Investing for Beginners: Expert Advice from Charles Schwab's Carrie Schwab-Pomerantz

AP2011

Carrie Schwab-Pomerantz, the daughter of Charles Schwab, is board chair and president of the Charles Schwab Foundation, whose mission is to help people become financially fit through education; senior vice president of Charles Schwab & Co.; and board chair of Schwab Charitable, a donor-advised fund. She has an MBA and is a certified financial planner. During a visit to the Kiplinger offices, she and I had a wide-ranging conversation about women’s attitudes toward money, what she learned from her father about finances, and how she brought up her own three children.

What has your experience taught you about how women approach financial issues? Women are more likely than men to lack confidence in financial matters and to be less engaged in making financial decisions. This has changed some over the years with the rise of 401(k) plans and women in the workforce, and that’s a positive trend. But I’m not sure we’re as engaged as we should be versus our male counterparts. In Schwab’s Modern Wealth Index [which tracks how well Americans are planning and managing their wealth], 67% of women said wealth meant having good physical health rather than having a lot of money. But money is critical to our physical security.

How do you address this situation? It’s important to focus on financial programs for women to help them gain more confidence. We host women-focused educational events, generally small workshops designed to feel informal so that people feel comfortable speaking up and asking questions.

You say this kind of education should start at an early age. One of our surveys showed that when families have conversations about money with their children, they talk differently to their sons and daughters. To their daughters, they emphasize saving and budgeting. With their sons, they are more likely to discuss investing and estate planning. My female colleagues in the financial industry all had family members who talked to them about investing, so it’s important to treat daughters and sons the same.

What was the best advice your father gave you about money? He is a man of few words and taught more by example. He encouraged me to have a strong work ethic—at 16, I was working as a file clerk for his company—and to have a higher purpose and impact. Helping people manage their money gives them confidence, security and social mobility. He also taught me to save, which I’ve been doing since I was 9 years old.

How about investment advice? When I was 23 and opening my own retirement account, I called my dad and asked him where I should invest. He told me just to pick two funds and I’d be fine. The important thing was to participate in the markets.

How did you teach your own children about money? When they were younger, they got allowances and had to make their own money decisions. They were all required to have summer jobs in high school. And when they opened their first Roth IRAs, they had to fill out their own paperwork to invest. I wanted them to feel comfortable going into a bank or a Schwab office. That’s particularly important for women because a financial institution can seem like a cold place.

What advice would you give women? Find a buddy and attend a few seminars to learn the language of finance. Or use a financial adviser as a sounding board. If you start investing in your twenties and save 10% for the rest of your life, you’ll be okay. If you’ re married, know where your money is and be involved with major financial decisions. It’s fine to delegate, but don’t abdicate.