The Pension Blueprint podcast video transcript
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Celine Chiovitti (VO): Hello and welcome back to "The Pension Blueprint." I'm Celine Chiovitti, the Chief Pension Officer at OMERS and your host on this podcast. Living in the age of social media means a lot of viral financial advice. It can be hard to cut through all the noise to ensure you're building the right plan for yourself.
Thankfully, I have two amazing guests today to help us with that. Michael Block, Senior Managing Director and head of Private Capital on the Private Equity team at OMERS, and Tito Adebajo, an Alternative Investments Analyst at OMERS. Together, they're going to help explain what's credible, what's risky, and how to build long-term wealth in a digital world. So, let's get into it.
Hello, Tito and Michael, and welcome to "The Pension Blueprint."
Michael Block: Thank you. Great to be here.
Tito Adebajo: Thank you for having us.
Celine: I have been so looking forward to this conversation and this episode really is dedicated to our younger members and younger listeners, and it's really to tackle what I'm feeling is a real life issue out there, which is financial anxiety and noise around money. And so, I've been wanting to find a way to give access to our members to some of the really great investment minds at OMERS. And so hence the two of you here today.
So with all of that said, I'm just going to dive right in. And Michael, I'm going to start with you and really just sort of set the context and start to think about how people are even getting information today. And so there's so much noise out there around everybody but there's also a lot of access to information. And so, you know, back in my day, if we wanted information about finances, you know, we'd go to our financial institution, we'd go and sort of see a financial advisor, we'd go into the workplace and talk to people. But that doesn't happen a lot today. People are kind of behind their computer and getting information in different ways.
I guess my overall question to you is to just weigh in on, is that a good thing; is that a bad thing?
Michael: Well, I think there's, as you said, there's a lot of information out there that is not necessarily true or good for people and can lead you astray. And I think, you know, per what you just said in terms of relying on some more trusted sources, whether that's big financial institutions or, you know, people in the academic world, those tend to, where there tends to be some research and backing behind the advice. And I think sticking to those traditional channels is probably a more reliable way to get good information. And I think with AI it's probably going to get worse because there are lots of fake videos and, you know, fake messages that are coming out that are artificially generated.
Celine: Yeah, so we don't even know where to, where to turn anything to rely on. Tito, I want to ask you a similar question, but before I do that, I have to say I've been so impressed and just watching you grow at OMERS and the work that you do. Do you ever go on social media to see what people are talking about when it comes to money?
Tito: A hundred percent. Yeah. I mean, I think for me it's just, I want to know what's out there. I want to know what deals there are to be found, what new products I can invest in, and just like what are the best ways to optimize how I use and invest my money. So social media is a really great source but as Mike said, there's a lot of misinformation out there too. And I think for me, when I think about knowing what to believe and knowing what not to believe, I just always think about what's in it for the person who's giving me this information. How do they stand to benefit?
Celine: Yeah.
Tito: And ultimately, what's in it for me and how can I benefit? And I think when you have those two considerations in mind, no matter what financial advice you're getting, whether it's from social media, whether it's from a financial institution, you'll always be able to kind of make the right decisions there.
Celine: I love that. I think what I'm hearing from both of you is like, do your due diligence. I think on the one hand it's great that people have access to information that they may not have had in the past, but there is a bit of skepticism and just making sure that we're asking the right questions and diving into it in the right way.
Tito: Exactly. And getting to the trusted source. Yeah.
Celine: So, Michael, if I kind of go back to the reality and the context of sort of how we're living out, I'm going to call out sort of the elephant in the room, I think, is that it is really difficult right now for young people. And so we know cost of living is higher than ever before, housing affordability, student debt. I read a stat some, I actually heard this on "The More Money" podcast, and they said a stat that came out of the United States that basically said 50% of adult children, so young adults are still relying on their parents to help subsidize their life. Now I have two children in their mid twenties and into thirties who are now both out of the house for now. But I get that like it's different than, you know, when I was sort of growing up.
And so if I think of, you know, what I was taught, I have immigrant parents who came here and really taught me sort of three things when it came to money. First, go to school, get an education to get a job. Then work and save as much as you can, and then try and buy a house. Like that was, those were the principles that were instilled in me and so I guess my question to you, are those still the right building blocks? Were they ever the right building blocks?
Michael: Yeah, I mean I think at least some of them for sure are. I mean, getting education I think is still super important. I think one of the questions going forward for people will be what are the future jobs and where are sort of the most reliable ways, places to start a career? Because kind of like I mentioned earlier with AI, there are jobs that are going to disappear and be, you know, done by, effectively by a machine or a computer program. But I think there'll still be really great jobs in the service sector and performing arts and in business and many, many opportunities for people. So, but just having a little bit of a thought around that is, is helpful. Education still is still going to be really important.
I think to your point, saving is, is also really important, kind of living a little bit below your means. And one of the things that makes the biggest impact to having, I guess, you know, we're in the retirement business, essentially in the pension world, saving early and having a longer period of time to invest makes a huge difference. And there are some calculators and things like that that you can find on, the retirement calculators and things like that on the internet. So just, I was playing with a retirement calculator and if you just search retirement calculator on Google, you can find many of these with different financial institutions and so, and there's a huge difference if you start when you're 20 versus you start when you're 30 or later.
So if you save, for example, $200 per month and you start at age 30 and you earned 6% on your investments for that. When you retire or you, let's say you get to age 65, you'd have $350,000. That's just what the calculator spits out. If you had started when you're 20 instead, you'd have two times as much money, you'd have $700,000. And that's just because of two things. One is you've saved more over those additional 10 years. But then also the impact of compound interest or compounding investment returns makes a huge difference over the life of your saving period—
Celine: Significant.
Michael: And they don't have to be big, 6% is not a huge return, but it compounds over a period of time and that really can help you later in life. So if you do more early, that's definitely better.
Celine: Yeah, so the power of compounded interest continues to sort of exist.
Michael: The longer you can save, no matter what amount, the better. And you're right, like the benefit that our members have is they do have access to this pension plan. One of the best things you could get would be a DB pension plan. Would be a DB pension plan. But those are hard to get. Yeah. That'd be great if you can have one. A hundred percent. A hundred percent.
Celine: So Tito, you said you've gone on social media, you're hearing sort of some of the talk that's out there. What worries you about what you're seeing out there? And the opposite of that is, what can we actually learn from this generation?
Tito: Yeah. It's a really good question. I think there's a lot out there that is scary. I think for me, a lot of the more concerning stuff is the crypto things out there. When crypto was a big thing, when NFTs were a big thing, that was really concerning. And I think for me, the reason why people kind of got involved in the hype is because you see the stories, "Hey, put like a few dollars here and now my investment's grown to this much." But I feel like when you take a step back and you look at those things, you have to understand, if I'm putting my money into this, what is the real economic value it provides? What is the service it provides? What is truly backing this investment? And you think about NFTs, what is it? I can't tell you and I don't think a lot of people who invest in them can tell you that either.
But on the other side, I think there's a lot of really good stuff out there that we can get from social media. You see companies pitching new platforms, there are new products to invest in. Lots of things that I think were usually only for institutional investors, we're kind of now seeing that flow down to retail investors and that can provide new opportunities for people my age as well to kind of get in early and kind of access new products and new asset classes. And so that's the really exciting stuff as well.
Celine: I love all of the advice I've heard or the information that I've heard here today. What do you think, is there anything that we can learn from this generation, Michael, from Gen Z?
Michael: There's tons we can learn from. I mean, I think, you know, one of the things, and it kind of goes back to comment around what source of information you're trusting and I think there's probably a lot of really good lessons for big traditional financial institutions about how to engage, interact with different, and particularly younger generations. And it's probably not through the bank branch in the corner of the street. And so I think there's a lot there in terms of communication interaction and that the younger generation is always where innovation and new ideas come from. And so, you know, I'm not a proponent in the least of crypto, but there are lots of innovations in the financial sector as well that come from new ways of interacting and new ways of thinking. So I think we can always learn from that.
Celine: I think that's right. I think that's absolutely right and I think it's, you know, again when we think of how do we take some of the traditional models that are tried and tested and true and take some of that discipline there, but innovate around it and bring the different perspectives in everything that we do, but specifically in, you know, how do we create a future financial environment that, you know, has equality for multi-generations. I think that's the question.
Tito, back over to you for a moment. I guess from your perspective, and I do, I'm looking at you as just this balanced person that's sort of, you know, right connection from social media perspective as well as sort of the more traditional models. How do we bring it all together? If you're giving advice to your friends or if you're just trying to kind of educate people on some of the things that you've done and some of the things that you would sort of say to your, like to an early 20-year-old who's just trying to start out, keep it simple, what are a few pieces of advice you would give them?
Tito: That's a really good question. I think for myself, number one, save. Even if it's 5%, 10%, something, save it and have it. Number two, know your goals. What do you want to save for? Is it for retirement? Is it to buy your first home? Is it for your education? Have your goals and have your timeline. Number three, how do you want to do this? Are you going to put this money in your TFSA, in RSP? What platform do you want to use? Have that in mind and be picky about it. There's so many institutions out there that want you to be on their platform to do your investing. So take advantage of the deals that are there. Do your research and get the best deal for yourself. And I think number four is just really be consistent with it. And I think when you think about all those things in tandem, you'll come out okay. Your horizon's 30 years, put the money in, let it reinvest, don't look at it. And when you're 65, enjoy.
Celine: All right. That's amazing advice. Thank you. I think creating a plan and doing something is sort of what I'm hearing from both of you. Doing something, do it early, you know, put in the hard work, save the money and it will take care of you over the long run. And I think that's really, really good information.
How about you, Michael? You've got two young girls at home, very young.
Michael: 12 and 10. 12 and 10 now.
Celine: Some advice that you would give to them?
Michael: Well, they don't always listen to their father.
Celine: At 12 and 10, they probably still do.
Michael: Well, you know, I think one of the things is if you, if somebody offers you a way to make money quickly, you should say no. You should say no. You should say no. Yeah. There are very, very, very few ways of reliably making money quickly. And I think there are a lot of ways of losing money quickly and so if you just generally avoid those attempts at trying to make it quickly, I think you'll avoid a lot of the scams and false promises that are out there.
Tito, anything that you'd like to add that you've seen that have been sort of red flags from social media?
Tito: Honestly, I think for me it's once again, understanding what you're investing in. Do I know what this is? What does it do? Does it have a clear value proposition? If it doesn't, then it's probably not something that you want to be putting your money in, especially long term. When I think about maybe meme stocks, going back to then I was in those Reddit threads kind of looking through everything and seeing all the ideas proposed.
And it's one of those things where in the short term, everyone's very hyped about it. They're buying, they're selling because they think they can convince someone else to buy it for higher. But is there any actual value to these companies in the long term that you want to participate in? Because remember, when you invest, you are expressing a view. So if I am putting my money into, I don't know, something that Wall Street bets advises me to do, while at the end of the day that's me saying, "I think that this company is going to generate this amount of profit and I want to participate in that." If you can't really form that thesis and it's not really there for these companies, when you look at it fundamentally, then you don't want to put your money in it. And that's really the way I would approach it.
Celine: That's great, thank you.
Michael: Yeah, I think anything that relies on the next person to buy it from you and that's sort of the idea, has a lot of risk attached to it. And so things that have underlying value, businesses that create, generate cash, that's the reliable way to. It's, like so do your due diligence. If it sounds too good to be true, it probably is. I think what social media is great at doing is creating this hype and then everyone feels like if I don't do it, I'm missing out on the, you know, the next big thing. And so I'd like be wary of everything and make sure you understand the fundamentals and the thesis around it.
Tito: Exactly and honestly the point that Mike brought up about compound interest was so powerful. Like, okay, maybe I missed out on making 200 or something from crypto, but hey, if I put 200 in my bank account every single month and I compound that, I'll have a lot of money saved up in the future. And I think that's a lot more valuable than whatever crypto or whatever new fad can offer you in the short amount of time.
Celine: So what I'm hearing from both of you, the fundamentals have not shifted significantly. How we get the information accessibility of it, you know, the world that we're living in may have shifted but the fundamentals have stayed sort of tested and true. And the other piece that I'm hearing that I want to call out a bit more specifically is to kind of pay attention to your money. Think about it, have a plan. It's what we talk about at OMERS with their pension as well is you don't need to do it every day. You shouldn't be stressing about it every day. Live your life, know your numbers, but pay attention to it. Understand where your money is going, where are you spending it on and how much are you actually keeping at the end of the month. And then take advantage of educational content out there. However you might get it at, you know, as part of a trusted source.
Michael: I think avoiding, not necessarily avoiding but being very careful with debt is also really important. Debt is one of those things that can be really helpful in a mortgage and other things, but if you take on, especially things like credit card debt, it can be really difficult to get out from under that. And so, again goes back to spending within your means and avoiding debt would be something I would add to that.
Celine: I know Blake Hutcheson, our CEO, often talks about cash flow. Making sure that the cash flow is there, you can have the best assets and you should have the best assets, but ensuring that you understand the cash flow that goes with sort of some of the basic economics is really important. So that's a good call out, something that we all need to be aware of.
Well thank you both for being here today. I always finish with just a series of quick fun questions and so I call them the fast five and I'm going to rotate between the two of you and I'm going to start with you Tito. First thing you do in the morning.
Tito: Coffee.
Celine: Coffee. Good answer. Strong coffee, yes. Strong coffee. I need it. (Tito chuckles) Amazing. Michael, it's Sunday morning, you have no commitments. What do you do for the day? Who are you with? No commitments for the day, well I would probably get up early.
Michael: I would try to play a bit of golf 'cause I do like golf and then if I play early I can play quick and then I can get back and spend the day with the family. And yeah, would be just time with the family outside and-
Celine: Lovely. Yeah. Nice.
Tito, what is your favorite spot to eat in Toronto and what would you order there?
Tito: My favorite spot to eat in Toronto, that is a difficult one. So my favorite spot I would say, if you're willing to look a little bit past- Go for it. Toronto, there's this Thai place in Markham called Shangri. Oh. Amazing! Pineapple rice, out of this world. 10 out of 10 would recommend. (chuckles)
Celine: Yeah, sounds great.
Strong coffee and Thai food- Spicy Thai food. (everybody laughs) It sounds great. I'm with you. We need to go out on a date. Good combo. Sounds amazing.
Okay, I'm going to ask the same question to both of you in the end. You have 48 hours to go anywhere you want in the world. Travel time excluded. Where do you go? What do you do? And who do you bring with you? You want to start us off, Michael?
Michael: That's a great question. So I'd go back, I'd take the family, and we're a big skiing family, so we love skiing. So, I think if we had 48 hours, you said travel time not accounted in this. Yeah, so I think we'd go out, honestly out to the Rockies and go skiing. It's one of our favorite places to go. To one of our hotels, I hope. It'd be lovely to go to one of our hotels. Yeah. Nice. Thank you.
Tito, how about you?
Tito: I think for myself, honestly, I'm thinking Greece. I just want beaches, I want good food, all of that. And I'd go with my family.
Celine: Lovely.
Tito: Just because they work so hard and I'd want to enjoy something that great with them.
Celine: That's so great. Thank you both. Thank you. Thank you so much.
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