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Jeremy Owens: Hello and welcome to On Watch by MarketWatch. I’m Jeremy Owens. What are the best new ideas in money? That’s a question we attempt to answer at MarketWatch every year with a series of stories focusing on fresh financial thinking. This year, our Best New Ideas in Money series discovered new metrics that tell us more about the economy, how artificial intelligence will change the real estate industry, and the potentially lucrative world of collecting VHS tapes.
Today we wanted to take you inside two of these stories that could impact many listeners. First, we focus on some of the most influential voices in finance today. Reporter Hannah Erin Lang writes about a new generation of influencers who focus on financial feminism. That group includes Tori Dunlap, who also joins us to talk about the million plus people who have joined her movement and why they think it’s so important.
After that, we welcome retirement reporter Alessandra Malito, who’s been diving deep into the world of 401(k)s, the most important investment vehicle for American retirees has already changed with the new legislation going into effect this year. Alessandra introduces us to Bryn Mawr Capital Management CEO, Jamie Hopkins, and his ideas for more. Plus we’ll take a quick look at the news stories we’re watching right now and how they’ll affect your wallet. First, let’s talk about financial feminism.
So Hannah with your story in the Best New Ideas in Money you’re talking about the new generation of personal finance influencers, what they’re really doing that’s different and pushing the idea of personal finance into a new territory. Can you briefly run us through exactly what the larger picture here is?
Hannah Erin Lang: Yeah, yeah, absolutely. So, as you said, I wrote about this new generation of essentially online money experts who are a young diverse group, primarily women who really seem to be, as you mentioned, kind of reinventing money advice for a new generation in a way that seems to be really resonating with young people in particular. In addition to that, we’ve seen kind of a growing resistance to really mainstream personal finance experts, think Dave Ramsey, Suze Orman, folks that have really dominated that space for a while, but we’re kind of seeing younger generations chafe at the tone of their advice a little more frequently.
Jeremy Owens: And that seems to be the real difference is in the approach.
Hannah Erin Lang: Yes, yes. I would say the overall goal of helping people achieve greater financial stability is definitely the same, and a lot of the advice actually looks the same. Put your money into savings, make sure you’re putting away some for retirement, pay down your high interest debt. A lot of those principles carry over. The difference is really in the way that this group of finfluencers, as they’re called, financial influencers, the difference is in the way they’re talking about this. So this is advice that is not coming from the upper echelons of the corporate ladder. It’s often from their own personal experience. I went through this. I struggled with money. I was in a toxic job or paid off my crippling student loan debt. And it really veers away from the harsh or what I might call finger waggy tone of other approaches that we’ve seen. The classic, don’t buy your morning coffee or you’ll never be able to buy a house, that type of cliche advice. Again that seems kind of outdated at this point, but still pervades a lot of the mainstream money guidance.
Jeremy Owens: I went to Tori Dunlap who was mentioned in your article, who you talked to, to kind of talk to her about how she is doing this, why it’s different, how she really thinks about it differently than people like Dave Ramsey, who she specifically called out in her interview.
So Hannah, tell me why Tori is such a good example of this, why she’s been so successful.
Hannah Erin Lang: She’s built a huge platform talking about money in a way where she explicitly states upfront, we live in a patriarchy as a woman that is going to affect your financial life and you can still take control of your finances and be empowered and find freedom that can be revolutionary for many women. But we really have to start with that fact, that there are things about your money that are outside of your control and from me as a sort of guide to you to not acknowledge that fact.
Jeremy Owens: Well, Hannah, thank you so much for joining us and now we’ll go to Tori who will talk more about not just why she talks about what she does, but how she thinks it can help people as they move through their financial life.
Hannah Erin Lang: Yeah, thank you so much.
Tori Dunlap: Unfortunately, a lot of personal finance media and the conversation around money has been about your individual choices, about your individual impact. And the next step beyond that is a lot of shame associated with your individual impact. So think of things like if you can’t afford a house, you’re buying too much avocado chips or you’re buying too many lattes, or the reason you can’t find that good paying job is because you’re not working hard enough. And none of this is true. I talk about in my book Financial Feminist and our entire podcast is about this, it’s also called Financial Feminist, this idea that your personal finance equation is about 20% person choices. Are you investing? Do you know how debt works? Are you living within your means? Are you budgeting? And then about 80% is circumstances, sexism, ableism, homophobia, a trillion dollars student debt crisis, racism, stagnating minimum wages, raising housing costs not just for rent but also for your mortgage and for interest rates. And so there’s a lot at play here that is not discussed, and so it leaves an individual feeling like there’s some sort of defect on their part that they’re not doing the right thing even though they’re working really hard to get ahead.
Jeremy Owens: Right. I feel like personal finance is all about choices, but you need to know what inputs go into those choices you make. And the decision part of what inputs you’re thinking about is quite malleable. And so this is more about making sure that the inputs you’re using take into account all of the things outside of your control that you should be aware of.
Tori Dunlap: Yeah. For me, it’s about controlling what you can control and then working to change everything else. And having a lot of empathy and grace for ourselves and for others, realizing that, again, there’s only so much you can control about your money and about your financial standing and understanding that policy has to make up for the other parts of it. And unfortunately, a lot of traditional finance experts up until this point, one who I am very outspoken against, which is Dave Ramsey, has convinced you that none of these systemic factors have anything to do with your lack of money or your lack of financial understanding. But, we have so much data and so much research, and I talk with women every single day about this. It’s not the latte, it’s systemic oppression.
Jeremy Owens: When you talk about financial feminism, that has kind of come up before I think back to Sheryl Sandberg and the Lean In movement, which was very much about teaching about the system, but in a way that is encouraging people to get in it and move up in it. So give me kind of your opinion on that and kind of how your movement differs.
Tori Dunlap: Yeah, I don’t know if we could see the face I just made, but I made the kind of face…
Jeremy Owens: Is there an emoji that can capture that face?
Tori Dunlap: The squirrel-y face emoji. I think that a lot of the early-twenty tens version of feminism was Lean In, girl boss feminism, which was like, okay, we’re getting in the corporate structures and we’re hustling and we realize now that we can’t just act like men and that’s not the way to get ahead. So we’re going to lean in the workplace. And I do feel like those movements made progress. We wouldn’t be where we are in the feminist movement if we didn’t have that. But there was a lot of issues with that too. There wasn’t a lot of discussion about, even the acknowledgement of systemic issues. I think when you read Lean In it is a lot about women negotiating, but it isn’t so much about how when women negotiate they’re often penalized for it, both in how they’re viewed, but also in the current kind of narrative, you should just be grateful. Why are you asking for more money? And we know from statistics now that women are actually asking for money and negotiating their rate at almost the same pace that men are, at almost the same percentages, they’re just getting told no less. So that tells me, again, that individual women are making a lot of the quote-unquote right choices, but it’s society that is not ready for those right choices. It’s society that is not supporting them.
So in my definition of financial feminism, it is this idea like we were talking about before, of doing everything within your individual power to get rich, to get money, to get options and resources and choices, and then use that power, use that influence, use your own stability to make an impact and to change the system that exists for everybody else.
Jeremy Owens: Right, and you brought up one thing is that earlier version of this that you’re battling, again, you brought up Dave Ramsey and a lot of menfluencers who are going to come against this. The reason for that is obvious in your reading, the societal structures boost white men and hurt others. So obviously it seems like white men influencers are going to battle back against that because the assumption there is that they are naturally boosted by this.
Tori Dunlap: Not necessarily. Men can be feminists and men should be feminists. People of any gender identity can be feminists. There’s plenty of cisgendered straight white men who are so acknowledging their own privilege, and so in support of women and other minority groups, maintaining and progressing towards equality and equity. I think one thing that’s really important to say is that when I say patriarchy, our whole tagline is fight the patriarchy by getting rich. That is the tagline of Her First 100K. When I say patriarchy, I do not mean men, and I want to be very clear about that. When I say I’m fighting the patriarchy, what I mean is I’m finding the system that upholds inequality and patriarchy hurts men just as much, and I would argue sometimes more, than it hurts women.
Patriarchy benefits nobody except people who already are in the status quo and benefit and supports and rally for inequality and inequity because it keeps them in power. Because we live in such an individualized country where it’s your American dream and it’s you taking care of yourself and your own. There is just this feeling that somebody else having it takes away from mine, and that’s not true at all. Rising tide lifts all boats. Candle loses nothing by lighting another candle. And so maintaining and progressing towards a more equitable workplace, a more equitable society, a more equitable world helps every single person regardless of how you identify.
Jeremy Owens: And one thing I am really struck by what you’re saying there, Tori, is how much of a community this is. The personal finance angle is supposed to be personal, it’s supposed to be one person making that decision, and it seems like you’re really trying to bring people together to make those decisions for the community and make sure that the community benefits as well; is that fair?
Tori Dunlap: I think it’s just we know we are more likely to talk about any other uncomfortable topic before we’ll talk about money, we’ll talk about sex, death, politics, religion before we’ll have a conversation about money. So what happens then is that money as opposed to being associated with abundance and joy and ease and stability, the emotions that come up for people are shame, fear, judgment, all of that shame then lives in people’s individual experiences and they don’t share it because they’re ashamed, they’re afraid that somebody’s going to judge them. And then ironically, the very people that they’re turning to for advice and guidance like a Dave Ramsey are the very people who are then shaming them even more. So for many, many years we’ve just existed in the shame cycle for money.
Jeremy Owens: And I can’t help but think about the fact that this really came about during the pandemic.
Tori Dunlap: Yeah, I mean it blew up during the pandemic. Yeah. I started HFK in 2016 as a side hustle. It really started building in 2019. And then 2020 was my first year of full-time business ownership. It was the perfect storm of people feeling like they were financially struggling, people at home trying to find content to consume people, trying to feel like, okay, I need some education about this and I also want to feel productive during a time where everything feels like it’s a mess. And so we did that really intentionally. That was strategic of going where people already were and providing this very inaccessible thing in an accessible way.
Jeremy Owens: The job of an influencer, in your case a financial influencer is a new type of profession really that has really only come around in this format in the past decade or so.
Tori Dunlap: I would argue it’s just a new medium. I’m a business owner, I’m a podcast host, I’m an author, I’m all of these things. It’s just a new format. I’m sure in five years we’ll be somewhere else talking about this. But I think that financial advice has always existed, it’s just the format with which people consumed that type of content and what was available to them.
I would argue that the cool thing about social media is becoming, when I say accessible, I mean it’s taking this complicated topic and making it easier to understand, but I also literally mean that it’s free. You don’t have to pay thousands of dollars for a course. You don’t have to have some sort of vehicle to be able to drive to Barnes & Noble and get the book. This advice is on your phone in your pocket. This advice is in your ears as you’re listening to this podcast. So I think that there is something so powerful about that of the true accessibility play, which is like there’s so much opportunity to learn now about personal finance or anything else.
Jeremy Owens: Tori, tell me, if you were going to summarize exactly what you think anybody should come away with listening to you and what are you really trying to get across, if you could just bullet point it for me?
Tori Dunlap: Personal finance is not just about your individual choices, it’s about your circumstances about what’s going on in the systems that exist. And policy change is one of the biggest parts about being able to impact people on a day-to-day basis, not just do they have the budget together and are they saving enough. And women are the future. It’s so powerful to watch women have money. Nothing bad happens when women have more money. I am a multimillionaire now, and my life is so much better for it. I get to not worry about taking care of myself or taking care of my family. I get to give people jobs. I get to spread this mission of financial feminism.
Jeremy Owens: If you had to choose one way for people to interact with what you do, where would you send them?
Tori Dunlap: Yeah, our website’s the easiest place to go, herfirst100k.com. Our Instagram is also very popular, herfirst100k. And then I have a podcast and a book called Financial Feminist.
Jeremy Owens: Thank you so much for joining us, Tori. We really appreciate it.
Tori Dunlap: Thank you. I appreciate it.
Jeremy Owens: We’re going to take a quick break coming up, changing the 401(k). Stay with us.
Welcome back to On Watch by MarketWatch. Before the break, we talked with Hannah Erin Lang and Tori Dunlap about financial feminism. Now, here’s Alessandra Malito and Jamie Hopkins to talk about how we can improve the 401(k).
Well Ale for best new ideas and money. You wrote about the best ideas to change the 401(k), and I think the number one thing I want to get across to everybody here is how important the 401(k) is to the entire economic structure of America at this point. Can you kind of walk us through how the 401(k) became the number one investment vehicle and kind of came to where it is today?
Alessandra Malito: Yes. The 401(k) has become king of the retirement planning landscape. It became very popular in the ’80s. Previously, the way that you paid for your retirement was considered a three-legged stool. You had your pension from your company, you had Social Security and you had your own savings. But that three-legged stool has been cut a little bit, one of the legs has been cut.
Jeremy Owens: Right. Pensions are not a thing anymore.
Alessandra Malito: So most often if you are working in the private sector, you’re not getting a pension like workers used to get back then. The 401(k) was really an answer for companies to push a lot of the responsibility onto the worker. They no longer had to deal with the financial responsibilities of funding people’s retirement or the heavy lifting of the paperwork and the legal work that often comes with saving and investing for the future. More of the responsibility, almost all of the responsibility now is on the worker to make sure that they’re okay in their old age.
Jeremy Owens: We’ve also had to change the 401(k), right? There’s already been at least a couple of attempts to reform the 401(k) to set it up to better be that number one retirement plan for Americans.
Alessandra Malito: There were two very large retirement focused pieces of legislation that came out in recent years SECURE Act and SECURE 2.0, and they did have some provisions to help the 401(k), such as in some cases, allowing part-time workers to become more easily eligible for retirement benefits or giving incentives to small businesses so that they would offer the 401(k) to workers. SECURE 2.0 did double down on encouraging retirement savings, so there was the auto enrollment or opening the doors a bit wider for annuities. But there is more to be done.
Jeremy Owens: Yeah, Ale and your story is about what could be done. You really pick out five big ideas that still need to be done to reform the 401(k). And one source you really relied on in trying to formulate those ideas was Jamie Hopkins who we spoke to. Could you tell me a little bit about Jamie, his knowledge on the 401(k) and just why you went to for this information?
Alessandra Malito: Yeah, absolutely. Jamie Hopkins is the CEO of Bryn Mawr Capital Management. You may have seen him on TikTok. But he’s a retirement researcher and he knows so many different aspects of retirement, including the 401(k), IRAs, annuities, and of course the legislation that supports all of this. I talked to him about the ways to improve the 401(k), and he had a lot of different thoughts from caregiver credits to having more access to annuities in your 401(k). In the retirement world, there is a lot of focus these days on decumulation.
Jeremy Owens: And that’s when you get paid out, right? I mean, that’s basically the other end. Instead of accumulating money, you’re getting the money back.
Alessandra Malito: So for years, decades even, you are focusing so much on saving for retirement. You’re told to put money into your 401(k), max it out if you can, open an IRA if you can and all sorts of other accounts. But then you get to retirement and you have thousands, hundreds of thousands, if you’re lucky, million or more in retirement savings, and you don’t know what to do with the money because all those years before you got a paycheck and you don’t have it broken down any sort of way. You kind of just have to create a strategy yourself if you don’t have access or the ability to work with a qualified and trustworthy financial planner.
Jeremy Owens: Well, thank you for teaching me the word decumulation, Ale, and thank you for joining us today. We’re now going to take you to the Jamie Hopkins interview where he broke down why decumulation is so important to how we approach 401(k)s in the future.
Alessandra Malito: Thanks so much.
Jamie Hopkins: Decumulation, or as I usually call it, retirement income (inaudible), those are kind of our terminology in this space, is a relatively new topic area in personal finance. The last 30 years we told you the only thing you need to know how to do is save your money, and if you just keep saving long enough, you’ll accumulate enough money, you’ll get to retirement, you’ll be okay. We get to retirement we say, just kidding, you now need to know how to spend money, which we told you not to do for 30 years. So we really focused over the last 40 years on putting a framework in place for accumulating money. It doesn’t exist for decumulation even to the point of Social Security. Social Security will not automatically turn on for you at age 70. You actually have to go in and claim it. There are people that Social Security knows about that are past age 70 that have never turned on their benefits. You have to go actively do it.
So all of that framework that we put in place to automate the savings period, we really have none of that on the spending decumulation period. So one area that I do expect to see more and more over the next 10 or so years is some tweaks to help with this distribution period. So I think I’ve mentioned to people before really coming up with maybe almost like the Apple Store of income products that all qualified plans can tap into. I think that’s a really good idea. Today it’s all segmented, it’s what your company really decides to do, or if you work with an advisor, what products do they have access to? I really do think in this sense we should just have an open platform where anyone with retirement assets in a 401(k) or IRA could tap into for distribution products. That does require, it absolutely does require, government action.
Jeremy Owens: I know even though there’s been all this legislation already to try to get more people into 401(k)s, saving for retirement early, we still want to make this available to more people. How do we do that? What’s the push for that?
Jamie Hopkins: The challenge point here is actually people who work for large companies, just say over 500 people, they’re pretty much all in retirement accounts. It’s when we get down to under 5 or under 10 person companies and solo individuals, that’s where this whole world just kind of disappears. It does pretty well up here, and as we move down and you’re running your own business and you don’t have an HR department and you’re banking with your local bank and you’re putting all your money back into growing your business, retirement accounts are not your focus and they don’t get to them. That’s been a little bit of SECURE .0 I actually think did a good job making this easier, simpler, less costly for those people to set up. But the reality is it’s probably not on their top 25 list of things to do as a business owner in any given week. So item number 26 never gets done, it falls off the list.
So there is a proposed bill out there that would enhance that at the federal level and require almost all employers to either provide access to one of them or a qualified plan. That is not passed, but it is something that’s floating out there right now, this automatic IRA bill. That’s kind of this next level is how do we take this… It doesn’t just have to be a 401 or a pension plan. We really just need people to be saving for the future, and IRAs can help accomplish this too. One of the challenge with IRAs today is that the contribution limits are 1/10th of the amount you can put into a 401(k) each year, roughly speaking. And for say, a traditional IRA, you can’t deduct the amount if you earn over X amount of dollars a year. So we just need to get rid of those and say, look, we don’t apply those to 401(k)s. You’re Elon Musk, you make billions of dollars a year. You can fully fund your 401(k) every year, but if you’re a small business owner and you have an IRA only, you can put like seven grand in. Doesn’t make a whole lot of sense from a policy perspective, right? So we need to change the rules to allow those individuals to save.
I am a big proponent of the state automatic IRAs. I think that if the federal government doesn’t get there, it’s perfectly fine for states to then come in and legislate in areas of federal government doesn’t. I think that’s a great area. We have seen states do it and it’s been more successful. There was a lot of detractors of it that said, “Hey, this is going to be meaningless. You’re just going to create havoc and no money’s going to go in there.” The first couple states that have done it’s wildly exceeded expectations. People have steered into it. Surprise, surprise, giving people access to savings, increased savings.
Jeremy Owens: We mentioned annuities earlier, and there’s more than one way to think about annuities here, right? We’re not just talking about people getting paid out their 401(k) through an annuity, but adding other annuities in, right? Can you talk through that issue and where their ideas there and how those differ?
Jamie Hopkins: Yeah. So the annuity world is a hot button issue. Once you get into this profession, there’s people that hate them, people that love them, people that only sell them, people that don’t use them at all. You’ve got a little bit of everything. One of the things I’ve always stated about annuities is that they’re often oversold and underutilized. So we have a lot of great research. There’s a lot of support for using annuities in retirement income planning, but I think they’re oversold often as people will sell this one annuity product as the solve for everything, and I think that’s been a big mistake of the annuity industry. But annuities can provide lifetime income in a way that no other product or strategy really can still because of mortality pooling.
And mortality pooling is really just this notion of you have 10 people, one of them’s going to live to 100, if you talk to all 10, they have a 10% chance so they might all try to fund retirement to 100. But reality is that’s super inefficient because only one of them is going to live to 100. So by pooling it together as a group they actually can much more efficiently fund whoever makes it to 100 together, and they can all actually spend more money throughout retirement. That’s the fundamental nature of mortality credits and mortality pooling. When used for those types of longevity issues, annuities are very efficient.
There’s one other change with annuities inside of qualified plans that I really think is appealing, it does not exist in any fashion today. It’s the ability to buy up income in small bits over time. So one existing challenge with annuity products is you, generally speaking, need a lump sum or a fairly large monthly premium to fund an annuity. But when I look at how I buy everything else in my life, when I go buy a stock or a mutual fund, I can put $7 in my retirement account and be buying into that. I really can’t do that in the annuity world in sense of a group of people pooling $7 a month and slowly buying income over time. It’s very efficient. It does not exist today, but would be a great policy change moving into the future.
Jeremy Owens: But it does go beyond product. Jamie, I know that the government action so far has been to try to bring more people into 401(k)s saving for retirement early. Who is still getting missed. What can we do to make sure that this broadens even more?
Jamie Hopkins: The biggest thing that I worry about from a policy perspective is we’ve really put no focus on education or information requirements at the end. And what I mean by that is we require students to go through student loan education. If you try to take out a reverse mortgage, you have to go through education, and we haven’t put any of that kind of required education around Social Security claiming, Medicare, distributions. We live in a world where just in time education is actually really easy. It’s not a huge lift for the government to say, “Hey, here, when you go to do your claiming, there’s some videos to watch so you understand the basics of what you’re doing because almost all of these decisions are permanent, you can’t unwind them.” They seem like the most important things that we could say, “Hey, watch a 12 minute video before you make your claiming decision, understanding the different options you have.”
Jeremy Owens: Jamie, thank you so much for joining us.
Jamie Hopkins: Thank you so much for having me on. I really appreciate you covering this important topic.
Jeremy Owens: Before we go, it’s time for, What We Are Watching, a look at the news you need to know for the rest of the week and beyond.
Consumer price index figures for the month of April showed that inflation did decline slightly from the first quarter into the second, and after really hot inflation in the first quarter, that was welcome news for Wall Street. Stock indexes rocketed to fresh record highs, and investors are now betting that we will see two Federal Reserve interest rate cuts this year, but a lot more could still happen between now and the next Federal Reserve meeting this summer. So stay with MarketWatch and we’ll guide you through to what’s happening in between.
Tech companies continue to show off how they’re utilizing generative artificial intelligence. At an event earlier this week, OpenAI unveiled a new version of ChatGPT and the personal assistant it is developing with the technology. The next day, Google kicked off its annual developers event with examples of how its dominant search engine will incorporate generative AI. Neither of those events answered the biggest question about AI and tech, will these advancements lead to more money? I joined colleagues at Investors Business Daily last week to discuss that topic on the Investing with IBD podcast, so make sure to check that out.
We’ve received earnings results from some of the biggest names in tech already, but one important name remains, NVIDIA. The graphics chip specialist that has become the biggest name in AI is scheduled to report its quarterly earnings on Wednesday. We’ll have more about that next week.
And that’s it for this episode. Thanks to Hannah Erin Lang, Tori Dunlap, Alessandra Malito, and Jamie Hopkins. To see all of our best new ideas and money stories and related material head to marketwatch.com. You can subscribe to the show wherever you get your podcasts, and please do. If you like what you heard, please leave us a rating or review it really helps others discover the show. And let us know what you want to hear from us. You can reach us at OnWatch@MarketWatch.com. The show is hosted by me Jeremy Owens, and produced by Meta Lutsoft, Isaac Gaines and Jackson Cantrell. Isaac Gaines also mixed this episode. Melissa Haggerty is the executive producer. We’ll be back next week with a new episode, and until then we’ll be watching.
