An Interview with Carrie Schwab-Pomerantz

Carrie Schwab-Pomerantz

8th November 2016

Carrie Schwab-Pomerantz is an expert in financial literacy, and has served on President Obama’s Advisory Council on Financial Capability, where she was Chair of the Partnerships Committee, as well as President Bush’s Advisory Council on Financial Literacy. She is Board Chair and President of the Charles Schwab Foundation, which provides financial support to a variety of charities and community events selected by Schwab employees. In addition, she is Senior Vice President for Community Services at Charles Schwab.

Q: Should investors be concerned about this election?
A: There’s no doubt that this has been one of the most contentious elections in American history, at least in our modern history. I do think from an investor perspective that you should always be aware of what’s happening in the world, and obviously this election is a big deal. But for a long term investor, which most of us are and should be, how the election turns out should not affect our strategy. We know that markets go up and down, and they ride all sorts of historical events. Certainly in the United States, we’ve withstood many different kinds of leaders of different political alignments, and the stock market in the country itself still continues to grow. I believe that this election is not any different.

Q: How well do you think brokers have adapted to the rise of the internet?
A: I think it has been a total evolution, and Schwab, throughout history, has been a very technology-dependant company; it has definitely been the backbone to our success. I think that’s been the case for many different financial institutions. Utilizing technology to better serve clients has always been in Schwab’s DNA. Technology and access to the internet has helped more Americans gain access to the markets and investing. That’s a good thing, because in my view, investing is key to building long- term wealth.
Probably when you talk about technology or the internet, you’re also thinking about robo-advisors, which is the latest advancement in utilizing technology to create portfolios for investors. I think there’s always this question of ‘will it replace financial advisors?’ We believe absolutely not. It will just augment and support humans’ work. People, especially when it comes to their money, will always need human interaction. I do think that brokers will evolve with the advancement of technology, for instance, despite robo-advisors, individuals will always need help with planning and keeping their clients focused on their goals, and monitoring their progress, and course correcting.

Q: What are the main financial literacy challenges that people face?
A: What I’ve found with my work, focusing on this for over thirty years, is that the lack of financial literacy in the United States cuts across Americans from all walks of life. It is blind to socioeconomic status, gender, and age. I think it is because the issue is driven by many different factors, including the fact that in the United States, very few schools teach young people the basics of money management.
With the rise of technology, we have more options and more innovation around financial products, which while being a good thing, also creates a sort of analysis paralysis, and keeps people from moving forward because they’re overwhelmed. Some of the most obvious challenges for people are being able to make ends meet, getting into debt, and not saving enough, which in combination are a disaster. Also, saving for retirement in the United States: not only are we required to save for our own retirement, we have to invest our savings and, as I mentioned, not many Americans really know how to invest. Saving and investing is how you get the growth that you have to have in order to build the cushion you’ll need for retirement. Quite frankly, for many Americans, it doesn’t necessarily have to be that way with these problems. Certainly, there are Americans for whom it is very tough, and they need assistance, but there are still those who can avoid it.

Q: What are some of your favourite programs from the Charles Schwab Foundation, and what do they entail?
A: I would say that there are a couple of programs I’m pretty proud of. The first is our national partnership with the Boys and Girls Club of America, which is the largest youth agency in the United States, serving four million kids in four thousand clubs. Twelve years ago, we co-built a financial education program for teenagers called Money Matters: Make It Count. It’s a pretty robust program: five modules, talking about needs versus wants, how to save, and budget, and manage debt. There are also some basics around entrepreneurship. We supplement it with games, and we have college scholarships for those teens who really embody the Money Matters concept and the values of the Boys and Girls Club. We’ve had over 800,000 teens go through the program. We’ve evaluated it three times over last twelve years, and every time it shows that not only are we increasing the knowledge of teens, but we’re also helping to change their behaviours around savings and budgeting.
The other set of programs that I’m proud of is our employee volunteerism at Schwab. We’ve got a very strong offering for our employees to get involved in the community. One of the two flagship volunteer programs is the Schwab Volunteer Week, during which about one third of our employees go out and volunteer for about half a day together in all sorts of different capacities, from teaching financial education to cleaning parks, painting, helping folks prepare their resumes, giving preparation for job interviews, and resume building. So there are all sorts of volunteerism there.
The other flagship program is the Schwab Pro Bono Challenge, and that’s where we bring about three hundred fifty employees together into small groups in order to help a non-profit with a specific challenge. So, a non-profit might have a marketing challenge, or a technology challenge, or a human resources challenge that they need to think through and strategize. And so we’ll bring folks with those different skill sets to help them think it through and create plans. We’ll have HR folks go help with the HR program, or technology folks help with the tech program. We save the non-profits a lot of money with this sort of free consulting. The majority of non-profits implement the actual strategies that we help them with, and they feel that it really helps them to become stronger.

Q: What do you think companies have to do in order to achieve gender boardroom equality?
A: I think that’s a really tough question. I think it has to start beyond the boardroom, with supporting women in executive leadership roles at the company level. Studies show that there is a real drop off in the mid-career period for women, which is when they’re forced to think about the choice between career and home. I’m not sure that corporate America really provides the support system and training and encouragement to move and advance to the next level. I think that the more women we can get at the top of the corporation, the more we’ll start seeing even more women at the corporate board level.

Q: Which books would you recommend to someone my age?
A: I like books about personal finance, and I would love for anybody your age to learn the basics of money management. I would highly recommend any young person to take a look at our Schwab website, which was created for all novice investors. It is helpful, not only for young people, but also for people who have expertise. I am a big believer in learning the basics of saving and budgeting and living within your means, and the basics of investing for your future.
In terms of a more personal perspective, I’ll share a couple books that I have read. They’re both historical nonfiction. I think that they’re inspiring and they both create a level of empathy for others. One of them is Team of Rivals, and it is written by Doris Kearns Goodwin. It’s a book about Abraham Lincoln. That book has really struck me in a lot of ways as a leader. The word they use to describe Lincoln in the book is magnanimous, and that’s somebody who puts his ego aside for the betterment of others. Abraham Lincoln, when he became President, brought all his rivals into his cabinet. Initially, they didn’t have a lot of respect for him, but over time, they grew such a close friendship and respect for one another that they created a very strong team to guide the country through the Civil War. It made me think about how we can all put our egos aside, and work with others who have skill sets we don’t have, to achieve something bigger.
The second book might be more relevant to the UK with the whole Brexit issue. It’s called Hillbilly Elegy by J. D. Vance. It’s about a young man, he’s only thirty-one, and he is a Yale educated lawyer, but he grew up as a hillbilly. His mother was a drug addict, so he was raised by his grandparents, who married at ages thirteen and seventeen. He grew up with Appalachian values and it gives you a real glimpse into the sociology of these people who are the backbone of America, in terms of blue collar factory workers, and how modernisation and technology has ripped up the American dream. It helps you reach a better understanding of what’s going on in the world at the moment with disenfranchised people.

Q: What life lessons have you learnt over the course of your distinguished career?
A: I think for me, I learned some important life lessons later in life and wished I had learned them earlier in my career. I think young people need to have a bigger vision for themselves, and aim high. When I say have a vision for yourself, literally visualize where you hope to be. I’m a big believer that when you start thinking big and start seeing yourself in this capacity, you start to take the steps to get there. There may be some twists and turns, and maybe some changes, but it creates some building blocks for you, and it also creates a level of excitement and drive to go for it.
The other is networking, and it sounds so simple. What I mean is building relationships or reaching out to people who can be potential mentors, or people you admire, or people who could be partners of some sort with you down the line. I think that the power of building relationships as a leader is how you get things done. I would say most of my work and achievements have not been through formal managerial structures, they have been based more on influencing people and bringing them along. The way you do that is to build close trusting working relationships, within your organization and outside.

Q: What did you learn in your teenage years which you think has influenced your success?
A: I come from a family that has run into some hard times. My father was a struggling businessman, and my parents divorced when I was young. I was just working hard and plugging away. I’ve been working since I was thirteen, starting with the paper route. I tried to do a little housecleaning, but that didn’t work out so well. I always had summer jobs, and I had a sense of accomplishment from paying my dues. I think paying your dues pays off in the long run. I didn’t see it at the time, but I believe that it is how you gain respect from others and your colleagues.

Q: Is there anything you wish you had done which you didn’t do when you were my age?
A: Well, getting as many experiences as possible when I was your age. Also, meeting more people: I wish I had reached out to more people that I admired or thought could be good advisors to me. I was very shy, and I didn’t see why anybody would want to spend time helping me. One regret, perhaps more as an adult than a sixteen year old, is not starting my own company. I’m not sure what it would be, but I wish I had started my own organization.

Q: Who is the most interesting person you’ve met, and why?
A: I’m thinking about that, and I’m not sure who I could say. Certainly, I’ve been fortunate in my role to meet lots of interesting people: I’ve met politicians, and philanthropists, and CEOs. I’ve met young women in Kenya living in the bush. I saw how they overcame unfortunate circumstances to get an education as girls in Kenya. Rather than picking just one person, I would say that I admire people who have drive and grit, and don’t let anyone get in the way of their North star. I would say that my twenty year old daughter is that way, she’s very driven, and she’s very focused. Now that I think about it, as I mentioned to you, there are those Kenyan girls that I met. I met one girl in particular, Rebecca, who lived in a tribe in Kenya with a lot of tribal warfare. She had a lot of relatives killed, and she was slashed as well with a machete. She found herself in a school that she’d otherwise never get to go to, and by working very hard, she is now going to college. Her hope is to go back to her community and become a doctor and have a medical centre in her hometown, thinking about all the people that were killed and hurt in the tribal warfare with no hospitals or medical care nearby.

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