newjerseynewsroom.com

BY WARREN BOROSON

NEWJERSEYNEWSROOM.COM

BOROSON ON MONEY

A question for a young, female Certified Financial Planner:

“Not many of your (female) classmates went into financial planning, did they?”

Replies 25-year-old Amanda Lott, “It’s a shame that this concentration has yet to be permeated by more female students, though, as a relatively new field of study, I see it taking off in the future.

“I think a lot of students look at financial planning in the context of investments and portfolio management. There needs to be a differentiation for the planning side, whereas this is a service industry, much like like the female-dominated fields of nursing and teaching. As a planner, you can help families achieve their goals in the context of their current lifestyle.

“I believe if young women understood that side of the industry, it would be an area of study more commonly pursued.

“Even more, many people don’t realize that females are naturally predisposed to be better investors than men. There have been studies that prove this fact, and yet the industry continues to be dominated by their male counterparts. Our instincts make us quantitatively more accurate, and our tendency to nurture deepens the connection to our clients when outlining their financial future.”

Lott has joined the firm of RegentAtlantic in Morristown, having graduated from Texas Tech University.

So, are young people today concerned about the possible disappearance of Social Security?

Yes, but they are more worried about job security. Social Security is far, far off.

“We’re focused on getting jobs,” she says. For a lot of her contemporaries, “Social Security is a good 40 years away. It’s not something that’s at the top of our minds.”

Thanks to the Tech Wreck, the rotten stock market in 2008, and the recent miserable job market, young people these days are deeply concerned about their financial futures in general. Will there even be a 401(k) for them, let alone Social Security?

What financial advice would she give to young people?

"Pay yourself first,” she advises.

She stresses the importance of saving for your retirement. “Don’t delay. Forget about instant gratification, the cool new car, the Starbucks latte. Avoid going into debt.”

And when you can invest in a 401(k) or an IRA, she counsels, make it a Roth 401(k) or IRA. With these retirement vehicles, you don’t get an immediate tax deduction as you do with a conventional 401(k) or IRA. But when you withdraw the money — if you’ve followed the rules — the appreciation itself doesn’t get taxed. You’re deferring your gratification. Wisely.

Lott is a fan of index funds, those that simply follow a mirror of an investment market, like a fund modeled on the Standard & Poor’s 500 Stock Index. “They’re great for diversification,” she says. “They’re useful tools, particularly for investors who are doing it themselves and don’t want to take on a full-time job of portfolio management. RegentAtlantic uses several index-fund strategies for most of our growth, or equity, asset class spaces.

“The one area in which we’ve taken a different route is in the large cap asset class space, as we typically manage this asset class using individual stocks. This provides us the opportunity to have a greater value tilt, as well as to manage the portfolio extremely tax efficiently. By having 50-70 individual positions as opposed to one index fund, we can have broad asset-class exposure, as well as much greater control over capital gains.”