How to maximize your full financial potential

NJTV News continues its focus on saving for retirement and financial literacy during Financial Literacy Month with Naomi Mulgrave, vice president of strategic solutions at Prudential Financial.

Schaffler: Let’s tackle financial literacy first. It’s Financial Literacy Month, so we’ve been focused quite a bit on this. Prudential recently conducted a survey and basically we all get average grades for being financially literate. What is going on? The average grade was a C, but what is amiss with people when it comes to their finances?

Mulgrave: I love that you’re highlighting that. Many individuals, they rated themselves a C or lower, but also they said that they’re not optimistic. They said, “You know what, not only am I rating myself a C, but I’m not optimistic about my financial literacy or my financial future.” So the truth is, is that what’s going on is people are overloaded with lots of media. They’re focused on many different things, from saving for their children’s education, to thinking through how they’re going to plan for a retirement. These are competing activities, and people just can’t find that time. So really it’s very important for individuals to get the education, the advice, some of the products, services and solutions that they need in order to start to solve some of this.

Schaffler: I want to focus on retirement with you because Prudential has done a lot of work in this area. One little nugget from some of your research: nearly a quarter of the respondents in a survey you did say their debt is higher than their retirement savings. I mean, that is just a little bit scary because we know generally people don’t save enough for retirement. How do you turn a situation like that around. How do you make saving for retirement a priority when you do have all these other financial obligations?

Mulgrave: I’ve got to tell you, it’s about planning. It’s also about getting the right resources. One of the things that we’ve been doing at Prudential is figuring out how can we better educate, advise, and offer individuals the solutions that they need in order to become financially well. And so we’ve created solutions that allow for you to reach out to financial advisers through a face-to-face type of channel, or face-to-face type of discussion. But we also decided we’ve got to be able to reach people online. We also need to reach people via phone. So we’ve created what we call more of a multichannel environment that individuals can get the information that they need from the channel that makes sense for them.

Schaffler: People still need to take the initiative, right, so there’s some sort of stumbling block or mental hurdle when we talk about a lot of financial issues. Why are we programmed that way, I guess, not to be proactive?

Mulgrave: Yeah, you know, and that’s probably competing thoughts, right? So individuals have many priorities that they’re trying to balance in their lives, and it’s really up to each individual to say, “I’m going to take charge of my financial future.” I’ll offer you an example of that. We’ve been focusing on just different communities and what holds them back. And sometimes it’s that they’re not educated about the different solutions that they can use in order to get to financial wellness, but we also recognize that some communities weren’t even being reached. So looking at, for example, women, we noticed that more and more of them are becoming breadwinners. As they’re becoming breadwinners within society, you would think that they’d have more financial confidence. They don’t have that financial confidence. And so in order for women to take charge of that, it’s a mindset shift. And they have to shift where they’re going to focus and say, “First of all, what do I need to plan my financial future? Who do I need to reach out to in order to make sure that I have the types of solutions that are really going to make me successful?”

Schaffler: Why is it, in your research, have you found disparities not just male/female, but also among races, which is very interesting. Not only their own perception, but how they’re doing in terms of financial health.

Mulgrave: Yeah, absolutely. So one of the things that we did find, to your point, is that around the black community, we’re seeing that they’re starting to make lots of various strides in terms of accumulating wealth. But in terms of that financial management and getting the coaching and the advice that they need, they’re not necessarily accessing financial advisement as much. And so it’s really about making sure we’re educating individuals around, whether it be debt management and credit counseling, whether it means building solutions that help them figure out, “How do I put myself in a better financial position,” savings so that they can actually save for that first house. Or planning the future so you can save for that child’s education. These are all the different types of solutions as we look at what Prudential is looking to offer in various communities that are very important. In addition to that, you have individuals who are looking at retirement. They’re planning for a retirement where you start to see the health care costs start to balloon, but they’ve got a plan for the cost of retirement for health care. They need to understand what type of guaranteed income do I need in order to make sure that I can live the lifestyle that I want.

Schaffler: It seems like this is such a challenge in New Jersey, we hear from people all the time about the high cost of living, whether it’s saving for a house or putting your kids through college, it seems like the challenges are even tougher in this state. So what sort of advice can you give people in just trying to get on the road map?

Mulgrave: I love that. So in my sweet spot, first, look for education and advice. We have plenty of information within where we really provide — here’s how you might want to think about saving for your child’s education or owning your first home. So start with just even exploring and researching. But the second thing that you actually need to do is to make sure that you’re reaching out and getting advice. It’s not a costly measure to reach out. In fact, in many instances, you can pick up the phone and get advice from a financial adviser on budgeting, on planning for your future with a quick phone call. We had that access when you start thinking about some of our phone-based, hybrid broker/dealers and things of that nature that really will help individuals start to solve for some of that challenge.

Schaffler: What about cost, though, for people?

Mulgrave: So the cost associated with financial services, what I will say to you is the benefit far outweighs that. The other thing that I would say is a lot of this is for free — some of the education is for free, some of the advice is for free. I also try to influence individuals, your employers offer many different solutions. Many individuals actually get retirement solutions through their employers, but they’re not necessarily taking full advantage of that — not contributing to a 401(k), not making sure that you’re contributing to the point of a matching capability. So really thinking through how where you have things at your fingertips, ensuring that you’re tapping into that and you’re really maximizing your full potential.

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