Women Leading The Finance Industry: Anne Lester Of JPMorgan On The 5 Things You Should Do To Increase Your Financial Literacy

Read. Read the business section of a newspaper. If you read it every day, or most days, you’ll begin to understand how the economy works, and how finance is connected to the economy — and how it isn’t. Significant inflation is something that my adult children have never experienced first-hand, but I think the newspapers are doing a good job of covering both the causes of the current spike in inflation, but also how it is affecting purchasing power as well as how it isn’t yet affecting the financial markets, at least for now.

As a part of our series about “Women Leading The Finance Industry”, I had the pleasure of interviewing Anne Lester, former Head of Retirement at JPMorgan.

Anne Lester is a retirement expert, highly sought-after speaker, and media commentator with over two decades of experience in all aspects of retirement. She spent 28 years as a portfolio manager and Head of Retirement Solutions for JPMorgan Asset Management’s Solutions group, holding patents for her progressive design to simplify and automate the retirement planning process. She is a regular commentator on an array of retirement issues for industry, for the rank-and-file, and with public policy through traditional media outlets and social media, including CNBC, Bloomberg TV, The Wall Street Journal, and The New York Times.

Thank you so much for joining us in this interview series! Can you tell us the “backstory” about what brought you to the finance field?

When I was in middle school, I read a novel by Paul Erdman called The Silver Bears. My dad used to travel a lot and was always picking up paperback books going through airports, and I guess he liked thrillers because there were always a lot of them floating around the house. The Silver Bears was an international thriller about cornering the silver market, involving money laundering, foreign exchange rigging, and a lot about how the international financial system works. It made the field of banking sound unbelievably glamorous to me, partly because most of the action took place in Europe and the Middle East, which were literally on the other side of the world from where I grew up in Honolulu. At about that time, too, my dad, who was a university professor, got an executive MBA. I guess I was the only one in the family who was at all interested in learning about what he was studying, and I remember having a lot of conversations with him about economics and foreign exchange.

As I got older, my dad started doing work with the OECD and the World Bank. Whenever someone from one of those two institutions was in town, my dad would invite them over for dinner. I got a lot of positive feedback from the men (and they were all men!) who came over. In hindsight, it’s kind of amazing that they spent so much time talking to me about finance and how markets worked. So that first Erdman book I read (and I think I read all the other books he wrote, too, as they came out) hooked me, and then I got a lot of reinforcement and support which continued all the way through college. I was able to spend a few college breaks in Washington DC as well as get an internship in Paris because of those connections.

I haven’t thought about this in years and talking about it now makes me realize how important access to the professional world is as we are growing up. I also now realize how incredibly privileged I was to have had that kind of access in my own home, and to have strong male advocates who encouraged me by taking me seriously as a teenager. I no longer work at JPMorgan Chase, but I continue to be very proud of the work they are doing to mentor high school students so that more teens from diverse backgrounds can gain exposure the finance industry at a young age.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?

I first started working for JPMorgan in the Milan, Italy office in the early 90s. I didn’t know any Italian, and for my first rotation I spent a few months working in the Treasury, working with the bond and foreign exchange traders. Financial services were still pretty rough and tumble then, and I didn’t realize that a lot of the Italian I was picking up on the job wasn’t exactly suitable for publication in a family newspaper. The first time I went to meet my then-fiancé’s (and now husband’s) family, I said some totally horrific swear words without knowing exactly what they meant. The main lesson I learned from that, in addition to not learning foreign languages on forex trading desks, is to make sure you understand the meaning of what you are saying, not just what you think it means!

Are you working on any exciting new projects now? How do you think that will help people?

I am writing a book, aimed at GenZ and Millennials, about how to hack their brains to set themselves up for financial success. I really struggled through my 30s to save, and one of the key moments for me was understanding that a huge part of the reason I struggled wasn’t because of some moral failure on my part, but because of the way our brains are wired. I’m hoping that by walking my readers through some of the brain science, showing them how to hack their own brains to automate savings, and explaining some key concepts in plain English, I can significantly move the needle so that more Americans are saving enough for long term goals like retirement.

What do you think makes your company stand out? Can you share a story?

I left JPMorgan over a year ago to write my book. I believe one of the things that makes me stand out is that fact that I really struggled to save myself for the first 10 or 15 years I was working — it certainly didn’t come naturally to me. I believe that my struggles, plus 20 years focusing on helping the average American worker save for retirement, will bring something unique to the marketplace.

Ok. Thank you for all that. Let’s now jump to the main core of our interview. Wall Street and Finance used to be an “all white boys club”. This has changed a lot recently. In your opinion, what caused this change?

It certainly didn’t change in isolation — we are seeing more women and minorities succeed across the board. I think it’s for a couple of reasons. First, it’s been 40 years — a generation and more — since a really significant number of women started graduating from business schools and working on Wall Street. When I was applying for Wall Street jobs when I was finishing college in the mid-eighties (none of which I got, by the way, but that’s another story!), there were already women on the teams that were interviewing me. Not many, but some. So anyone who is a senior manager now has never known a world where there were no female peers, at least at some point along the way. It’s easy to forget, but I don’t think anyone now questions whether women should be in finance. When I graduated from college, firms were full of men in their 50s and 60s who had come up in a world where the only women they saw at work were secretaries, and they couldn’t imagine their wives or sisters working alongside them. I am sorry to say that it was obvious that some of them didn’t really believe that we should be there. So that is a huge shift in attitudes in just a generation or two.

Second, it’s now also a given that diversity improves the bottom line. In my part of the industry, asset management, there are a lot of studies showing that female portfolio managers tend to manage better performing funds than men. People understand that diverse teams create better outcomes. It doesn’t mean that they understand how to build diverse teams, or manage them well, but at least that first item is no longer up for discussion.

And last, I think many companies have focused on creating policies that create space to define success in multiple dimensions, and to allow for work to happen in multiple ways. So there is less focus on ‘face time’ and more focus on measurable results, which is something that I think allows many more people to flourish than would have been the case 40 or 50 years ago.

Of course, despite the progress, we still have a lot more work to do to achieve parity. According to this report in CNBC, less than 17 percent of senior positions in investment banks are held by women. In your opinion or experience, what 3 things can be done by a)individuals b)companies and/or c) society to support this movement going forward?

Many firms have begun offering paid parental leave so both mother and fathers can take off time to be with their newborn children. That is helping both sexes with policies that create space for caretaking is critical. I also think that it needs to be broader than just for newborns. Children need parents throughout their childhood, and while Flextime and work-from-home policies have become more widespread (and ubiquitous because of COVID), I still think that the default assumption is that they are really there so moms can be there for their kids. It’s just as important that dads are there for their kids, too, and firms need to do a better job encouraging new fathers to take time off, and for all fathers to show up for their kids along the way. And this perhaps should be broadened to encompass elder care too, which sadly is what I am juggling right now. So first, and most important, I think companies need to think about their paid leave policies and make sure that they apply to both men and women — and that they aren’t just used by women. Because if they are just used by women, it can reinforce the notion that women aren’t ‘serious’ people who also want to succeed at work.

Second, I think all individuals in senior leadership, both men and women, need to actively support and mentor diverse talent. Affinity groups are fantastic, but also make sure that you step beyond them. Women and minorities need allies as well as role models, so there is room for everyone to get involved here. And I have found this to be a two-way street. When I was just starting out, I was told by one of my male mentors that I had taught him a lot about how he really could make sure that he got to more of his children’s events. My number one priority when my children were young was making sure I was home for dinner most nights, and as they got older, I treated my kids school events like they were client meetings. That helped him understand how to manage his calendar so he wasn’t always missing important events in his kids’ lives. He, in turn, coached me through asking for a raise. We both benefitted.

Third, at some level, I think it comes down to commitment by management. I think my former firm did a terrific job of promoting women and recruiting external talent. But that doesn’t happen without a sustained commitment to not only creating diverse slates of candidates for every open role, but also pushing to make sure that there are multiple diverse candidates for each role.

Let’s now turn to a slightly new topic. According to this report in Fortune, nearly two-thirds of Americans can’t pass a basic test of financial literacy. In your opinion or experience what is the cause of these unfortunate numbers? If you had the power to make a change, what 3 things would you recommend to improve these numbers?

That topic is very near and dear to my heart! I think one huge challenge is at its heart an emotional one. Many families find money a difficult topic to discuss because of their own struggles with their family finances, so it’s easy for children to grow up feeling like talking about money is somehow shameful. Making money somehow a less taboo subject is critical. More emphasis on financial literacy in the school curriculum has often been discussed as one way to accomplish this, and that can be a great first step.

Second, and staying on the topic of education, I think that some of the gaps in financial literacy can be linked back to math. I am constantly and unpleasantly surprised at how few people understand how statistics work. Too many people don’t understand the power of compound returns and how time is actually one of the most important friends young investors have, and one of the largest enemies older investors have. And of course, the other side of the coin of compound returns is interest that people pay on debt. It’s too easy to make minimum payments on credit card debt and student loans and I think most people really struggle to understand the long-term consequences of revolving credit because of this poor grasp of the mathematics of interest.

Finally, I think that the industry does a poor job of communicating. Financial documents have endless pages of required disclosures about risks and conflicts of interest which are difficult to understand and generally mind-numbingly boring. And performance reports for investments contain numbers that are generally difficult for the non-expert to understand or place into context. I think that financial service firms need to work with their legal and compliance teams, and with their regulators, to simplify what is communicated so that people aren’t overwhelmed by the sheer number of words on pages, as well as the use of industry jargon. Something as simple as replacing ‘equity’ with ‘stocks’ would immediately make many reports easier for the average person to read.

You are a “finance insider”. If you had to advise your adult child about 5 non intuitive things one should do to become more financially literate, what would you say? Can you please give a story or example for each.

I am not sure how non intuitive any of these are, but here goes!

1. Read. Read the business section of a newspaper. If you read it every day, or most days, you’ll begin to understand how the economy works, and how finance is connected to the economy — and how it isn’t. Significant inflation is something that my adult children have never experienced first-hand, but I think the newspapers are doing a good job of covering both the causes of the current spike in inflation, but also how it is affecting purchasing power as well as how it isn’t yet affecting the financial markets, at least for now.
2. Always try to understand the relative cost of something. For instance, my husband and I bought a complete fixer-upper Victorian house and we needed to replace or restore each of the 53 windows in the house — all of which were a non-standard size. For years, every time I thought about spending any money on a non-essential, I would think about how many windows that was worth.
3. Always try to understand the opportunity cost of something. That is, what are you ‘paying’ because of a specific choice you made? For instance, each window we restored used money we could have put into our retirement savings but didn’t. And that money would have grown a great deal over time. So not only were our savings balances lower by the amount we spent on the windows, but the opportunity cost included what we would have earned on that money as well. On the other hand, we are spending a lot less on our heating bill now that the windows aren’t leaking, and the house is much more comfortable to live in. We knew, when we bought the house, that we would eventually spend as much fixing it up as we did buying it, which was a crude attempt of approximating our opportunity cost when we bought it.
4. To understand how powerful compound returns over time are, look at logarithmic graphs. Or pie charts showing returns from your savings vs returns from the markets over 10, 20, and 30 years. Think about the rule of thumb that money invested at 7% will double every 10 years.
5. Never be afraid to ask questions if you don’t understand something about a financial product or transaction. There are no stupid questions. It is your money — never let someone intimidate you. If they do, immediately stop whatever transaction you are doing and find someone else to work with, whether it is buying a car, getting a mortgage, or investing money.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

Honestly that is hard to answer. I got so much help and encouragement along the way, from so many people. But some of the best help I got wasn’t about how to get my next job, but was rather about how to navigate commuting, having two small children, and a demanding job. The head of HR for JPMorgan Asset Management at the time, Lynn Avitabile, told me to make sure I knew what my priorities were, so that whenever an opportunity or a conflict came up, I was able to make a decision that was based on my values. For me, at the time, my priorities were as follows:

1. Work-life balance. I left the house before anyone else was awake, so getting home by 6 or 6:30, in time for dinner and bedtime, was incredibly important to me.
2. Enjoying what I did. If I didn’t love what I did, why was I leaving my family at the crack of dawn? We were fortunate to have two incomes so it would have been possible to stay home; not everyone has that choice.
3. Learning. I am a life-long learner and building new skills has always been important to me. It helps you stay relevant for the next job, too, in case anything happens with the one you are currently in.
4. Compensation. While I would say I have never been one to chase after something because of the paycheck attached to it, I have always wanted to make sure I was fairly paid for the work I did.

22 years after that conversation, my priorities have shifted a bit. I have added a fifth priority, which is now in first place, and that is making sure I am contributing to society and doing what I can to leave the world a better place than it was.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

Best coaching advice I got was from a senior portfolio manager at JPMorgan, Tom Luddy, who spent a lot of time with me in the late 90s when I was trying to figure out if I wanted to go back to being an investor (I’d spent some time in support roles right after I moved to the US from Italy and had been out on maternity leave.). He asked me what I wanted to do, and I said I wasn’t really sure, but I wanted to do something that would keep doors open for me. He looked at me, smiled, then said, “Anne, do what you love. If you do what you love, you’ll do it well, and then all doors will be open for you.”

I repeat that advice often to younger people looking for advice. Certainly no job can be only things you love, but you really need to find something that you get satisfaction from and care about if you want to succeed at a company, because then you will excel. And when you excel, people want to help you, and want to hire you for their next role.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)

I would love to see the US adopt some form of lifetime savings account for everyone when they are born, and to require all employers to help employees save automatically from their paychecks. People aren’t born knowing how to save and invest, and the more we can do to make it easier, the better off we will all be.

Thank you for the time you spent on this interview. We wish you only continued success.