans receive benefits. By 2033, it'll be over 70 million Americans. And we saw, particularly during the COVID pandemic, how critical it was to have this guaranteed income for the rest of your life, cost of living adjusted. Because when you look at the demographics of who survived the pandemic best, from a financial standpoint, it was the retirees. They weren't worried about losing their jobs. They had guaranteed income from Social Security and they weren't going anyplace to spend the rest of their money.

Jonny: You have a fantastic backstory. Can you tell us how you got to this place in life and why you're doing what you're doing right now?

Mary Beth: I came to financial planning by a very securitist route. I have been a financial journalist for more than 40 years. I started as a Capitol Hill reporter for United Press International. And back then in the 80s, yes, I did cover Social Security reform. You didn't know they hired twelve-year-olds back then, did you? But I had ten years under my belt covering Capitol Hill and really understanding the politics and the public policy. Then when my kids were little, I wrote a syndicated newspaper column that was in about 200 newspapers nationwide, that was financial planning for and about older people. I was probably one of the first people who ever wrote about things like reverse mortgages and long-term care insurance and Medicare strategies. Then down the road I was able to go to Kiplinger's Personal Finance Magazine, which in my opinion was one of the smartest money magazines ever available to the public.

I learned great things from an editor, like never make the reader do the mental math. Always give an example. Of course you know if you delay claiming Social Security benefits up until age 70, you'll get a bigger benefit. You could increase your benefits by 76% by waiting till 70 versus age 62. So really great strategies. Also, back in my UPI days, they always said, get it first, but first get it right, which is really valuable in today's more casual journalistic environment. And they also used to say back then, write it for the Kansas City milkman. Don't make it too confusing, make sure it's conversational. I've had great editors over my life. When I started writing for InvestmentNews, which is of course a publication for Financial Advisors, back in 2010, why were they going to listen to me, a journalist? So that's when I pursued the CFP designation, I wanted those golden credentials because not only do I truly believe in the importance of fiduciary responsibility, but I wanted my professional audience to take me seriously.
 
It is an interesting story. If you go to my website, MaryBethFranklin.com, you'll see on some of my videos where I was awarded the Trailblazer Award last year. Which means you're really old if you get a Trailblazer Award. I told my story of when I decided to pursue the CFP, I was still a journalist initially at Kiplinger's Personal Finance Magazine. I was taking courses at night, that was a challenge. I fulfilled all seven university level courses, I studied and passed the rigorous CFP exam the first time around. But I knew I did not meet the traditional experience requirements that the CFP Board demanded before I could use the credentials. Basically, two years face to face client experience or three years in the back office.
 
I'm saying, okay, you want me to quit my lucrative career and intern at a financial planner's office? I don't think so. How about this? I answer about 100 questions a week from consumers and financial advisors, mainly about Social Security, Medicare, tax efficient withdrawals. I'm going to blind copy you on everyone and you tell me if I don't have the experience. After a couple of months, they said, stop please and be patient. And they did rewrite the experience rules and I was the first person to be awarded the CFP credentials under their new definition where as a personal finance journalist on a case by case basis, I did meet the experience requirement. I have never been prouder to say I am a CFP professional. I have spent all those years since working with the CFP Board to increase equity and diversity in our ranks of financial planners.

Because, face it, this was a business in the past that was old, male, and pale. And that was fine when your clients look like you, but they don't anymore. They're women. They're men. They're people of various gender definitions. They're people of all colors and they want to talk to someone who looks and sounds like them. From a business standpoint, it makes so much sense to have a more diverse group of financial advisors to serve an increasingly diverse client base.

Marie: Well, I especially love the Kansas City milkman because I live in Kansas City, just outside of Kansas City, and we're very proud of our hometown heroes. I wish I had a milkman. But Mary Beth, you and I were just at the Women Advisor Summit that InvestmentNews had here last week in Chicago and were talking about how do we get people engaged in this profession earlier and keep them longer. Of course the conference was about women in the profession. But I think you make a fabulous point about diversity and people want to work with someone that can relate to them. Would you comment on that?

Mary Beth: I also think it's important, and I see Dr. Laura is joining us soon here.

It's important not just from a standpoint of having an increasingly diverse client base that you can service better if you have a more diverse panel of advisors, but it also gets us just beyond wealth planning and gets financial planning, which is critical for all Americans into various economic stratus. I think we're doing this with a lot of online advisors and digital and remote advisors where advice can be delivered in a more cost-effective manner anywhere around the country to people. That was one of the benefits of the COVID pandemic, because the financial planning industry per se was very slow to adopt new technologies, and they were forced to do it during the pandemic. Many advisors said they'll never go back. Their clients love having Zoom meetings and when it was impossible in the past to get a dual income husband and wife couple to come in at the same time to meet with them. Heck, they can sit in the living room at the same time and maybe get their young kid who's going off to college to talk about money too.

Jonny: Can you speak about the challenges and opportunities for advisors as they work with clients as it relates to retirement income planning?

Mary Beth: Well, I think the basis of financial planning for its entire history was really focused on accumulation and growth and essentially investments. Now we are coming to realize, particularly in an era of disappearing pensions, erratic stock market returns, what had been zero interest rate environments, interest rates are coming up, is that retirement income distributions, it's a completely different animal from investing for accumulation. Because investing has become commoditized, that really, it's more about a holistic financial planning experience. Your clients, particularly those that are facing retirement or in retirement, don't want to know just about their investments, but they want to know, when should I claim my Social Security? What do I have to do about Medicare? Do I have to think about long term care insurance? Should I take a reverse mortgage? My adult kid just moved home. What do I do? It is really more about holistic planning. And I think the advisors that embrace that either with their own knowledge or by basically becoming financial quarterbacks and assembling a team of estate attorneys and tax attorneys and senior housing experts, that they'll able to talk more holistically about what this phase of life is about and how do we fund it.

Jonny: So, any other resources you want to share with our audience today?

Mary Beth: Well, I will blatantly flag my brand-new website, which is MaryBethFranklin.com. I offer free articles on various claiming strategies depending on your marital status. You can also order my eBook there and you print it out. It's an eBook, it's only about 50 pages because no one should have to read 300 pages about Social Security. You can go right to that page that says if you're married, if you're divorced, if you're single, if you're widowed, and find the right strategies for you. As you can tell, I also do a lot of presentations to both financial conferences. I do client events, and you can find all about my services on my website. Thanks for asking.

Jonny: Yeah, thank you. So, Dr. Laura Carstensen has joined us. You also just got off the main stage, literally, that's why you joined us a few minutes late. But you are a professor of psychology at Stanford University. Director of the Stanford Center on Longevity. Her research program includes theoretical and empirical study of motivational and emotional changes that occur with age and the influence such changes have on cognitive processing. She was selected as a Guggenheim Fellow in 2003, and in 2016 was inducted into the National Academy of Medicine. And in 2011, she authored A Long Bright Future: Happiness, Health, and Financial Security in an Age of Increased Longevity. So, Laura, tell us what you spoke about on the main stage and why that topic is so important for our audience.

Laura Carstensen: Thank you. Can I just say, before I answer your question, what a pleasure it is to listen to you. I mean, it's just like you just answer the questions people are wanting answers to in a way that is straightforward and clear and wow, what a service. Thank you.

Mary Beth: Thank you. And for someone who relies on your research in so many of the articles I write, it is a mutual admiration society.

Laura: Thank you. What I spoke about this morning was in some ways just the historical era we're living through. In the last century, we added more years to life expectancy than all years added across all prior millennia of human evolution combined. It's a starkly different kind of opportunity that we have. What I try to argue for is that instead of taking the white knuckled, oh, my gosh, how are we going to deal with all these old people approach, we say, how do we use this opportunity and what do we need to do to make sure that the majority of people are able to improve the quality of their life, not just in old age, but all the way through, because we have more time. There you go. I did that in less than 40 minutes.

Marie: That's amazing. I personally am going through some of this. As the eldest of ten children, I am called upon to be the helper at my mother's side when she is the caregiver to a 95-year-old man who is physically fit, very active, but not able to take care of his financial affairs or his medical affairs. I wonder if that's part of what you think about aging well, is the physical, the mental, and the financial.

Laura: When we started the Center on Longevity, we organized it around three core research area. One was the mind: cognition, emotion, motivation. One was physical fitness, mobility, basically, and the other was money. What we thought is that if we could shore up those three legs of a stool, we'd be good to go. A decade later, we think it's more complicated than that. That's why we started the New Map of Life Initiative, because it turns out those three domains always interact. We'd be having a meeting on financial decision making, and I would think, oh, the economists and the people from the business school are coming to that one. But it was psychologists who were coming in, people from education. It's complicated, but we certainly need to think about new ways to share, not just financial risk, but social risk so that we can get away from models of caregiving that developed when people weren't caregivers very long because life expectancy was short, not that many people survived. 4% of the population was over 65 years old, 100 years ago. And to be inappropriate, it doesn't really matter how they're doing from a societal view. It mattered to a small number of old people who happen to survive and their families and loved ones, but it wasn't a societal issue. Now it is, as we're headed to 20% of the population being over 65. We need to think about new ways to take care of ourselves and our families and our loved ones by sharing that risk.

Mary Beth: And if I could jump in a minute. This is new territory for financial advisors. We've all been aware for decades about the costs associated with financial caregiving. But now we're becoming aware of more this financial capacity and that some of their early older clients may not be in need of long-term care issues, but do they have the financial capacity to make the financial decisions? And how do you, as a financial advisor, recognize that? And what is your company's policy if you suspect your client may have early cognitive impairment, and what is your liability involved? I think this really talks about the value of bringing the next generation in who is not only perhaps the heirs of your client, but who will be making decisions perhaps on behalf of the client. And it's also a great way to grow your business into the next generation.

I think financial advisors are asked to grapple with so many problems that they don't necessarily have the tools. I think with the help of your research, we're raising the issues that this is a challenge. Now we need to give them the tools to work with it.

Laura: Anthony Wagner, a colleague of mine at Stanford, is working on a project that one of our New Map of Life fellows is also collaborating with him on. It's a project where we're trying to see how people who have a documented brain disease, but early stages of it, so it's not easy to detect, and people who have documented healthy brains, and how they make different kinds of decisions. This is a project really very much related to advising. Advisors have been coming to us for a long time saying, how do you know? The other thing is sometimes people just think these doddering old people won't be able to make their decisions. Older people who've been making their own financial decisions throughout their lives outperform young people making those same kinds of decisions hands down. There's a tremendous range. To be able to know how to present information, how to couch that information to somebody who's got a lot of expertise, you don't want to make that different because they're older.
 
Mary Beth: Certainly, experience helps. People have decades of experience, but I think one of the things the advisors have to look for is one of the reasons you create a plan is so that when the market goes up and down, you don't freak out. We've got this plan, we've talked about it, and if your client has consistently gone along with that and then suddenly they behave erratically, that is your first red flag. Something's going on here.

Laura: Yeah. The other case that you're raising is the person who say is the surviving spouse has never been involved in making those financial decisions, may have some cognitive impairment. I'll say herself only because it's more likely to be the surviving wife than the surviving husband who doesn't have that experience and then suddenly is making decisions. The range is just dramatic, and we need to have better tools for identifying early on, who are those people? What are the red flags, as you're saying.

Mary Beth: So many advisors have really developed niche practices with widows, with divorced women who have this, incorporate an educational component. I know you never had to pay these bills before. I know you never had to make these investment decisions before, but we're going to teach you. You're going to be in a safe space. You're going to be with other clients that are in similar areas. We're going to make it social and fun and interactive and just give you the confidence. You don't have to be the expert. We're the expert, but we're going to make sure you're more comfortable in our conversations.

Marie: One of the things you talk about in your book, Dr. Laura, is about living longer and living with happiness and fulfillment. You mentioned loneliness in the synopsis that I read, and this goes to what you were pointing to before. How do we as a community, as concerned citizens, as family members, as financial advisors, support our elders through that time of life so they're not lonely, so they have purpose. Do you have thoughts on that?

Laura: I think all of us need to be part of something bigger than ourselves, and families and friends provide that. The longer we live, the more likely we are to outlive many of those people. I do want to note, though, that older people are less lonely than younger people and middle-aged people. They spend more time alone than any other age group, and they're less lonely. To me, as a psychologist, that's interesting in and of itself. I keep hearing my grandmother used to say, the loneliest place you'll be is in a crowd. And I think there's something to that. Older people are more likely to have they have fewer relationships, but the ones that they have are strong and familiar and long standing.
 
No one is sort of immune to being not susceptible to loneliness if we find ourselves unneeded. I think that's probably it more than anything, you wake up in the morning and if you say, nobody needs me, that's not a good place to be. As much as many of us here would like to have that experience once in a while.

Mary Beth: I think having a purpose, whether you define it as giving back in a volunteer situation, working with your church or synagogue or hey, me playing pickleball three times a week, that's a purpose. I think that is so critical to healthy aging. I know a colleague in California, a guy named Marc Freedman years ago had created Civic Ventures, and his whole premise was looking at the baby boom generation and the enormous amount of education, experience, and knowledge they had. The idea of just retiring and doing nothing was such a waste to both them and to society. He was all about helping older people find a purpose. He highlighted examples of people, I remember there was one guy, I can't remember his name, he had been in food services, marketing executive. And he retired early, I believe his spouse died. He basically founded one of those Good Harvest concepts where they would collect food from restaurants that would have gone to waste and distributed those to people in need. He found a purpose that was not just for himself, but for the greater good of society. I think for us to have those opportunities or find those opportunities to connect people who have the time and are willing to give and people who need those services.

Laura: Marc Freedman is just an unbelievably moving, effective, evangelical sort of voice in this area. He has changed the name from Civic Ventures to CoGenerate. It's very much to your point, it's younger and older people working together, volunteering together, doing engaging in efforts where they help others, but together, and that's a really great approach.

Mary Beth: He had in his original book one of the best lines I ever heard. He was an older father, married late, had young children, and he talked about checking into the hotel with his AARP discount and then asked for two cribs in the room.

Laura: There's another quote from Marc's book. You can tell we're fans here. The one that stays with me is he says, as older people, we need to stop trying to be young and instead be there for those people who actually are. I just thought that was lovely.

Mary Beth: I have one other thought, this is not Marc Freedman. This is Ed Slott, who you all know, and he was speaking at the InvestmentNews Retirement Income Summit here in Chicago last week. This is my second trip to Chicago in two weeks, and this goes into the intergenerational nature of family and finances now. He said the American dream used to be buying your own home. The new American dream is getting your kids out of your home. So that's something advisors have to address as well, is this intergenerational flow of money, not just as a bequest, but when your adult son loses his job and moves back into the basement.

Marie: I want to get Jonny involved here. So here he is. He's a millennial. He's looking at his mother, who's also his business partner. That would be me. And we are three senior stateswomen. I'll just say it that way. I'm trying to normalize that it's okay work past 60 and to love it and to have a plan for someday working less. So, Jonny, you've got a young son, and he's about to begin Montessori. One of the things I've been saying is, gosh, wouldn't it be great if there were seniors in the Montessori who were not just volunteering, but maybe they were co located for their own adult activities? How does this come off to somebody? I mean, we're talking about aging and living to 100. Do you want to take care of me when I'm 100?

Jonny: Well, of course I would, but I think it's great to normalize the conversation. Sometimes it's a taboo topic. It can be difficult at times to talk about aging or intergenerational wealth, but I think it's important to start the conversation early and normalize it. Are there any tips you all have for advisors and how they can start that conversation with their clients early and get the next generation involved at a young age?

Mary Beth: Well, as I mentioned, during the pandemic, when advisors were able to use Zoom as a way of reaching their clients, again, someone with niche practices were saying, what a great way to bring the broader family into it. Hey, you've got a son or daughter going off to college next year. Why don't you let them sit in the conversation? And we'll just talk about money and credit and creating a budget and what a great way this is something that was always left to chance before. While I'm such a huge proponent of financial literacy and we're finally seeing some of it getting in the high schools, hey, this should be in kindergarten. Do you want one cookie or marshmallow now or two later? That whole idea of delayed gratification. There should be a girl scout badge for money prowess.
 
The most important people we need to reach are high school guidance counselors who don't know that financial planning is a thing. It's not just for the great math students. Think of your theater and chorus members who have these wonderful performance skills and listening skills and entertainment skills. What great financial advisors they would be. You don't have to be a math genius to do it.

Laura: I think educators really need to take this more seriously. Yes, high school early on, universities need to be teaching financial literacy, and we do a terrible job of it, but I think that should be a required course for all students coming through the university, how do you think about money, and probably even more broadly, life skills. Financial literacy is a piece of it. You also need to think about the aims, the goals, what's on time and off time. I remember having lunch with a former student of mine, Hal Hirschfield, and Bill Sharpe, Nobel Economist, and we're working on a project together to try to see if we could use virtual reality to get people to save more money. That was the idea. We're leaving this lunch, and my graduate student, fabulous brilliant guy, says, what time in life do people teach you what words like annuitization mean? I remember laughing, and I said, I think about your third house, but we don't take it seriously, and these are really important concepts and we need to do better.

Mary Beth: And why it's so intimidating to people that, why would you know what annuitization means? Right?

Marie: Well, it's time for us to wrap up, unfortunately. I could go on and on. It's a delightful conversation and I am very engaged in it. Jonny, let's talk about resources. One that I'll mention is I recently learned about an organization called Rock the Street, Wall Street. They have a program where financial advisors can raise their hand and you can sponsor or invite a group of high school girls to come and be in your office to see what it's like to be in an office setting, to do some exercises. There might be financial planning exercises, financial literacy, to sit at your desk and imagine that they could grow into that role. Other resources that you would have for our audience, we'll start with Dr. Laura.

Laura: I would suggest to people that you take a look at our website, Longevity.Stanford.edu. There's a lot of information there on the big issues, longevity, and some information also about finances and some reports that we've done.

Mary Beth: I would encourage any of the certified financial planners out there to go to the CFP Board's website and see how you could be an ambassador going out, helping either in the schools or talking to young future CFP Certificates of getting them through the courses, getting them through the exams, and to show them that this is a valuable and a well-balanced career where you can help people, you can balance your life and work, and hopefully it's financially rewarding as well.
 
Laura: One other place to look at it is Halbert Hargrove’s Wealth Advisory Organization in Long Beach. They are a company that's really been thinking about this new map of life and developing ways to think about saving differently. That's another good source of information.

Jonny: Well, fabulous resources and an amazing conversation. Thank you both so much for joining us on the Swift Chats Podcast.

Laura: Thank you. My pleasure.
 
Mary Beth: Thank you for having us.

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