In the debut episode of "Financial Freestyle with Ross Mac," TIAA Chief Administrative Officer Derek Ferguson takes us on a journey from his roots in the Bronx to his influential role in finance today. Ferguson reveals how his upbringing fostered a deep sense of purpose and community, driving his career choices and everyday life.

From his impactful work combating poverty with the Robin Hood Foundation to his current mission tackling America's looming retirement crisis, Ferguson exemplifies his lifelong goal of contributing to "something bigger than oneself."

With years of expertise, Ferguson offers viewers practical, actionable advice for achieving financial stability. He emphasizes the critical importance of early retirement planning, effective budgeting techniques, and gaining a comprehensive understanding of various investment options.

"Financial Freestyle with Ross Mac" on Yahoo Finance strives for economic prosperity for all. Through expert insights, actionable advice, and inspiring success stories, we empower you to build and accelerate wealth. Join us on a transformative journey towards financial freedom and inclusive economic growth.

This post was written by Jimi Corpuz

Video Transcript

40% of all Americans run out of money in retirement.

If that system is broken, everything breaks down, we really are in a retirement crisis.

Hello, World, it's your boy Ross Mack and welcome to Financial Freestyle here on Yahoo Finance.

Now, whether you're a professional on Wall Street, a first time investor or just someone looking to change their overall financial situation, there's always a first step that you need to take and look no further because I'm gonna be speaking with some of the most influence, bunch of voices in my universe and I'm gonna be asking them about their path to economic prosperity.

And my guest today is none other than Derek Ferguson, the Chief administrative Officer of Tia a and a former interim CEO of the Robin Hood Foundation.

He's also a warden alum and a Bronx native.

Derek, thanks so much for joining us, man.

How you doing Ross?

I'm doing great man.

And thank you for having me, man.

I, you, you know, I've been following your career for a while and I'm just so proud of what you've been doing and what you're doing is so important, impacting our community and especially impacting our young people.

So I commend you for what you're doing and definitely feel privileged to be here, please, man.

I uh you're so humble.

Thank you for being here.

And you know, obviously I know a lot about you and your name always precedes any room I go in.

But just to the people that don't necessarily know you, who would you say Derek Ferguson is?

Well, first and foremost, you know, I'm uh you know, somebody who really cares about his family.

Uh My, my parents are from uh Virginia.

Uh they grew up in the segregated South.

Actually, my mom and dad both went to the same high school.

My mom was a valedictorian valedictorian in a really small African American only school.

So they came to the to, to New York and they settled into the Bronx.

And uh you know, they always had this incredible aspiration for us.

Uh Neither one of them graduated college but in my household, like education was the key thing was the most important thing was like education, entrepreneurship, faith and just excellence.

I did really great in school.

Uh you know, graduated high school when I was 16.

Uh you know, went to the Wharton school, which, which we know, honestly showed up there.

I had no idea where I was, you know, and uh at 16 of Philadelphia as a teenager, Bronx Bronx born, I came with that.

I'm gonna take you way back.

I, I showed up on campus with bell bottom leaves with my name on the, on the bottom of them.

So yeah, I was all the way Bronx.

Uh So uh no, so it was just an incredible experience.

And again, my comfort zone when I got in that environment was just numbers.

Like I was always just good with numbers.

So once I got some numbers in front of me, I was, I was comfortable, you know, majored in accounting and then went on to the Harvard Business School.

And uh so for me, you know, my focus really, my journey has been around just one, mastering everything I try to do.

Uh but always keeping a mindset around like, how am I impacting the world?

Like I felt like I was so honored and privileged to be in the places I was in that I had to have impact and I had to do something that was bigger than me.

That was, that was something that would impact the community.

So that's really what what I would say has been a theme around my career.

Going to an Ivy League at the age of 16.

Sounds insane.

But maintaining and being yourself out there with your, with your parents is a remarkable.

So like, let's segue to where you are today, right?

Obviously, you're at a very storied franchise at TI A and coming from there, you were, were prior to there, you were Robin Hood Foundation.

But what made you choose TI A, well, TI A was very, it was interesting.

So I was at the Robin Hood Foundation, uh Westmore was, was our CEO um and he decided to go run for governor.

He won.

He's now of Maryland.

So, um but, you know, our, our mission there was basically solving poverty in New York City.

So it's just a monumental task and, and he was up for it and I was up for it.

And we just had, you know, incredibly to put your head down every day and try to solve these problems of poverty.

You know, you just learn a lot about, you know, what, what's going, right and what's going wrong in the world, right?

So, you know, when, when Wes leaves and goes to run for governor, I met Tashana Brown Duckett, the uh CEO of TIA A didn't know much about what TI A was doing, knew they were, were a retirement company and she went on to really describe for me like that we really are in a retirement crisis and the work we do at Tia A really is part of the answer to that crisis.

So that again, put me in that same mode of like, oh, I can actually go solve a real problem that's going to impact people, the world in general, the, you know, the country in general, but even more specifically, whatever problem problem we're facing in general, our communities, African American minority communities are facing them even worse.

So it was just a great opportunity to do something that would be very purposeful mission driven, but also very commercial.

Wow.

One, I also get to meet Tunda who I think is a huge heavy hitter on Wall Street.

I think she's one of the dopest CEO s and then on top of that, a female CEO and I think she's just remarkable.

And so when you think about Ti A, right, let's actually explain what Ti A is and more importantly, the overall underlying mission, right?

Because when you talk about solving a problem and retirement being a problem here in America, like, what is it over half of Americans aren't prepared for retirement?

And I think that even gets further exacerbated when you start thinking about, you know, minor or, or females, et cetera.

So like, let's explain what Ti A is and then maybe talk about kind of the overall mission there.

So going back over 100 years ago, Andrew Carnegie founded Tia A and it's structured as a nonprofit.

And when he was trying to solve for, when he founded, it was, he was trying to solve for how can he help educators uh retire with dignity.

So he saw these great educators doing all this great work and then they would retire and not have enough.

So he, he, he literally went out to construct a retirement plan that would allow uh you know, educators and, and people that hire ed, ed ed institutions to retire with, with, with enough money to, to have enough money to retire.

So, what he did is he created essentially this lifetime income product, which is still our core product today.

So this is that product that, you know, it never goes away.

So you, you, you, you're gonna earn X amount uh per, per month for the rest of your life.

And you know, you have that set amount of money.

So that product is what was introduced to higher ed.

And at the, at the time, we were focused on primarily higher ed, we ended up gaining, you know, 90% plus market share in the higher ed market.

So major universities, Harvard Yale, et cetera, all had tia a retirement plans and we had this unique product, which was this lifetime income product, which was the, you know, the core of what we offered, which allowed people to retire and know that they would have a stream of income for the rest of their life.

That's remarkable, right?

I've obviously done a little work with TI A and, you know, one obviously coming into it, they're focused on serving the people that serve others, right?

But I know to Sunday when she got in there, she said, you know what, let's be a little more laser focused on also retiring inequality.

Can you talk about that?

Yes, it's, it's amazing that, you know, sitting here right now 2024 still 40% of all Americans run out of money in retirement.

Right.

53% of African American households run out of money in retirement.

So we are looking at a system, if that system is broken, everything breaks down.

So if your parents, you know, can't run out of money in retirement, then you have to start funding them because they don't have money.

So that's taking money out of, out of what should be your, uh, you know, your nest egg, which you should be passing on to your kids.

So it's just a generational deficit if we can't retire the right way.

So that's the, you know, that's like the problem we're facing.

But if you break it down, there's a, there's a lot of stats that were kind of staggering.

40%.

A lot of them are gonna be 40%.

So again, 40% of people retire without enough money.

Um, you know, you have 40% of young people, uh, 25 to 35 do not contribute to an employer plan, right?

40% of African American households, only 40% of African American households, uh contribute to a plan versus 63% of, of white households.

So the these deficits are gonna lead to a definite gap in how people retire, which is gonna impact everything about that person.

So there's really three gaps that we think about.

We think about the access gap.

So who has access to plans?

57 million Americans do not have access to an employer plan, right?

The access gap, the savings gap.

So even when you have a plan, like, you know, first thing I tell my kids, whatever job you get join the retirement plan, a 41 K plan immediately, many people don't join.

So and in terms of the savings plan, we want people to actually join and then escalate how much money they put away because something you talk about a lot, the earlier you start, the more you get the compounding of that money, right?

So if you wait, you can wait if you want because people, well, I can't really afford it.

You can always afford to put this money away.

It's the best investment you're gonna make ever hands down, right?

Because it's tax deferred, et cetera.

And then the last uh the, the um the last gap um is the guarantee gap.

So, and this is that guaranteed lifetime income.

So if you uh 1975 about 90% 80% of employer employees, sorry, 80% of employee employees had defined benefit plans which gives you a lifetime income flow that's down to like 12%.

So, so most people have these defined contribution plans where you get a lump sum sum of money that's distributed once you retire and that money is the money that can run out.

So, as opposed to having 100% of your retirement money just being in assets.

You know, we, we, we, we believe and, and we've seen through studies that people need, uh, guaranteed income to assure that they can pay all the bills, have enough income flow in retirement, the average American and probably a lot more aren't able to go to their parents and get that type of advice.

I know when I started work I had no idea how much I should be, you know, contributing to my 401k, right?

I'm like, oh, I'll be rich at some point.

I I don't need that right?

The or better yet.

Oh, I need to have that extra money and start paying off student loans.

And so instead I say, OK, let me start educating people because access to information is the greatest barrier to helping break and you know, solve and hopefully at some point, you know, narrowing that gap when it comes to the wealth to the wealth gap.

But I, when I speak on that, II I try to define what my why is right?

What, what would you say your, why is my, why is just that, you know it at, at my core, I I believe that if you work hard and you're as good as everybody else, you should, the results should be the same.

But you know what we're dealing with in this country as you think about gaps, right?

And these wealth gaps is, you know, many people like my family, like we're fighting from behind Right.

And you can do everything right.

If you think about it, you can do everything.

Right.

Like, you have people that work up, they do, you know, wake up every morning, they do 40 hours a week of, like, hard work, you know what I mean?

Like, and, and, and they get to the, and they're trying to just make ends meet and they get to the end of their career.

Like, yes, I'm retiring.

This is great and they retire and they don't have enough money.

You know what I mean?

They've done everything right by, by the rules of the land.

Like they, they, they've been great people, they worked hard and they just do not have enough money to retire.

So, you know, those type of inequities and like what I consider just uh things that are not fair.

All those, those things get my, you know, just get my energy up like I just feel like I've been put in such a position, uh and been so fortunate to be in certain rooms and be in certain discussions that these are the things that get me excited about fighting for them because, you know, you really just looking for equity and for people to get what they, they deserve.

So that's what really keeps me going, man.

I love, I love, love this story and why you have your why, right?

But look guys don't go anywhere, we're gonna take a short break but stay with us and we'll be right back with you.

All right.

Welcome back to Financial Freestyle.

I'm Ros Smack here with none other than Derek Ferguson.

So I thought it was so important to hear you.

Why?

Because I'm a person that literally said, I also wanna find a better way to do service, right?

I was working at a, a fund, right?

Um A fund of funds and we were looking to invest in a specialty finance company.

And one of the things I realized when I was like, oh man, this looks like a great investment, right?

It's uncorrelated to the market, right?

They're probably making 20% irr in a down market.

This is remarkable.

The thing is they owned a portfolio of cash advance loan places.

And when you think about it, where are those at?

Right, Aaron, you know, traditionally underserved black and brown communities.

So I realized, right, the average person, right, black and brown people are traditionally underbanked.

So what they're doing right?

If they need money tomorrow and they don't get paid to two days, they're gonna go to a cash advance and they might end up paying 2 300% on that loan.

And so I realized at that moment that when it comes to truly narrowing the wealth gap, we have to narrow that exposure gap.

And so that's one of the things that, you know, I figured out what my why was, but talking about narrowing the wealth gap.

Right.

I know you're big into kind of the overall crypto space.

So, tell me a little bit about what you got going.

Yeah, I think, um, the way I viewed it and I have to give all credit to my son who's one of your peers, Wharton peers and one of our peers, I guess.

And, uh, you know, he was the first one that ever was talking to me about Blockchain and, you know, this back when nobody else was doing it was investing in uh Cryptocurrency.

And you know, the way he described it to me was not as much about like the tokens or the, you know, the speculation or there was more about what this technology could do, right?

And the fact that, you know, when I, when I started thinking about how to solve some of these issues and how to really create economy, you know, you just had to look toward the next thing.

So what is the next thing?

So what is this Blockchain technology?

And how could you use it to actually solve some problems to create some new economics?

So the way I think about the wealth gap is that if we do everything the same and all of us, like if we, if we just say, hey, we're not doing this great with investing or whatever and we all catch up and we all do the same wealth gap stays the same.

In fact, the dollar amount of the wealth gap goes up, the percentage amount if, if the percentage amount stays the same, you know, e even if that happened, the dollar amount of the wealth cap goes up, right?

So nothing changes.

So how do you change it?

How do you actually say when you say you wanna close it?

That means you have to get some economics from somewhere, you know, different.

And I think when I, when, when we think about our communities and, you know, uh my son was, was working on this, you know, he was just like, you know, look, we need a, a way to actually democratize influence and monetize influence because if you think about the place where our community contributes a lot but only gets a portion of the value, it's an influence and creation, right?

It's like, you know, we're creating like, if you think about whole new uh genres movements and you know, areas of the economy like, you know, just hip hop or, you know, just things that we have solely created.

Uh and, and we end up getting, we end up giving away the 90% and keeping the 10% right?

So how do you control that better?

So, you know, just, and when you talk about how, how technology can do that, you can say imagine if you know transparency um and everyone seeing the same, seeing the the the marketplace in a transparent democratized way, right?

So for example, if, if I'm an influence.

I'm a, I'm a Ross Mack and five different financial firms wanna access my following on my fi my base and the five different offers, right?

Uh We can see in this system, you're gonna be able to see all five of these offers, right?

And understand who's bidding lower, who's bidding higher, who you're gonna be able to see what, what they're bidding on for somebody else.

So now everything is totally transparent and democratized because, and, and that will allow you to get the market a real market price, right?

So if I can pull you over to one corner and offer you something, you never know what the other five people are getting offered or what the other companies are offering, then I'm going to win that battle of I got more value out of you than what the market would have would have would have allowed.

So this is a system really that democratized and makes a marketplace out of influence and how influencers are able to monetize their value.

The second piece of it just, just uh just to add to it is that it's a global marketplace specifically connecting America with Africa at the time, you know what they saw and they observed with the demographics was just a fast growing youth population in Africa and the influence and impact on all of the, you know, areas of culture.

So music, film sports and you know, now you see, I remember when we first started many years ago, uh, you know, after I started learning more about it, I predicted that 20 30% of the music charts was gonna be African music and that's what's happening right now because there's just so much creativity and so much good creativity, but they really don't have a ready market place.

So putting that marketplace together with what we already have in, in the US, really creates new economy and, and what I love about it is that it's actually, it's actually uh economics that don't exist now, right?

Because the the economics that exist are depressed in terms of the actual amounts that are being uh received by the influence.

So if you now increase that, that's now additional wealth that didn't exist in the system and that's truly closing a gap.

That's fascinating, right?

And so wait, I don't, I don't think you said the name, obviously, I know the name, what's the name?

So the beauty is in the name, the name of it is vibranium.

Uh And you know, I if you think about what that, what that, what that name means, you know, it really represents like that thing, we're gonna protect that.

We're not gonna let anybody else have it.

Like we're no longer gonna give away our, our natural resource, we're gonna protect it, we're gonna grow the value of it, but you can't even own it.

That's remarkable.

And so one shout out to your son.

Um I'm a little upset.

He didn't tell me more about crypto when we were at Penn together.

But what I will say, right is I always say this to myself.

What would I do if I can go back in time?

Right.

In fact, I have a Mac Economics Wealth Summit in Chicago in a few weeks and I had put out some uh some content to, you know, to promote it.

And the funny thing I said was, look, if I can talk to my younger self, if I can go back in time, I would tell myself, dude, you're never getting tall enough, you're never going pro so you stop focusing so much on the girls.

But instead, let's learn a different skill set.

Let's start thinking about investing.

So I, I pose that question to you.

If you could talk to your younger self, what would you say?

Getting close to 60?

I'm 59.

And you know, to know what, you know, at 59 and be 30 would be like an amazing thing because I've learned so much more and, and, you know, I think some of the are the things that they sound cliche, but they become more meaningful after you actually experienced it.

It's really just a relationships, you know what I mean?

Like every single relationship I would say again, one of the downsides of showing up to U Penn from the Bronx.

I was like, I didn't really know how to interact with people.

I was awkward about that.

Like, when we got, I played basketball too.

So when we got on a basketball court, I can interact with you.

Good.

We speak the same language but we, you know, we're just in like accounting class.

I'm kinda like, I'm, I'm, I'm interacting with the people I'm more comfortable with.

So I probably didn't stretch myself as much as I should have in terms of building those relationships.

And for me, vast difference from when I was an undergrad at U Penn and when I went to business school at Harvard, because at that point, I had learned that skill, you know, I have learned, I had more years of experience of, of that skill and then forge great relationships.

So I would say relationships are key, that's like that that's money in the bank.

Uh The other thing for me and, you know, I try to tell my kids this but youth is youth is like, you know, my uh for, for myself, you know, making like my faith, the center of my life, I just would have done it earlier.

I would say the third thing is um is about investing, right?

So, um you know, I think as, as with a lot of people, you think you need like a lot of money accumulated to start investing.

So I think I was always like, hey, when I get this much money in the bank, then I'll start thinking about investments and so on.

Now I had, you know, uh, uh, it was very interesting.

My dad growing up was always talking about different stocks and, and he even was trading commodities.

He was doing sophisticated stuff and this is someone, you know, who never went to college.

So I would see it.

Right.

And, you know, we would talk about like he did, well, he'd tell me about it.

So I was definitely interested in it, but I just was like, we'll put $100 into something that doesn't feel like I should be doing it.

But now I know like I even at $100 is better than zero.

I often say like the greatest equalizer is the exposure gap, right?

And the fact that you were exposed to the stock market at a young age, the fact that your Children are exposed to your wealth of knowledge that comes from generation to generation, that's why we do it right.

And obviously here on financial freestyle, the goal is to just help educate, right?

Because so often financial literacy is taboo, right?

We don't talk about it nearly enough.

And one of the things that I do is I pose a question to the audience, right?

It's called Dear Mac and I'm gonna pose it to you, right?

We have Snook 15.

Snook 15 said, what's the first thing I should do to get it going to be financially successful?

So what advice would you have for snook?

So the first thing is a lot of people miss this is live on a budget, understand how much money you're bringing in and how you're spending it.

And sometimes it's like you think you have it in your head or maybe you care to have it in your head, put it down on paper, write it down, get a spreadsheet, you know, uh Excel spreadsheet, break down your budget and you have to save, right?

So in your budget like yes, put your money in your 401k and then you have to save something.

So like a lot of people, well, I can't afford this.

I, you know, I, I gotta spend this money because I need to have this.

Well, do you need to have that?

Yeah, or if you sacrifice that for a short amount of time, it's gonna be of great benefit to you.

So first have your budget and know what you're living on.

If you, if you're living with zero savings, just know it because a lot of people running around like I don't know why I don't have any money, what you're spending it all, you know what I mean?

Let's do the math.

You just spend everything anyway.

So no, no, no, do do your budget and, and by the budget then it again join get, get in your employer uh retirement plan.

And the third thing is start understanding marketplace, you know, like the, you know, the, the advent of tools like the Robin Hood app and shows like, you know, you're all, all, all, all of what you share on a daily basis.

I watch you with your kids every, every morning, you know what I mean?

And a lot of other, uh uh other people sharing now at, at, at a clip that we've never seen, just start dipping your toe in the water.

Start simple, you know what I mean?

Start simple, you know, with, with the ETF S and, and, and funds that are, you know, that are kind of doing the work for you.

Then as you learn more, you know, learn more and grow and make sure you're balancing your wrist, but you gotta start learn it, start and the earlier you start, the better, the earlier you start, the better you gotta control your inflows, right?

You gotta know your inflows and outflows.

People quite so often are spending money that they don't have, right?

Buying things we don't need with the money.

We don't have to impress people we don't like.

And so start with that budget.

Start investing, right?

I always say you gotta pay your future self because when you get 5060 you're gonna be upset at your 2030 year old self for just blowing that money.

So I love that and I love, love everything.

Thanks so much Mr Derek Fergus.

Thanks for joining us.

Just congratulations again, man.

Great, great.

And I look forward to great things.

Look, I wanna thank my guy Derek Ferguson for sharing his story with us and thank you everybody for joining us here on financial freestyle.

Look, I hope we get you guys some very valuable insights and inspiration for your own wealth journey and acceleration.

I'm Ross Beck.

Make sure that you come back next week because we got you covered.

We're gonna build wealth together.