Tag Archives: Gina Robison-Billups

Women, Business, and Retirement Planning

  By petillo | September 11, 2010 - 6:33 am | 401k, financial planning, Repercussions: A Retirement Review, Retirement Planning Target 2025, women and business, women and retirement
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I just recently began season two of a radio show with Gina Robison-Billups and Kat Bellucci.  Quite often, Gina reminds us what this project is designed to do: help women in business not only achieve their goals but to level the playing field in business. This playing field, it seems, isn’t level for any of the players when it comes to retirement planning.

We have discussed numerous ways for the moms in the her audience to create and maintain a retirement that is both affordable and provides the right incentives for all of their employees.  But while women (and men) concentrate their time and efforts into growing the business itself, what you don’t see or accidentally ignore, could cost in terms of legal fees and quality employees.

Once the business you are in becomes big enough to consider more than just a self-employed IRA for your retirement plan, an IRA suited best for the business owner and employer of one, the decisions seem to suddenly become more complicated and costly.  You might be CEO, chief sales person, plant manager and human resource department among the numerous hats you might be donning as your business grows.  But don’t forget, you will also be the chief financial officer.

CFOs are faced with numerous problems when it comes to creating and maintaining a 401(k) plan.  You will need to hire a plan sponsor. At first, you will wonder if this is a necessary step.  But there are numerous reasons why you should hire what you can afford.

In a small business situation, the simple plan is probably the best.  Often referred to as a prototype, the plan comes with some basic elements in place and some you may not have considered. The best advice in structuring your 401(k) is to separate the elements of the plan.  Mutual fund and insurance companies offer a complete package of services designed to make the plan a sort of one-stop shop sort of affair.  Now, I’m not saying that this is a bad idea and on the surface it may look as if it might be the most cost efficient.  But in the long-run, as your company expands, it might become more burdensome.

As the CFO, you need to consider compliance and regulation issues. This is almost impossible to do in-house. Hiring outside of your company may cost a little more than your typical investment/insurance company might offer, but consider asking yourself these questions when hiring them: are they capable of protecting your plan and its participants from costly mistakes, regulatory penalties, liability exposure and all nature of aggravations that will act as distractions and interfere with the operation of your business or non-profit organization?  They might say yes but the simple truth is, much of those issues fall back to you should they become legal actions.

According to CFODailyNews.com, one of the scariest parts surrounding 401(k) plans, is the participant lawsuit. Why? because if you haven’t done your job, you will probably lose a lawsuit. According to the site: “Recently, there’s been a spike in employee lawsuits over excessive 401(k) fees. The scary part: If you can’t prove that your company did its best to negotiate lower fees from your 401(k) provider, courts are likely to rule against you.”

One of the main reasons employers use 401(k)s, aside from their ability to create retirement wealth that is directed by the employee themselves, is the matching contribution.  This is something the employer provides and people beginning their plans should keep a couple of things in mind when deciding how much to offer or even to offer anything at all.  We have all heard news reports over the last couple of years about companies reigning in the 401(k) matches, citing difficult economic times.  While we have also heard about the huge amounts of cash they are hoarding, taking something away from employees is harder to do than you might imagine.

So when beginning to offer a match, keep in mind that no match or a little match can be improved upon. Small business employees will understand your prudence and might even see it as a wise business choice made by a smart owner. If you do decide to offer something, consider selecting a match that motivates current and potential employees, increases employee participation in your plan, affectively works at appreciation of the 401(k) plan and helps reduce employer contributions needed to pass ADP/ACP tests (actual deferral percentage/actual contribution percentage).

Now you might think that no match or a low match might be considered stingy.  But studies have begun to show that the higher the match, the higher the likelihood your employees will contribute only the enough to meet the match. Another consideration when building these plans is to offer them some sort of way to see the future.  It used to be that a number goal was what we all chased.  Now, we need to know how long the number goal will last.

And most importantly, women business owners can do their female counterparts a huge service by offering a lifetime annuity in their plan choices.  Now, as a rule I am not a fan of the annuity.  They cost a lot and are sold with all sorts of add-ons.  But they are particularly treacherous for women who receive a lump sum at retirement.  Annuities consider length of life and determine the payout based on actuarial assumptions. Shopping for one after retirement, leaves women vulnerable to getting far less than they would had they had access to it while they were working.

Gut Check: Revisiting Your Emotions and Your Retirement Plan

  By petillo | July 5, 2010 - 6:26 am | commentary, Repercussions: A Retirement Review, Retirement Planning Target 2025, women and business, women and finances, women and retirement
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A short time ago, as part of my regular contribution to MomsMakingaMillion radio, I introduced the notion that relying on your gut feeling, specifically when women rely on their intuition, they tend to come up short in terms of business and investment decisions when compare to their male cohorts. In the beginning, I thought the article was playing well.

I wrote that making decisions with your gut was fine in a raw, untamed world where second guessing some emotion could lead to your demise.  But once you enter into the world of business, you should check your gut at the door. “Men were making most if not all of the business decisions and were priding themselves on doing so with deductive reasoning,” I explained to one of the hosts Kat Bellucci, a self made woman who heads her own pension consultation business when she is not empowering women with financial knowledge along with her co-host, Gina Robison Billups. I continued saying that “deductive reasoning essentially removes the gut from the decision by compiling all of the available information and drawing a conclusion based on what was available.”

Intuition does have a place I explained, but in the area of networking, where getting a feeling about someone is often a good judge of whether they can be trusted or not. Yet, when the cold, hard facts are evidence of something other than how you feel, go with the facts. About 20 minutes following the broadcast, I received an email from Kat disagreeing. She said that she had great investment success when she ran her next business or investment move past her feelings.

So who was right? The wealth of research that points to the fact that gut feelings are not to be wholly trusted or the claim that without them, the cold, hard facts would be void of some integral element? (You can read the original article here.)

According to Andrew Campbell and Jo Whitehead, directors of London’s Ashridge Strategic Management Centre and coauthors, together with Sydney Finkelstein, of Think Again: Why Good Leaders Make Bad Decisions and How to Keep It From Happening to You (Harvard Business School Press, 2009) the realization that something doesn’t feel right in spite of evidence otherwise is not such a bad thing. But shouldn’t you be able to test your gut’s assumption?

They have come up with a test, four questions that can be used by anyone leading a business or simply trying to decide which investment seems right for their portfolio.

The first question they suggest you ask is whether you have any prior experience from which to draw your conclusions. This familiarity with a similar problem isn’t always fail safe either. The weather is a great analogy of how we react to certain types of situations. A light dusting of snow as is often experienced in the Pacific Northwest does nothing to prepare you for a snowfall in Buffalo. In this case, what you know and how you reacted to the event in the past has little bearing on what the actual event could bring.

You have heard the term “yes men”. These people are there for a reason and it is not a good one. They reinforce the emotional tags you put on an event so that when a situation similar to that one comes up again, you are conditioned by the memory. Problem with this is that from an objective point-of-view, you may not be making the right choice. The coauthors write: “Hence, without reliable feedback, our emotional tags can tell us that our past judgments were good, even though an objective assessment would record them as bad.”

Those emotional tags bias our judgement and play an important role in how our memory of a particular situation is handled in the future. If you have been bitten by a dog as a child, you know exactly what kind of emotional tags can be carried forward, even when it makes no sense. being wary is good except when it clouds your decisions in the face of conflicting facts.

One of the last biases the decision maker has to confront is the easy one. Not the one that is easy to make but rather the most convenient option. If you feel as though your vote on a particular solution is influenced by the easiest path, step back and let someone else make the call.

The authors understand that not all of these biases come into play in every decision but when they do, you need to take the appropriate action. “There are usually three ways of doing this—stronger governance, additional experience and data, or more dialogue and challenge. Often, strong governance, in the form of a boss who can overrule a judgment, is the best safeguard. But a strong governance process can be hard to set up and expensive to maintain (think of the US Senate or a typical corporate board). So it is normally cheaper to look for safeguards based on experience and data or on dialogue and challenge.”

When you are investing on your own for your retirement, take your time. Gut feelings often prod you into the feeling that whatever mistake you make now is easily undone. But as any little league umpire will tell you, taking that additional breath before making the call can make all of the difference in the world. Being your own boss is much the same: you must make the call but do it based on all of the information you have and if it doesn’t seem adequate, get more.

Retirement Planning: Making More Helps Women

  By petillo | May 17, 2010 - 7:06 am | Repercussions: A Retirement Review, Retirement Planning Target 2025, women and retirement
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Wouldn’t it be great to find an extra $10,662 to invest towards your retirement, pay down debt and improve your lifestyle? This is the gap in income currently experienced by women across the country.

But before I get to that, I want to clear up a couple of the errors I have made have made in the past. I have suggested that when a woman takes time off from work for whatever reason, kids, elderly parents, etc., she should enlist her husband’s or partner’s help in maintaining her retirement plan. The thinking here was based on the concept of partnership, where the business of running a family was something a simple as having a meeting, discussing the upsides or downsides and choosing the most financially feasible path.

Another error I am guilty of making is based on the assumption that women can approach investing in the same way as men do, hoping that the unemotional or coldly calculated decision making men are often credited with should also be employed by women. There are numerous studies on how women invest but those were done in order to identify how to tap that market, not why they are different.

Today, I like to look at ways to fix both of those mistakes. Women do need to become investors but they seem to have an awful lot of distractions keeping them from being better ones.

One way (Gina Robison-Billups, founder of MomsMakingaMillion and host of the radio show by the same name mentions it during the intro to the show), is to get the pay levels women receive on par with men. A recent study done by Forbes – and conducted by men – offers yet another skewed look at the wage gap women are experiencing in the workplace. I believe the Census Bureau now has that gap at 23 cents. What the study suggested was that compensation is somehow not the company’s problem necessarily, but the woman’s failure to understand how the networking process operates.

There is a belief, at least according to this report that it is more than simply impressing the boss. It is the inability of women to create and maintain networks that keeps the compensation for women lower.

The authors of that study (you can find a link below) are suggesting it is the woman’s fault she isn’t making enough money. While they try to generalize, they include men in the topic when addressing their conclusions, it isn’t really genuine. Men aren’t faced with a persistent pay gap.

They write that women and men “can increase their pay by having more effective corporate network relationships–but women have a particular opportunity. The wage gap is likely to persist, but there are things you may be able to do to improve your own situation.”

But the real pay gap isn’t in the inability to network. It is their inability to get the information on how much a job is worth when they are either jockeying for a raise or a promotion or simply applying at a new business.

While some of us could find the information, (I have provided a job search salary calculator for comparisons below) knowing is usually just a general indicator of what a particular job pays. For instance, a chief executive with an MBA looking for a job in the Portland, Oregon area will find it pays as much as $250k a year on the high side to $139k on the low side.

The problem is much more complicated than just finding what a job is probably worth. In order to get the pay women deserve, they need to know exactly what price the employer has put on the value of that job. All the networking in the world won’t help you if the employer looks at your salary history, offers you more than your last job but less than what they saw as the true value and you accept because it is more.

Unfortunately, the Equal Pay Act hasn’t done much so far. It has been around for decades and is awfully difficult to win and there is still a huge pay gap. It’s none too easy to even make the claim. But there is currently a bill being debated in Congress called the Paycheck Fairness Act that would allow you to find out what the person sitting next to you earns for the same job and to be able to do so without retaliation. If you ever had a reason to call your congressperson, this is it. If this act passes, this might be worth about $10,662. And that could change not only how women invest, but how they retire as well.

Info on Paycheck Fairness Act

The Forbes article by Kevin Clark and Patrick Maggitti

Job salary search calculator