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Fomenting The (Financial Literacy) Revolution

Despite being the daughter of one of the most influential men in the history of the financial services industry, Carrie Schwab Pomerantz's early childhood was more Main Street than Wall Street. Unlike many scions of finance, she was schlepping newspapers before she reached her teens. Not surprisingly, Main Street quickly led to Wall Street: Pomerantz joined her father's firm as a teenager, an age

Despite being the daughter of one of the most influential men in the history of the financial services industry, Carrie Schwab Pomerantz's early childhood was more Main Street than Wall Street. Unlike many scions of finance, she was schlepping newspapers before she reached her teens. Not surprisingly, Main Street quickly led to Wall Street: Pomerantz joined her father's firm as a teenager, an age when most of us were more focused on trips to the mall.

In addition to her NASD Series 7, 63 and 8 registrations, she also has a degree in political science from the University of California, and an MBA from George Washington University. She currently serves as senior vice president and chief strategist of consumer education for Charles Schwab & Co., as well as president of The Charles Schwab Foundation.

Much of her professional and philanthropic work has been focused on providing information and skills to those who might otherwise be excluded from the “investor class.” We recently caught up with her via email and telephone:

What are the goals of the Charles Schwab Foundation?

The mission of the foundation is to support employee-selected causes and foster financial literacy for at-risk teens and young adults through Schwab funding, involvement and expertise. This mission is reflective of our heritage, our culture and our employees.

Our goals are very specific to our programs to support financial literacy.

Talk about the specific programs you've been involved with that are attempting to make Americans more financially literate. What's working?

I have found from my work that many Americans, from all walks of life — [regardless of] gender, age, socioeconomic backgrounds — lack basic money management skills. My efforts focus on educating all Americans — wealthy and less fortunate — and include a fair amount of speaking and writing. In addition to my regular column in On Investing magazine, and my book It Pays to Talk, I recently launched a personal finance column on called “Ask Carrie.”

As president of the foundation, I have also steered the efforts to provide money management education to kids who otherwise would not have access to education and training on these important life skills.

Last year, we launched a national partnership with Boys and Girls Clubs of America (BGCA), the largest growing youth development organization in the country, which focuses primarily on kids from disadvantaged circumstances.

Together, we created a five-module after-school program, Money Matters, Make It Count, to teach teens, ages 13 to 18 years, basic money management skills. The program consists of a Teen Guide, a “Facilitator's Guide” and a Web site, all with fun and interactive exercises. We also award college scholarships to exemplary teens and we encourage our 14,000 fellow Schwab employees to help facilitate the program in their local communities.

Our goal, set in May 2004, is to reach 36,000 teens in two years. As of December 2004, 13,100 BGCA teens have taken the course. Our recent survey of U.S. teens compared against a separate sampling of BGCA teens shows that our program is working.

What are the biggest challenges to helping current and future investors be more aware, and more disciplined, in making financial decisions?

Our financial world has become more complex than ever, and at the same time our society is moving toward individuals having to make their own retirement and investment decisions. We are becoming more of a do-it-yourself culture — and also more of a credit-driven culture, which creates a unique set of obstacles to saving and investing. In addition, families do not talk about money and schools are not teaching the topic, which only perpetuates the issue of the lack of financial literacy in our country. We are dealing with big cultural issues.

What would you say to charitably inclined advisors who want to help educate current and future investors?

I would say that there is a huge demand for their abilities in the nonprofit sector. The closer their charitable giving is to their passion, the more effective they will be. Plus, it will help the advisors develop speaking and business leadership skills.

What methods did your father use to teach money skills to you when you were young? Did they have an immediate effect, or was it a case of “as you grew older, your father got smarter?”

My father was a struggling businessman until my early 20s. While he didn't give me an allowance or sit down and have specific money conversations, he did instill two important values that I am now teaching my kids — the value of saving and the value of having a strong work ethic. I started working at 12 years old with a paper route for the Oakland Tribune and later started working for my dad [at Charles Schwab & Co.] when I was 16. The company was only two years old then. I also opened up my first savings account at age 10. I continue to save for a rainy day. Now that rainy day [money] has become my retirement. I'm lucky to have started saving early; it's part of my DNA and is not a chore for me. Unfortunately, not a lot of baby boomers had this discipline instilled in them.

You and your father collaborated on It Pays to Talk: How to Have the Essential Conversations with Your Family about Money and Investing. As you worked together, what new things did you learn about each other — both in general, and relating to money and family?

My father was very supportive of the book and its focus. I took the lead in writing the book and in the process found some of the conversations with my father uncomfortable. I felt as if I was having to dig into his personal affairs and feelings. While this was awkward for both of us, my father became more open to sharing and more comfortable with the process. I think it made us closer. What I learned at this time is that when you have these essential conversations, it's an ongoing and dynamic process. It takes multiple conversations, not just one, to get where you want. I also learned that gender, age and life experiences can affect our attitudes and behaviors about money. He is a bit more old-fashioned than I am and not as open to sharing his feelings, which I think is a common gender and age difference. We didn't necessarily agree on everything, and it taught me — and him — to have respect and compassion for the other's feelings.

What are you and your husband doing to make sure your children become financially savvy (and remain grounded)?

I have 3 kids — ages 16, 13 and 8. When each turned 5 or 6 years old, I gave them a small allowance. This was the first time they experienced money and could make budgetary choices for themselves. I remember my son, Win, begging me to buy him Pokemon cards. He was about 7 years old. When I suggested he use his own money, he decided the Pokemon cards weren't worth it. He was placing value on money. My two oldest had savings accounts until they had enough money for me to open custodial brokerage accounts on their behalf. While I heavily guide them on investing, explaining the importance of diversification and investing for the long-term, I also let them make their own decisions. Of course, as their custodian, I place the actual trades.

This summer we are requiring my 16-year-old to get a job. Many of his friends do not have to work, and many are going on fancy trips overseas to improve on their Spanish skills. I wanted my son to learn what the real world is like.

What money issues cause the most friction between the two of you and your children?

Living in the Bay Area, we are surrounded by wealth. I want to make sure my kids are grounded with good money values and money skills. I fear “affluenza” — being spoiled and disempowered by money. While I want to give them the resources to succeed and have a better life, it's really important to me that they have the skills and confidence to rely on themselves to be financially independent. My kids say I'm cheap compared to their friends' parents. They say their allowance is not at the “going rate,” and they want to know why they can't have a laptop computer and cell phone like their everyone else. Now I'm dealing with the pressures of giving my 16-year-old a car. He's not pressuring me, but all his friends are getting cars. I come from a family that helps the younger generation get a leg up, but the skills and values come first.

What will you tell your children if they reach adulthood and want to work in the family business?

I would be proud, but they'll have to pay their dues to learn the business.

Any early hints of exceptional money skills?

My older boys save and invest most of their birthday, work and holiday money, which makes me believe they have the values I've been trying to instill. Unfortunately my oldest son started investing in individual stocks for the first time in late 2000. He got a real taste for how volatile the stock market can be. He's now a big believer in mutual funds and being properly diversified. His younger brother started investing in index funds just as the market recovered in 2003 and believes he's an investing wiz. I just care that they learn the basic principles of investing. It appears it's happening, although with a few bumps in the learning process. On the other hand, my 8-year-old daughter could be a challenge. She's already quite a consumer.

Supposedly, trillions of dollars are going to be passed from one generation to the next in the coming decades. As both a holder of a Series 7 and a member of a wealthy family, you have a unique perspective on how advisors can help families preserve financial legacies. What should an advisor remember when helping clients carry out benevolent wishes?

There is a lot to be said about passing on wealth. There are different ways to look at this depending on whether a client wants to preserve wealth for future generations or wants to pass on their wealth to the community. These are very personal and emotional decisions for families. The most successful and lasting financial plans incorporate a family's beliefs, values and personal passion. The advisor that can facilitate these conversations is going to have a client's business for generations.

What mistakes should she avoid at all costs?

Avoiding the conversation of legacy altogether. Unspoken words leave behind family strife rather than unity.

If we are talking about philanthropy, expect that each generation may have their own passion. This has to be incorporated in the legacy plan.

More than 100,000 financial advisors read this magazine. What would you like to tell them?

Make sure you're in a position — whether you're working for a company or are out on your own — where you have the unencumbered ability to put your client first.


The Charles Schwab Foundation and Boys & Girls Clubs of America asked American teenagers about their money smarts. The responses offer some rays of hope for the next generation — as well as reasons to fear for our collective financial future. Some highlights:

  • Only 10 percent understand the power of compounding.

  • 77 percent know that the term “financial literacy” has to do with money (that means 23 percent don't know that the term pertains to money).

  • 80 percent of teens believe money management should be taught in high school, yet only 33 percent have received any such work in the classroom.

  • Donald Trump was considered to be the most financially literate person in America, followed by Oprah in a distant second place.

  • 9 percent chose Alan Greenspan as the most financially literate person in America (of course, some Fed watchers might beg to differ with this choice).

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