The financial advice we’d give to Barbie

This is an audio transcript of the Money Clinic podcast episode: ‘The financial advice we’d give to Barbie’

[CLIP FROM ‘BARBIE’ PLAYING]

Claer Barrett
As Barbie mania sweeps the world, I’ve been thinking about the financial advice I’d like to give her. Now, you might be thinking, what financial advice could a plastic doll possibly need? But think about it this way, Barbie was invented in 1959, so aged 64, she’s probably starting to think about retirement. And she’s had a pretty knockout career. She’s been an astronaut, show jumper, a scientist, even a pop star. So many different jobs could mean a jumble of different pensions. Plus, there’s property. Goodness knows how many dream houses Barbie has in her name. And although she’s undoubtedly a high earner, she’s also a big spender. All of those fashionable outfits, hairstyles and make-up could mean her finances are deep in the red, not pretty in pink. There’s plenty of real-life money lessons here to discuss. So sit back, grab some popcorn, and welcome to Barbie Land.

[MUSIC PLAYING]

Welcome to Money Clinic, the weekly podcast from the Financial Times about personal finance and investing. I’m Claer Barrett, the FT’s consumer editor.

Starring Margot Robbie, Barbie, the movie, directed by Greta Gerwig, has broken box office records and contains plenty of food for thought about finance and feminism.

[‘BARBIE GIRL’ BY AQUA PLAYING]

[CLIPS FROM ‘BARBIE’ PLAYING] 

Claer Barrett
If you have yet to see it, don’t worry. I promise, there are no plot spoilers in this episode. But prepare to suspend disbelief, as me and the podcast experts apply financial lessons from the real world to Barbie Land in the hope that this could encourage you to play around with your personal finances. And we’ll have tips on everything from retirement saving to managing money in relationships. So come on, Barbie, let’s go party! But only after we’ve checked out your financial future.

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Joining me on the podcast today are two fantastic female finance experts, starting with Christine Ross from Handelsbanken, otherwise known as “wealth manager Barbie”. Hi, Christine.

Christine Ross
Hi, Claer.

Claer Barrett
And FT columnist and friend of the podcast, Moira O’Neill, otherwise known as “financial journalist Barbie”.

Moira O’Neill
Hi, Claer. I’m ready to put the magic and sparkle into money. (Chuckles)

Claer Barrett
Oh, I like it. I like it. Well, Moira, I’ll start with you. Give us the top lines here. What financial lessons do you think we can all learn from Barbie?

Moira O’Neill
Well, I think as a career girl, she’s had 200-plus jobs over her . . . 

Claer Barrett
Two hundred? Wow.

Moira O’Neill
 . . . her many years. And some of those were high-earning. She’s been an air pilot, for example. She’s . . . but also she . . . you know, she’s been a fashion model. She’s been a freelancer. She’s also had sort of low-paid jobs, waitress, etc and a stay-at-home Barbie as well. And so over the years, she’s also probably got into debt with some of the things that she’s aimed for, such as campaigning for a US president. So it’s a bit of a mishmash of things. And I think, you know, a lot of . . . have career portfolios now. And the question is what implication does that have for your finances? You probably pick up bits of pensions along the way. You probably have periods where you earn a lot, periods when you don’t. I think looking at Barbie in that concept can teach us all some good lessons.

Claer Barrett
Mmm. Now, Christine, if Barbie rocked up to her first client consultation with you, what areas would you like to cover with her?

Christine Ross
I think if I was fortunate to sit and advise Barbie on her future wealth planning, I’d really want to get her incredibly good idea of her current assets, but more importantly, her aspirations. Financial ones and both . . . and non-financial, but she has had an array of jobs, and I think we shouldn’t assume just because Barbie is at 64 years old, that she suddenly going to stop generating income. She has a portfolio career and who knows whether she’ll continue to reinvent herself. So I would want to look at what she has now but very much what her earning potential is for the future and how we help to consolidate and to preserve what she’s generated so far.

Claer Barrett
Mmm. Now, we’ll kick off by talking about her financial independence, which is a really big theme of the movie. Now, one of the most striking aspects of Barbie’s finances is the level of autonomy she’s achieved in her life. She’s the one who calls the shots. She’s also child-free. If you’ve seen the movie, you’ll know that a prototype of the pregnant Barbie was (chuckles) discontinued, and she’s also potentially husband-free. Now, even though there is a Barbie and Ken bride-and-groom set available, in the film she describes her long-term partner, Ken, as her boyfriend. So over to the experts. What potential issues does this throw up for you with Barbie’s financial planning? Should we start with you, Christine?

Christine Ross
Well, Barbie is a fabulous independent woman, and she needs to ensure that she safeguards her wealth to see her through her future years. So should she decide that she does want to marry Ken, she should certainly consider a pre-nup. Whilst these aren’t absolutely in law, they certainly can influence the size of any settlement if, unfortunately, those marital plans ultimately go awry. But equally, even if they live together, she possibly should even have a cohabitation agreement to be very clear as to what happens if ultimately they go their separate ways.

Claer Barrett
Mmm. Moira, what are your thoughts on this?

Moira O’Neill
Well, I think she’s obviously the breadwinner in that partnership. And I think more and more women today are facing into those issues. You know, the man is there. Is he Ken-ough? (Laughter) Let’s hope that he is.

Claer Barrett
(Laughter) . . . is enough.

Moira O’Neill
And he can, you know, shoulder, you know, and be proud of his partner who’s the breadwinner. So I think there’s some maybe psychological, emotional issues to deal with and talk through if she goes ahead and does marry Ken. But I think she should worry potentially about insurance issues, you know. She’s worried about dying. This comes across.

Claer Barrett
This is one of the themes of the movie. Not a spoiler.

Moira O’Neill
Yes, not a spoiler. And so, therefore, insurance issues come in. You know, what type of insurance as a single woman or as a married woman potentially does she need?

Claer Barrett
How could she replace some of that income if she (inaudible) get ill, for example. Age 64, it’s the kind of age where you could be hit by a curve ball.

Moira O’Neill
Definitely.

Claer Barrett
Now, one of those themes in the movie was that Barbie was being bugged by thoughts of her own mortality. Christine, what did you take from that? Because there’s lots of planning that people often put off doing for this very reason.

Christine Ross
There’s a lot of planning because ultimately nobody likes to think about their own mortality. That’s very clear. But taking sensible steps and then just putting it to one side and considering right to have done this and have my affairs in order is a really good sort of path to follow. So Barbie is not married. She has considerable wealth. She needs to have a will. While she doesn’t have any children, there is a pecking order when you don’t have a will. The rules of intestacy are very simply if she doesn’t make one, her assets may not go to those beneficiaries she intended they would. So she may want to leave some money to Ken, but he’s not thought to be entitled. In fact, he’d be, well, he wouldn’t even be on the pecking order.

Claer Barrett
Yeah.

Christine Ross
So (inaudible) make a will. Lots of people don’t like to think about what they would leave to each beneficiary. But with a good lawyer, it’s possible to navigate through that. And it doesn’t have to be revisited all that often. The other important thing, though, and that’s important these days, is a power of attorney.

Claer Barrett
Mmm.

Christine Ross
(Inaudible) the power of attorney allows someone to step into your shoes if you become incapacitated. And that doesn’t necessarily mean permanently incapacitated. It may be only for a period, but it’s possible for someone to take over your finances and to deal with them as you would want. And if you want to, you can also have a health affairs power of attorney so that somebody could deal with important decisions if you were to become unwell, disabled, to make them yourself. Nobody likes to contemplate these issues, but they are two of the most important steps in good financial planning.

Claer Barrett
Now let’s move on to investing. There was one particularly delicious part of the movie where all of the Barbies pretend to enjoy being mansplained to about various subjects by the Kens in a bid to distract their attention. And one of the Barbies pretends that she keeps all of her cash in a checking account because she simply doesn’t know how to invest it. Now, Christine and Moira, do you think that Barbie is an investor?

Moira O’Neill
I’m not sure. There was a teen Barbie from 1992 which caused controversy by saying math class is hard.

Claer Barrett
Oh.

Moira O’Neill
And so I’m not entirely sure that she’s up to thinking about compounding and all those maths questions which sit behind investing as a successful career. But I think also this movie and the earning potential and the soaring share price of Mattel (chuckles) . . .

Claer Barrett
That’s true.

Moira O’Neill
. . . could actually be bringing home the power of investing for Barbie. I think she’s probably heard colleagues, etc, talking about it, and definitely it’s time Barbie. It’s time to learn about this stuff.

Claer Barrett
And also, despite that disgraceful message on the teen Barbie, you don’t have to be good at maths in order to be an investor. It’s very easy to get started with robo platforms. You don’t need to delve down into all of those details if you don’t want to.

Moira O’Neill
Definitely. And I think if they did make a fund manager Barbie or a financial planner Barbie, then obviously she’d learn enough. But yeah, OK, you don’t need to know about maths. But you do need to know about the concept of compounding interest and how that can work to your benefit over the years. And you also need to know about percentage charging and understand that and know that you should . . . the reasons why you should keep your costs low in order to give yourself the better chance of your investments doing well and growing.

Claer Barrett
Well, very sensible advice for all of the Barbies out there. Now, Christine, what are your thoughts? Do you think that Barbie is an investor?

Christine Ross
I do think Barbie is an investor. She might be an unconscious investor. But look at all that property she’s amassed over the years.

Claer Barrett
Mmm.

Christine Ross
She has palaces and ranches and so many other properties, too numerous to count. So whilst like many property investors, she’s acquired these for enjoyment, they still have a value. I think the issue for Barbie is that as she’s using those for her own enjoyment, they’re not going to generate her an income. They’re not rented out. So Barbie does have to look at what we call liquidity, basically cash that you can get your hands on. So as she nears point where she stops generating income and needs to start to draw on her accumulated wealth, she does need some investments that are a bit more liquid but can actually start to pay her a return so that that will meet all of her numerous expenses.

Claer Barrett
Hmm. Very good point there. Airbnb Barbie beckons, perhaps. Now let’s move on to longer-term investments and pensions now. Now, the first ever Barbie doll went on sale in 1959, it featured that wonderful black and white Chevron swimsuit that we see in the opening scenes of the movie. And while Barbie doesn’t look a day over 25, in real life she would be coming up to her 64th birthday. So I’ll put this question to Moira first. I mean, having had such an active lifestyle, do you think Barbie’s ready for retirement and what sort of things might she and other listeners consider in the run-up to preparing for this?

Moira O’Neill
I think she’s not unusual in having had a later life surge in wealth or boost. A lot of people are still working at her age. They potentially start scaling it down, working part time a bit. Barbie might want to do that if she wants more time for the beach with Ken.

Claer Barrett
Mmm. Beach.

Moira O’Neill
Yes, but I suppose she might be thinking of turning her, like Christine mentioned, the liquid assets. Maybe she can liquidise some of that. She can start thinking about securing a guaranteed income that gives a peace of mind for her future. And you can do that by buying an annuity.

Claer Barrett
Yes. You’ve written a column about this in the FT: Annuities are sexy. Should Barbie consider buying one?

Moira O’Neill
Annuities haven’t been sexy for a long, long time. And recently annuity rates have risen and that makes them now an option for people in retirement.

Claer Barrett
So they would trade some of their pension pot to buy a regular income that would die with them. But for every year it will give them a certain amount of money that they can live off.

Moira O’Neill
Definitely. But on the other hand, we know Barbie’s worried about dying. If there is a reason for that, you know, if her feet — I’m not going to give that away — or her slim thighs that can’t fit in her major organs are giving her reasons (chuckles) for health concerns, she might want to steer clear of buying this type of guaranteed income from the insurer because you’ve got to think that you’re going to get your money back in income for giving that cash sum upfront. It is an irreversible decision. And that means you’ve got to think very carefully about this.

Claer Barrett
Mmm. Now Christine, if Barbie sitting across the table from you in your consultation, I’m sure you’ll probably want to know what she’s got in terms of different pensions.

Christine Ross
Absolutely. I’ll definitely want to look at all the pensions that Barbie has hopefully accumulated. I want to make sure that she’s taking advantage of all the tax breaks that are available to her and start to look at whether she should consolidate these into a single pot. But consolidating isn’t always the answer. It might be administratively easier, but sometimes she might have been fortunate to have particular benefits, and certain plans no longer exist. So it’s a case of sifting through all of this. Really understanding what she’s got and not assuming that she would know herself what she has. And hopefully Barbie’s going to have a significant fund that will itself provide a reasonable proportion of her spendable income in retirement.

Claer Barrett
Now, if Barbie had clocked up enough years working in the UK. Another thing, Moira, that she would be wise to do is to check her state pension forecast.

Moira O’Neill
Definitely. And I’m not entirely sure that she will qualify for all of it because there are so many years when she was a low-earner or a stay-at-home Barbie for a while. So maybe she hasn’t got enough and she could look at buying some more. She can backdate these. So, yeah, definitely look up what her entitlement is to state pension.

Claer Barrett
Sure. And if you want to learn more about that, do listen to our previous episode with Sir Steve Webb looking at whether it’s worth it to top up your national insurance credits.

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Now, it’s all very well for us to sit in the studio discussing Barbie’s wonderful wealth that she’s amassed, but she is an outlier. Unfortunately, the gender pay gap and the associated gender pensions gap are likely to hit most women’s finances very hard indeed. And that’s something that you’re seeing all the time, Christine.

Christine Ross
We’ve certainly seen a huge disparity between the genders, both in the amount of savings, but also confidence with relation to personal finance and savings generally. I think it’s quite stark that the average pension fund at the moment is approximately £100,000. But when we look at the split between men and women, men have average pension pots of about 142,000 and women nearer to 50,000.

Claer Barrett
Gosh.

Christine Ross
Now that is being redressed in that there is growth in the amounts of younger women who are now actively contributing to pensions. But when we ask about their financial confidence, it is still far lower than their male counterparts, no matter that they’ve managed to get earlier on to the savings ladder.

Claer Barrett
Mmm. I mean that is actually a theme that Barbie could perhaps help with Moira because, I mean, you’ve seen the movie, too. Female empowerment is definitely the big theme here. How could it help women when it comes to investing?

Moira O’Neill
I think on the thinking about their income, they need to ask for a pay rise. That always affects your pension. So any incremental income rises can affect your pension at work. And also think about, you know, paying yourself first. So always make it a really important part of your monthly routine to put some money aside for your future self, to make it regular, frequent, make it a habit.

Claer Barrett
Than get used to spending the extra money.

Moira O’Neill
I mean, the thing is, if you pay yourself first, this is the pots of money or the investment pots for your future, you don’t get used to having it. So you can, you know, not just automatically rein in the spending basically.

Claer Barrett
Well, finally, given the mega performance put in by Ryan Gosling, I feel it would be remiss of us ladies if we didn’t spend some time discussing the financial advice that we might give to Ken. Now, he’s actually a couple of years younger than Barbie, shock-horror. (Inaudible) The first Ken doll wasn’t made until 1961, I found out. But Christine, if Ken was your client, what are the things you would be discussing with him about his future finances?

Christine Ross
Well, I’d want to know if Ken is himself financially independent because I have a strong suspicion that he’s pretty reliant on Barbie’s income. But who knows? But also, if this relationship is going to endure, then Barbie and Ken may actually want to consider marriage because if they are looking to leave their assets to one another, then of course they can pass entirely free of inheritance tax between married couples. As it stands, if Barbie did decide to leave the majority of her wealth to Ken, he would get it but less 40 per cent tax. That might be a consideration, even if slightly less romantic.

Claer Barrett
Well, that’s true, and same applies for people in civil partnerships. They also get those benefits. But, Christine, in your long experience as somebody who has advised people and families on the tax planning benefits of this, have you seen any cases when it has gone wrong? Somebody died early unexpectedly and the family have been left with a huge tax bill.

Christine Ross
Yes, absolutely. I’ve definitely seen, sadly, cases where the planning wasn’t in place. And I have been asked to advise after the fact and even not have in a will, something that is relatively simple to put in place, can cause amazing disruption to a family at a time when there are enough issues to deal with.

Claer Barrett
Mmm. And Moira, what about you? What kind of things that you would expect Ken to be thinking about?

Moira O’Neill
Well, I think if he hasn’t really had a proper job up till now, he needs to start thinking carefully about any spending and possibly he is spending too much on matching beachwear and faux fur coats. (Chuckles) And after decades at beach, as he says, it’s probably time for a serious job. I think there’s always opportunity to retrain in later life. And now that he knows he’s Ken-ough, I could probably see him something like a counsellor teaching others how to, you know, feel worthy.

Claer Barrett
Mmm. Good luck to Ken. And Christine, finally, just something that Moira said that did make me think a little bit about Barbie’s spending. Now, she obviously has got a fantastic array of fashionable outfits, properties that she’s picked up over the years, luxury cars, all kinds of gadgets and equipment, she’s never been shy of spending in her life, I would expect. This is going to be a bit of an adjustment for her potentially in retirement or if her income dips in the coming years.

Christine Ross
I think taking stock of Barbie’s spending as her income potentially starts to reduce is going to be a bit of a culture shock. But just like many others, it’s a case of ultimately taking stock of the things that you really want to do. Retirement should not be living on a tight budget, as perhaps when one starts out and buys a first property. It should not be a return to that. But I think, like many, Barbie will have a look at what’s really important. Which cars she likes best? Which beach home? And ultimately, you could say it’s a quality problem.

Claer Barrett
(Chuckles) I love it: a quality problem. Well, thanks ever so much for joining me. In the pink surrounds of the FT studio today, Moira O’Neil, FT columnist.

Moira O’Neill
Thanks, Claer.

Claer Barrett
And Christine Ross down the line from Handelsbanken Wealth Management. Thank you so much for joining me, too.

Christine Ross
Thank you, Claer.

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Claer Barrett
Well, that’s it for Money Clinic, with me, Claer Barrett, today. And we hope you like what you’ve heard. If you did, spread the word and leave us a review. We’re always looking to chat with people about their money issues for the show. So if you’re interested in being part of the future episode and are looking for some expert advice, then email us: money@ft.com. You could also take a peek at our website: ft.com/money. Grab a copy of the FT Weekend newspaper or follow me on Instagram, @ClaerB, and Moira is @MoiraOnMoney. Money Clinic was produced in London by Persis Love. Our sound engineer is Breen Turner, and our editor is Manuela Saragosa. You heard original tunes this week by Metaphor Music. And finally, our usual disclaimer . . . The Money Clinic podcast is a general discussion around financial topics and does not constitute an investment recommendation or individual financial advice. For that you’ll need to find an independent financial adviser. That’s all the small print for now. See you back here next week. Goodbye.

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