This Is Woman's Work with Nicole Kalil - 031 / Your Financial Planning Strategy with Chantel Bonneau

Episode Date: September 30, 2020

I believe every woman should know about and understand her financial situation, and every woman should have a financial plan. In this episode, I welcome guest Chantel Bonneau - Wealth Management Advisor and Author - to educate and help take away some of the mystery and overwhelm we may feel when it comes to making decisions about our money. You don’t need to track the stock market or understand the differences of all the various retirement accounts, or even be great with money to have a plan. That’s where a great advisor can come in. All you need are goals, dreams and to know what’s important to you, so that you can make the best choices with the money you have. It’s time for women to feel empowered by their finances! This is Woman’s Work To learn more about what we are up to outside of this podcast, visit us at NicoleKalil.com

Coming up on this episode of This Is Woman's Work. Financial planning is about progress, not perfection. And the little good decision you make today makes tomorrow a lot easier. I am Nicole Khalil, your host of the This Is Woman's Work podcast, and I can't even begin to think about redefining what it means to be doing woman's work without talking about our finances. If you listen to episode 26, you'll know that I believe money provides choices and options, not necessarily happiness, and that I believe we as women, no matter our life choices, should never abdicate the money because we should never

abdicate our choices. Historically, the making and the managing of money was left in the hands of men, but we know times are changing. Four in 10 households, the wife is the primary income earner. More women are graduated from college, getting their master's degrees, starting businesses, and people are getting married later in life than ever before, which means more women are getting used to and having to make financial decisions by themselves for themselves. Let me be clear in saying that I don't believe we need to take control over men in this area, but I do believe every woman should know about and understand her financial situation. And every woman should have a financial plan,

whether that be individually or together with their partner. I've asked wealth management advisor and author Chantel Bonneau to join us today to educate and help take out some of the mystery and the overwhelm we may feel when it comes to making decisions about our money. I know literally hundreds of advisors, so I didn't make the choice to have Chantel on lightly. I chose her because she's both incredibly smart. She's a certified financial planner, CLU, REBC, CHFC, WMCP, like alphabet soup after her name, which basically means she knows what she's doing. And she's incredibly approachable. She explains things in a way that just makes

sense. Chantel, thank you so much for joining us today. Thank you, Nicole. It's so great to be here with you. So I'm going to start with, I think, kind of a big question. I know a lot of financial advisors are men. And for our listeners who are most likely women, what is the difference for women when doing their financial planning? Are there any nuances or things that women should be aware of that would be different than their male counterparts? Everyone is unique, of course. Everyone has their own experiences and their own goals and objectives. So I think that that's the crux of any good financial planning relationship is looking at every individual for large, women love feeling educated and making decisions from a place of confidence and information. And generally speaking, men can shoot from the hip a little bit better and are fine making

quick decisions and assuming that their gut is going to work for them. So when I work with women, I really want to make sure that I give them the opportunity to ask as many questions as they have, to let them know that I will educate them and I want them to feel great about any decisions that they make. So that is the biggest difference is women take me up on that offer more to dive a little bit deeper and to know that they're in a place where there's no dumb questions, that anything that we're talking about financially is supposed to be important. And because of that, it's okay to take a little bit of time if that's what they need to feel

comfortable in the realm of finance. So it sounds like having a relationship with your advisor or with somebody who's willing to answer all the questions or create a space where you can ask and get to a point where you feel confident about your decisions is pretty important. Yeah. I don't want them to feel like I'm their professor. I want them to feel like I'm their partner and their advocate in their financial plan. And if you don't have that space where you can be vulnerable about your weaknesses or your struggles or your goals and things that are important to you or challenge you, it's hard to have a meaningful financial conversation. At the end of the day, it is, of course, about the numbers and, and that's great. And that's really important, but the numbers don't mean everything if it's not helping you accomplish

what you're trying to accomplish. So it's really about carrying that, that balance of, um, helping a client make decisions and move forward and make progress, but also that they feel like they are being heard and really understood. Yep. So I know, and I'm so glad you said that right away, is every individual is different, and therefore, you know, everybody needs their own unique customized plan to them. But are there any general rules of thumb, regardless of your income or age or financial situation? Are there any general rules of thumb, regardless of your income or age or financial situation? Are there any general rules of thumb as it relates to financial planning that would be helpful as a starting point? So no matter if you are getting your first job at 22 or you are in the thick of raising a family and buying a home,

or trying to pay the bills, or approaching retirement, or wondering if you'll ever retire, there are a few things that tend to carry throughout all of those circumstances. So one is, and I'm a big fan of this because it doesn't have anything to do with the amount of money. I always encourage people to just have an accurate pulse on your cashflow. What does it take to run your life, your fixed expenses, your reducible expenses, the amount you save, what is that nut you are working toward and then how much comes in. And for some people they're underwater resulting in debt. Other people have lots of cash flow. Some people are living paycheck to paycheck. But knowing those numbers helps you at least have those tools that all the other decisions can be based off of.

So many times when people ask me how much of a house they can afford or if they should move to a different state or take a different job or start a business. It all comes back to that cash flow as our starting place. So that's a common theme is you have to know that number generally. The second thing is in a perfect world, you want to have between three and six months of an emergency fund. And people wonder what's an emergency fund for? Well, sometimes pandemics happen or things that throw us a little bit off of our game. Let's hope only once in our lifetime. OK. I didn't say that, but just in case there's a pandemic, it's nice to have an emergency fund. And I usually encourage people to have six months if they can, if it's just them.

They're the breadwinner or the sole person responsible for finances. If it's a dual income household with pretty even incomes, maybe three months. But having that emergency fund is key. And then the last thing across the board is if you have any investments, make sure you are making investment decisions based off of your risk tolerance, not because your coworker said to invest in something or your dad told you to do it or because you read it in Money Magazine. All of your investment and frankly, all of your financial choices should really come from what you're trying to accomplish. And it sounds so simple, but that's what you need to

spend time on is where is this train going? So then we can structure things correctly. And most people want to jump to a product or a service or a fee. None of that matters if it's not helping you get where you want to go. All very good advice. For people who work in corporations, there's always group benefits. Based on your experience, well, maybe not always. Often there's group benefits. Based on your experience, how well or not well are people leveraging those? Do those typically meet your client's needs? I think guess, you know, I think sometimes people think, well, oh, that's taken care of. I have a 401k through work. What are your thoughts on that? It's a big misconception that people will say, oh, I have really great benefits. So

I have all that handled. First of all, you might, there are some companies that have phenomenal benefits. You still have to accept them, right? Or, or register for them or enroll in them. If you have a great 401k, you still have to make sure that that amount you're contributing and they're matching perhaps is going to result in the, the amount to get you on track for retirement. So there can be really good things in there, but you still have to make sure that you are reviewing it. And then I always encourage people to think about what components of your benefits package do you need to supplement? So a big misconception I have right here are two things. The first one is that people don't need things like life insurance or disability insurance because their work provides it. Rarely is it an appropriate amount, number one. And number two, it's not portable generally. So if you change jobs like the average American a few times over your career, then you could find yourself without coverage. Or if you are laid off,

again, amid a pandemic, certain things happen that you don't want the risk of not having those things in place. Another big benefit I see that people don't fully understand is if their 401k matches 3%, they will think, oh, all I need to fund is 3%. And while, yes, that's all that they're matching, if you have the cash flow, you might want to be contributing or consider contributing more because 3% may not be enough to get you toward retirement. So I would just always encourage people that all of your benefits should be considered in your plan, but don't just chalk it up and assume everything is taken care of. You want to use what you have and then build on that. Okay. So, and maybe you can't

answer this and that's okay, but how much should the average person be saving? Is there a range? So let me start there. So whatever the answer I have for most people listening is probably more than you currently are, which isn't a very good answer, but most people need to save a little bit more. It is a math formula. So if we think through this, if you live off of whatever you live off of and you're currently saving three or five percent toward retirement, it's unlikely, even if you're not good at math, it's unlikely that saving 3% of your income over 35 years will somehow replicate your entire income for the next 35 years. So a very standard number, a lot of people will use at least as a placeholder somewhere in the 20% range helps you accomplish that.

Of course, there are different industries. If you're a resident doctor, no, right? Is it going to matter if you save 20% when you're in residency, if your income is going to jump up tremendously, it might not be even over all those years, which you save. If you're working for the county and they have a pension, maybe you don't need to save 20% after that because the pension will provide some of it. So it all varies. That's when you have to look at it. But I would just encourage people to really look at those numbers. And if I had to throw out a standard, the standard in the industry would probably say somewhere in that 20% range.

Okay. So I know the first time I heard that 20% number, and I'm guessing most people listening, because you started by saying most of us need to be saving more, wherever you're at today and 20%, I'm guessing it's not an overnight thing to bridge the gap. How do you teach your clients to increase their ability to save or develop good habits or whatever the case might be over time? Yes. Yeah, it's definitely not. I wish I could snap my fingers and everyone had this extra 20% laying around that it just didn't occur to them to save it strategically. But unfortunately, that's not usually the case. So because life is expensive, as we all know. So I tell people a couple of things.

The first one is, and I love, Nicole knows this, I love workout analogies. Financial fitness is a lot like personal fitness. It's a journey for sure. And if you had the best workout ever yesterday, it doesn't mean you never need to work out again. So finances are the same way. You have to take stock of where you're at, make sure you commit to something that is actually doable, right? You don't want to go run a marathon on your first day and then you pull a muscle and you're actually worse off. So you need to make sure you're progressing and that it's a long journey.

It's okay. You can't check the box and be done with it. The other thing I like to remind people is that yes, it's hard to flip a switch and all of a sudden save the perfect amount of money overnight, but all those little decisions really add up. And that's what I try to spend time with people to help them understand is we can't solve the whole thing, but we could get this much closer. So for example, if I'm talking to a 25 year old, mathematically, if they are going to save the same amount every month until 65, they need to save three 80 a month to result in a million dollars by age 65. So yes, daunting. I've already planned out 40 years of their life, right? That's a big thing to think about.

But what I really want them to get out of that is every $100 that a 25-year-old saves results in $250,000 in retirement. So even if you can't wake up at 25 or 35 or 45 and start saving $1,000 a month or whatever number sounds really big to you, it's important for people to know that that $100 actually means a lot. And it's gonna make it easier to save $150 next year, and then maybe $225 to work your way up. And that's perfectly fine. Getting closer is a lot

better than keeping your head in the sand and ignoring the huge benefit of starting to build great habits around saving. I love the workout analogy too. And what jumped into my head is oftentimes we use a trainer or an app or, you know, if I were going to run a marathon, I would definitely have somebody who knew what they were doing, chart out my training plan. And that's kind of like a financial advisor. So what are your thoughts about who needs a financial advisor, who might not, and then how, if our listeners have not worked with financial advisor before, they don't particularly love their current one, how do you recommend finding the right fit? Yeah. So I would say, first of all, everyone needs a financial plan. Some people's are going to be very sophisticated plans with lots of strategy and modeling and scenarios. Other

people's plan might be as simple as try not to spend so much money on Postmates this month. Your budget needs to go down $50 so we can put that into a retirement plan. So I would start by saying, try to think about what you actually need from a financial professional. Do you need the accountability? Do you need someone to help you feel just educated on what, you know, help you know what you don't know? Do you need someone to help you actually build a strategy? Do you need a quarterback to pull together all the different components of your plan? Do you need someone to keep this top of mind because you travel and you work and you have kids and so much going on that you need someone to handle the grunt work? I think that that's really who needs a financial advisor is someone that has one of those areas that

they need help with. And I just always encourage people that there are different advisors for all sorts of different people. And you should find someone that jives well with your personality and understands the phase of life that you're in. That's the most important thing that they really get what your opportunities are and what you're struggling with, and they can meet you where you're at. They might have the best ideas in the world, but if it's not for what your priorities are, it's not a good fit. All very good advice. So what are some of the differences if you're in the earlier phases of your financial planning

journey? So if you're in your early, mid or late 20s and you've just got your first big job where you've got some money to save, what might the 20-year-old be thinking about that's different than the 30-year-old that might be different than the 40-year-old and 50-year-old be thinking about that's different than the 30-year-old that might be different than the 40-year-old and 50-year-old? And I know you would have to generalize there because obviously everybody's not thinking the exact same things all the times, but do you see any themes at life stages where certain things become more or less important? Absolutely. So for that young professional, I definitely want to help them focus on three things. The first one is building good habits. So right from the get go, how do we not get into this credit card, poor relationship where we're living, you know, off of hope, right, that it's all going to work out versus making sure we don't add that extra pressure. So I want to build habits around spending, saving, and just have them build a really positive relationship with money. The second component is making sure they have fundamentals in place. So

that emergency fund, disability insurance, something toward retirement. And if they have debt, student loan debt, they have credit card debt, that we have a plan on how we're going to attack that. And the third component is beginning to build their investment philosophy. So what I mean by that is it's one thing to turn on CNBC or Fox Business or Bloomberg and see the red or yellow or green lines going up or down. And wow, that seems dramatic. It's different when you see your money going up or down. So I like helping clients when they're younger, start to build a philosophy, understand risk. And when they have, even if it's just a little bit of money in their 401k,

whenever the market goes down or goes up, it's a really great opportunity to have that dialogue because when the numbers get bigger and there's more zeros, it's going to get more stressful. So if we can really learn what their risk tolerance is when they're young and there's less on the table, that helps just create such a good long-term investment philosophy. That makes sense. So what about the people in their 30s and 40s who maybe didn't do that in their 20s? Are there any things unique to those circumstances? Yeah. So when I'm dealing with someone a little bit more established, it becomes about what are

their priorities. And usually by your 30s, you have a thought on, I want to own a home or a different home, or I'd like to start my own business or my parents need my help now, or I have a young child and it's really important to me to make sure that we go on a vacation every year or I help them with college or whatever your goals are. That's where I really want to dig in with that person in their thirties is helping them think through what their goals are, that's where I really want to dig in with that person in their 30s is helping them think through what their goals are. And then we either triage or we build a plan around that. Usually in the 20s, it's about options, right? They don't know what they're going to want, but when they want it, they want to be in a good place to get it. In our 30s,

I really want to make sure that I'm helping to calm whatever anxiety there is around finances that is keeping someone up at night wondering if they're going to be able to accomplish whatever that big, important item is. So we go a little bit more for the jugular in the 30s on the goals that are most important to that person to feel like they've really, um, they're really working toward what means something to them. Okay. And then later on in life, maybe, you know, as we're getting closer to retirement, I'm sure everything changes. Yeah. As we get closer and closer to retirement, um, it really becomes helping someone picture making that jump. So when we get within 10 or even 15 years of retirement, we really have to start thinking through what they're going to want and what we've done so far and what tweaks we can take advantage of, whether that is saving more, starting to use certain tax shelters that maybe they haven't in the past.

Basically, whatever they've done, we can't go back in time. But how do we be as efficient with what their circumstances are? And I think that's a hard conversation for a lot of people because they feel like they can't make as much progress. And that's not true. There's a lot of work to be done around someone beginning to envision what that next phase of retirement is going to look like. And it's actually a really fun conversation because it's about thinking through the distribution. And sometimes there's not enough. Sometimes there's plenty. Either one of those, I think it's really calming to people to have an accurate pulse and to think

about what they can do in that last 10 to 15 years before retirement to start preparing for what that next phase of life is going to look like. So you don't have to run every scenario in the back of your mind. We can actually run a few that are realistic. Yeah, that's great. And based on your experience, what gets in the way of people making good financial choices? What are the barriers or obstacles or beliefs that mostly prevent people from making good choices or being in a great financial situation. Absolutely. And this is a big, this is something that's a big topic because I, in my role, only help people if they actually make progress, right? So I spend a lot of time thinking about why people make choices or why they don't make choices. And of course, just like anything else

in the world, Instagram or whatever, there's FOMO when it comes to finances too. People feel like there are 5,000 choices on where to put their money and all of this. And people have to realize there's not that many places, right? To put an emergency fund or to ways to appropriately invest a retirement account. I think people try and get, you know, they're looking for this unicorn, right? Vehicle that gets a guaranteed 20% rate of return and it's tax sheltered and it's liquid and it comes with a puppy, you know, and it's important for people to realize that there's no magic bullet product. It's, you know, a plan is a combination of products and tactics relative to the client's needs.

So that's one thing that gets in the way is thinking that there's some other magical solution out there that's going to solve all their problems that somehow no one has thought of. The second thing that gets in the way is I think sometimes people don't understand the recommendations they're getting. And that's something that's really important to me is that people understand what I'm saying. I don't want them to take my recommendations because they assume I'm smart or that this is what I do. I really want to be their partner in planning because I need them to be an active, you know, partner in that too. And I want them to feel really good about the choices that they're making. So many people, if they're really confused, they just say, Oh, let me think about it. Because what they're saying

is I got to do some research. So I feel like I'm making a good choice. And then the last thing that gets in the way is again, people feeling like if they can't do it perfectly, why bother? Right. And again, like we said, um, a few minutes ago, financial planning is about progress, not perfection. And the little good decision you make today makes tomorrow a lot easier too. So those are the things that usually hold people back. And I always hope that I can help people feel a little bit more confident that taking that step is at least going to get them closer to where they want to be. Last question. I think sometimes there's this misconception that if you want to have a financial plan, you're going to have to pay a ton of money to get one.

You know, obviously the most successful and the right things, is there a financial advisor out there for them? And what are the differences? What might they be looking for? Absolutely. You need to be clear that there's different types of advisors. There are fee-based planners that charge a fee for their time and their strategy. And if you're at a certain point, that's a great exchange of money for value. Right. If you need someone that's going to really dive in deeper on certain components. And many times there are industries or levels

of income where that's necessary or very helpful. But for a lot of people, there are really great tactical planners out there that can help them assess their needs and are very interested in growing with clients. And nothing is wrong with those advisors who deliver huge, phenomenal advice and service to people and without charging for time. And many times there are clients, right, have needs of products where an advisor can get paid and it makes up for all of the other help and planning that they do. And so that's a great trade is if the client needs a product and service and an advisor has it, it's a way for the client to get that advice and the advisor to be compensated for their time too. So that's a perfectly good trade. And like I said, there's many other resources or tools for people that

just want a little bit of education, but just remember education only goes so far. You also need to take action. And if you're not going to do that on your own, it's important to go find someone that's going to help push you to take action around the things that you want to implement. Very well said. A plan without action is just a wish or a hope, right? And so one of the things I love about having a financial advisor and working with so many financial advisors is that they often help bridge that gap, right? They're the person, whether it's a little bit of support or accountability or education or whatever that has you actually move forward on what's important. Okay. So if you want to learn more about Chantel and the work that she does, I mentioned earlier

that she's an author. She has a book called Finding Your Financial Type. It's available on Amazon. A great read to just understand kind of your different approaches to saving and how your personality may play a part. I don't know, Chantel, do you have anything to add about your book that might be helpful? Yeah, the premise of my book is I feel like one of the reasons I've been successful at helping clients really change and take action in their financial life is because I try to get in their shoes and think about how they think and what they need from me. And so that was the premise is that there are different financial types, right? There's people that are naturally great

savers. There are people that approach money with a lot of fear. There are people that just love learning. There are great delegators. So I try to help people think about how they approach money and then how we would formulate a plan around them versus this, you know, the last hundred years of finance has been, this is what you need to do. And a lot of people that doesn't resonate. So there are some really great tips in there, both on how to think through a plan, budgeting, goal setting, execution, that I think are very helpful for people that want to start to form their own personality and objectives around financial management. Okay. And that book was called Finding Your Financial Type. Again,

you can find it on Amazon. You can also visit Chantel's website at chantel-bonneau.com. So it's C-H-A-N-T-E-L-B-O-N-N-E-A-U.com. You can also follow her on Instagram at Chantel Bonneau, and she gives some good tips and you get to see her oh so precious daughter. Thank you so much, Chantel, for joining us and for giving some really great advice. Thank you, Nicole. Whether you work with a trusted professional or have a partner who manages or makes the money, make sure you stay engaged and involved in the financial conversations, plans, and decisions. Always review your financial plan consistently. And anytime you have a big life change or transition, it's always a good time to revisit. You don't need to track the stock market or understand the differences in all the various retirement accounts or even be great with money

to have a plan. That's where a great advisor can come in. All you need are goals, dreams, and to know what's important to you so you can make the best choices with the money you have. A great advisor can help, but most importantly, it's time for women to feel empowered by their finances. This is woman's work.