Human Capital :: Directions For Women

Human Capital

resources are the new dollar

June 21st, 2011

Recently I realized that I had been ignoring two of my very best clients–that would be my daughter Colleen and my son-in-law Matt. As I told Matt, a doctor, if he treated his patients the way I had been treating them, they’d all be dead … So, we had an “official” planning meeting with filled-out forms, a pile of documents, the works.

I should add that Colleen and Matt are parents of my favorite (and only) granddaughter, Casey, age 15. She is, as I am sure any grandparent already knows, brilliant, lovely, talented, and surely a find for any college that ultimately has her as a student. But the result of our official meeting showed us all that current household finances were likely to limit her college choices. Between now and then her folks needed to ratchet up the college savings account!

I laid out the numbers for them and what I saw as the potential options, with the emphasis on changing spending to free up funds for savings–something that probably suggested they’d never be able to have fun until Casey finished school. We left it there, with them to think about. The next thing I knew, I had a happy and excited call from my daughter. No–no lottery winnings! But almost as good. They recognized they could reorganize how they used the space in their house, thereby freeing up a bedroom, bath and living space that could be rented out. In the magical way these things sometimes happen, the rent they are able to get matches almost exactly the amount needed for the college fund.

It was a very creative solution that actually has made the rest of their space much more practical, and they all love it. What they had done was look at all their assets, not just their dollars and cents, to figure out how to maximize their wellbeing. As we say at Directions, “Resources – they’re the new dollar.”

Think about it, what are some of your resources?

Categories Women and Finance
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what does it mean to change the conversation?

by Eleanor Blayney

January 11th, 2011

In light of our subscription program for advisors, we are taking a moment to review some of the basics of our initiative.
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We talk a lot about changing the conversation about personal finance for women. But why is this important, and what does it mean?

It’s important because women have been underserved by the financial services sector. Many report being patronized or intimidated by financial advisors. If they are part of a couple, they may feel unheard as a result of the discussion being pitched primarily to their spouses or partners. Many don’t feel ready for the challenge of personal financial management, having grown up without examples of mothers who worked or who were responsible for the important household financial decisions.

It’s important to change the conversation because women are rapidly gaining in economic power. They are in the workforce to stay, and have accumulated assets of their own. They are the inheritors of wealth because of their longer life spans. To survive and thrive, financial advisors have to figure out better ways of reaching women. They must realize that the traditional male-defined ways of doing business are not going to work. Women aren’t that interested in the competitive game of money with its constantly changing roster of winners and losers. They are interested in what money can do for their families, for their communities and networks, for their lives.

Changing the conversation will involve a shift in emphasis and delivery rather than a wholesale discarding of subject matter. We still need to talk about investments, debt management, tax reduction, and retirement plans with our clients. There will still be topics that are technical and complicated – estate planning comes immediately to mind – which we must make sure women understand, even when they are totally uninterested or overwhelmed.

Here are just some of the ways that Directions for Women would like to change the conversation about personal finance:

Advisors would talk to women clients:

Less about being rich, more about being enriched
Less about price, more about value
Less about balance sheets, more about balance
Less about transactions, more about engagement
Less about financial capital, more about social and human capital

These conversations would take place more often at kitchen tables, and less often in formal conference rooms. Advisors would tell more life stories, and present fewer graphs and charts.

Most importantly of all, advisors would listen more, and talk less.

A Different Kind of Wealth

by Eleanor Blayney

August 15th, 2010

August 15, 2010 – Six days and it’s still not quite real yet, but there was a massive fire destroying the townhome where my daughter, son-in-law, and grandbaby lived. They are safe. This is the first, last, and most important consideration. But just about everything they owned was lost to the fire itself, or to smoke and water damage. We’ve been reminding ourselves over and over that it’s all just “stuff.” At the same time, it was a lot of stuff – computers, photos, family documents, clothes, furniture, jewelry. There will much rebuilding, both literally and figuratively, in the months ahead.

It’s said that nature abhors a vacuum, and the truth of this has never been so powerfully apparent to me. In that void created by the loss of their house and their belongings, a flood of community support has come pouring in. Many of the people offering food, places to stay, toys, and baby gear do not even know Elizabeth and Brad, but their generosity and concern has been no less genuine. When thanked, they push off our gratitude with a simple “I’m sure they’d do the same for us, if our situations were reversed…”

In the financial advisory world, we talk a lot about capital – how to invest and manage it. Usually we are referring to financial capital that is easily valued in dollars, and considered necessary for our lives and our goals, such as educating children or retiring comfortably. But here at Directions, in keeping with our vision of changing the way we talk about and view personal finance, we are enlarging our definition of capital to include not just investment and savings accounts, but human and social capital as well. Your human capital is the aggregate of your education, experience, skills, and passions, which can be put to productive use in the workplace, in return for earnings and benefits. Social capital, according to the ecological organization, EarthEconomics, is defined as “the underpinning and core fabric of communities,” providing benefits in the form of safety, security, friendship, and a sense of civic identity.

Both alternative forms of capital – human and social – are incredibly important as supporting and sustaining resources, and deserve as much attention and management as our 401(k)s or mutual fund accounts. For women especially, social capital is often an essential resource, because of the fact that their financial and human capital is often diminished by the years they spend out of the workplace, raising and caring for family members.

The hard fact is that women need more resources for their longer lives, but have less, in terms of financial assets, when they arrive in retirement. Elderly unmarried women – including widows – depend on Social Security for as much as half their income, compared to men for whom Social Security covers about 39 percent. For a quarter of unmarried women, Social Security is IT: their only source of income.

What does a financial planner say to a woman who faces a radically reduced lifestyle in her later years? “Well, I’m sorry but you cannot afford to live?” This is unacceptable. We are problem solvers, not buck passers. Even if our own clients are unlikely to be in these straits, they may have mothers, aunts, sisters, and female friends who need support.

To answer these women, we need to become more knowledgeable about available community resources: what is available to the elderly in terms of shared or cooperative housing? What medical services or clinics offer cost-free services? Is there a job bank or coordinator placing seniors in paying, part-time work? What, in other words, is the social capital that can provide safety and security to our women friends, clients, neighbors, even ourselves?

Because this capital does exist, even if the bank won’t give you a debit card to draw upon it. It’s our obligation to find it, grow it, and invest in it. Speaking for my kids, I can say that the goodwill and support of their community is now their greatest asset.

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