Meena Flynn, Co-head, Global Private Wealth Management, Goldman Sachs 
Jaclyn Rice Nelson, Co-founder and General Partner, Coalition Operators
Moderator: Terri Burns, Investor; Co-chair, Fortune Brainstorm Tech

MPW Next Gen 2022 - Wealth Generation

Conferences

Meena Flynn, Goldman Sachs 
Jaclyn Rice Nelson, Coalition Operators
Terri Burns, Fortune Brainstorm Tech

Meena Flynn, Co-head, Global Private Wealth Management, Goldman Sachs 
Jaclyn Rice Nelson, Co-founder and General Partner, Coalition Operators
Terri Burns, Investor; Co-chair, Fortune Brainstorm Tech

throughout today. We've heard from innovative entrepreneurs and inspiring leaders as they discussed, how they built and managed a diverse set of businesses. The capital accumulation is impressive, but how do we ensure that we pass it on to future generations. These questions could not be more timely given the widespread economic turmoil, rising inflation and interest rates and the looming prospect of a recession. How will we pass on the wealth up next? We'll discuss a number of investing strategies to generate long term wealth and how to invest for social impact. Please welcome Mina Flynn, co head of global private wealth management at Goldman Sachs and Jaclyn Reiss nelson, co founder and general partner of coalition operator. Welcome welcome. Hi Meena. Hi Jacqueline. How you guys doing so Good. 100%. So let's cut straight to the chase. I'm sure everyone here has been looking at their investment accounts over the last few weeks and months and crying at least I certainly have. What opportunity are we facing right now given the current market climate and therefore how should we all behave in terms of wealth creation? You can start with you. Sure. Sure. Um yes, all of us have been crying because I think the only things that have worked in this market over the last year are carbs and carbon. So um energy and agriculture and despite um usually where equity markets and fixed income act adversely. Um, it's been a year where both equities and fixed income have declined and have declined materially. And the reason um, is really the known unknowns is what uh, you know, we're focused on. And that would be recession, that would be the central bank increasing interest rates to a point that does put us in recession to offset inflation and then also geopolitical concerns. So given that backdrop, um our perspective is that in the US we're actually not going to see a recession, that's not where consensus is consensus is that we are definitely going to see one, but even if we do see one, our view is that growth is going to be relatively anemic. Um but it won't be that substantial from a downtrend perspective, because if you think about the components of inflation, it's really been wage inflation, it's been rental inflation and it's been supply chain, supply chains are normalizing there's a huge supply of apartments that are coming um that are coming on the market and you've actually got a job market that is uh cooling. And so we do think inflation is going to come down um from relatively high levels right now. So with that backdrop, um I would recommend staying invested if you are invested in us equities and doing that in a diversified manner. And the reason why is because most of clients, despite the move that we've had this year, most of our clients are still sitting on gains is I would assume many of you are, if you have been investing for quite some time and there's really a significant after tax consequence of selling, it's also impossible to time markets. And so let me just give you a stat on that. If you were invested in the equity market, the SNP for the last five years, the market would have returned roughly 12% per year, 12% per year. If you were out of the market on the 50 best days, you would have earned negative 15%. And so whether we do a recession, we don't do a recession. If you are in a diversified us focused portfolio, we recommend staying invested for incremental capital. I think fixed income is finally attractive. You finally have an alternative from a risk perspective and so high grade fixed income, if you have the opportunity to do alternative investments and invest in companies such as Jackie's, I would, I would make those investments and then also um from an equity perspective, um take, you know, called take a 6-18 month approach and add exposure to the markets relatively systematically over that time period. The more risk risk conscious, you are make that over a long time longer time period, the less risk averse, you are doing that over a shorter time period. Oh, um, sorry, um, I love you already, because first of all, you already told me there's not a recession and now you're getting the investors, so this is the best channel ever. I think first of all, that's amazing news. Um and I think the way I kind of thought about things is similar in the sense that there is a portfolio that you're optimizing and I think what you're guiding on is how to optimize with your cash, which is amazing. Hopefully many of us have a lot of that. Um and then in addition the other two assets that you definitely have are your time and your expertise and that's really where I sort of think about building a portfolio for your career and in this moment that becomes even more important because even if we're not heading for a recession, which I sincerely hope we are now not the things that used to be risky like startups are now even riskier and the things that used to feel safe, like working at google or amazon or meta no longer do with them like laying off tens of thousands of people per week. Um and so how do you really think about balancing the portfolio of time and energy that you have and where can you really poor that? Um And this is how I manage my career as well. I am the Ceo co founder and Ceo of a company called Tribe ai we are a network of top machine learning engineers and data scientists, you can kind of think of it as a kind of talent agency or matchmaker for top Ai talent to companies who really need this type of talent. Um and then in addition I started a fund called coalition um and we invest in early stage tech companies, some of them are in the room, we have Christina from a quest and Rebecca from little otter. Um, we have someone from santa as well. Um, so really, really cool companies. Um, but then in addition we've built this model to get women onto cap tables, top venture backed companies at scale. And the reason I believe this really matters is because, um, while this is not a tech centric thing, um, there is, and I really believe that will continue to be dramatic wealth creation opportunities happening in tech over the next generations. And I have a very, I get to be the scandalous person on the panel and have a very shameless Agenda to make a lot of women very wealthy. Um, and that, and that is not always happening today. Um, so if you look at recent acquisitions and exits companies like sigma, um, that sold for $20 billion. I see nodding heads already to adobe. There wasn't one woman on the cap table. Yeah, gas. So that doesn't mean that there were no women who benefited from that. But my gosh, there's so many people who became exorbitantly wealthy. Um, and a very small percentage of those are going to be women. Um, and so this is the thing that a coalition, we really want to change. We are only going to be one piece of the problem, but starting to think about how you can spend your time kind of in fractional ways and lend your expertise in exchange for equity is really, I think where I've been focused, I want to double down on this point because as as you mentioned, women are poised to control more assets than ever before in the coming years. What about this moment is unique in particular to the female investor base? How should the female investor base really be thinking about having access to these types of opportunities? Um, thinking about their own portfolios and our own portfolios and risk assessments of wealth wealth generation. So, um, just in terms of females controlling more wealth, um, we anticipate the amount of wealth that females are going to manage to double um, into 2030. Um, and so roughly right now women control a third of us household wealth. We think that's gonna again more than double. Why is that? Um one is you have aging baby boomers. The first, um you know, women tend to marry five years older and they tend to outlive men by two years. And so the first wealth transition goes from the patriarch to the matriarch. Second, you have more women that are making decisions for their household financial decisions. And third, just Jackie mentioned, you have more women making money. So those are the reasons why women are going to be controlling many, you know, more assets going forward. Um the first thing I would say is just don't be passive about it if your name is on that statement that financial statement get involved, ask the questions and that's what I found that I really enjoyed when working with our female clients is that they are not ashamed to ask anything. Um And and it's also you know, I would say that they're not necessarily more risk averse. Like I think sometimes women get tagged with being more risk averse, they're just really more risk aware. And in terms of how they you know, if if I was qualitatively going to say what is a different investing trend of women versus men, I would say that women really want to invest to propel their communities further. And so if you think about E. S. G. It's really the s is where I found most of our female clients focused, how can I help, you know, from a housing affordability from an education perspective, how can I help propel markets, communities etcetera ford and make money at the same time. And in many ways they are giving their money from a philanthropic perspective in the same way they're investing and you no longer need sub optimal returns when you're investing in this fashion. It's really interesting. Um I even just start with trends across people. Um The reality is that people tend to invest in their networks. Um it's just easier who do you know um who's next to you, who's sort of telling you about whatever it is, whether it's crypto hopefully not F. T. X. Um but you know, you're you're sort of learning from the people around you. Um and for better and largely for worse people tend to to spend time in homogeneous groups. Um and so that means that they end up investing in people who look a lot like them. Now. That has been a problem historically, when the people who have largely been check writers or founders that have gotten funding have been men or angel investors. So people who make money from companies like Sigma, then go on to pour that money back into the ecosystem into people who look like them. Now, the thing I get really excited about is that the people who are amassing wealth are changing. And so now we get to pour that money back into people who look like us who look like people in this room um and support the next generation of female entrepreneurs, of GPS adventure funds of executives of large fortune 500 companies, we saw many of them today and over the past few days. Um And I think that that is why this is a really exciting moment. And tipping point and that to me is why wealth matters, it's because then we can pour it into communities and fuel a future that we all believe and I want to see. Um and when I just look at coalition as a microcosm of that, there are four of us, we are all founders and operators ourselves, we are all women. Um, and we have no explicit uh, sort of charter or mandate to invest in women. Um, but our goal is truly just to generate as much financial return as we can. So we are just a pure investment venture fund. Um, and yet when we pulled the numbers, we saw that 68 percent of the founding teams we invested in had a woman or a person of color on the founding team. And so it's just to highlight that, um, there are incredible opportunities out there to generate huge returns and also, you know, invest in the s which is communities of people who can go on to do incredible things. Any questions from the audience right there? Yeah. Hey there, Whitney Magnuson. I have seen some research saying that millennials and now gen z following are largely trying to retire at earlier ages than ever. Early retirement being a key motivator. Now, some of that might be kind of wishful Thinking at some point. But what, what advice would you have that may differ from kind of traditional portfolio management or things for uh, individuals who are trying to pursue something other than a 40-year working lifetime. So I'm happy to start. So at first day save and invest as much as possible and as I said, stay invested as well. And let me just expand on that a little bit. What we see as being the worst, worst, um, wealth destructor. It's a permanent loss in somebody's portfolio. How do you get a permanent loss? You get a permanent loss because you're too conservative and you can't keep up with inflation. So your whole portfolio is in bonds that is not going to help you retire on the other end of the spectrum. You are invested in a very concentrated position. That as you know some work very well, some have idiosyncratic experiences or you are in a portfolio where when you do look at it, you can't sleep and you sell at the wrong time, right? Or you take on leverage whatever it might be. So how can I save as much as I can right now to invest and have those compounding returns in a way that is diversified and has a growth aspect to, it is not too conservative that allows me to sleep well and grow that over time. So I think Nina is going to be the true expert here. I might just take this in a slightly different twist, which is that prior to the panel we were chatting um what if we, you know had life changing outcomes, what would we do in our lives? We got deep before the panel um and uh and I think we both kind of came to, we actually love what we're doing, we would probably be doing the same thing. We just might be doing a little less of it or like a lot less of it um and having a little bit more time freedom, flexibility um and so I I sort of share that as an alternative because there are now are so many more ways to work on a fractional basis work sort of not just in traditional part time, which means you work full time and get paid for part time, but actually like really work you know for designated amounts of time and get paid really really well for your expertise rather than in your time for the value you create and produce. Um And this is very much what I focus on that tribe for data scientists and engineers. Um but there are there are many other ways to do this um and you know that might not be the sort of like laying on the beach retirement that everyone has in mind. Um but I think finding ways to have a little bit of the best of both worlds is probably a little bit more where where I orient I want to go back to um this concept of risk and how to really think about um risk averse versus risk aware what might prevent folks from ultimately facing their wealth generation or preservation goal. Um and how should folks consider risk? What's what's what's your advice in terms of how people should really think about that? So I I think about it again as as a permanent loss and you don't want to experience a permanent loss and so you need to have a portfolio that is diversified enough that will outpace inflation and by the way inflation for this room is not the C. P. I. Inflation for this room is actually higher because if you look at medical costs, if you look at college, you know education, you look at the shoes, it's 1.5 times inflation actually, Especially it's literally I'm not even joking, there's an index that's called the clue we index. It's the cost of living extremely well index and it's 1.5 times. So if inflation is 10%, it's 15% on an after tax basis, you have to make 15% to break event. Right? So the biggest thing like I said is avoiding a permanent loss. Um and so it's keeping up with inflation but also you know, not extending yourself to the point where you're not um where you're not comfortable. So I think of it again, going back to sort of career philosophy is um when you're earlier in your career, the best thing you can do is be head down all in on your job really. The only currency you have is your ability to outwork everyone else when you get more senior. Um It's actually quite the opposite. It's why we're all here. Um You get tremendous benefit from looking up um from getting, you know more perspectives experience or across across a range of industries companies um just different exposure to groups of people, um, and ideas. And I think one of the biggest risks for, for women is staying heads down as you get to the more senior levels or trying to really break into these more senior levels. Um, Deb Deb lieu of ancestry spoke about how Cheryl Sandberg opened the door to board positions for her. Um, and how, uh, you know, that overnight, you know, changed roles she was eligible for. Um Now that's fantastic, but that, that's probably not a solution at scale. Um Well, while she's doing incredible work, um, and and I think that this is something that, that we felt personally mentioned, there are four of us, we each have had careers and startups raised over a billion dollars collectively, uh for those companies, we've had jobs inventor and yet that we all came to investing personally very late. Um, and when we did, we realized that none of our female peers were participating. Um and all of our male peers were. Um and this is really, I think the missed opportunity for for everyone in this room, um these are the people who then go on to have more influence on our system, um, and also more wealth generation opportunities. Um, and I think that when we really think about what, what, what's one tangible thing you can do, um it's to really seek out some of these opportunities, whether it's investing advising, um, you know, joining groups like I know chief is here, um, and really getting that exposure exactly your point around, um, not looking down, not looking down, but looking up. I think it's a great note to end on. Thank you both. Mina Jacqueline. You both have been wonderful. Thank you.