Closing the gap.
International Women’s Day. I know some of you reading this are wondering why we need a day. I am not going to reel off all the stats here, because you can go onto google and read how far behind women still are and how much we contend with as we go about our daily lives.
There are so many angles that I could take in an article about women, money and the financial services industry, and I have re-started this piece way too many times (on a Sunday). My experience working in a predominately male profession (Morningstar found that only 9% of US investment managers are women and only 18% of CFA Charterholders are women) has elicited its fair share of frustrations and tears. Owning my own firm has given me the greatest sense of freedom, not just because I get to dictate what I do and when, but because there is no glass ceiling for me now. I still get infuriated by stories of how other women are treated, stories like this, but for me I know those days are gone.
The angle I want to take here though is not mine, but that of female clients and female investors.
There is a well-publicised fact that 70% of women fire their male financial adviser (around 85% of financial advisors are male) when their husband dies. There are many reasons cited in the research but most come down to the fact that he never connected with her and she felt he was condescending. 90% of women will, at some point in their lives, be solely responsible for their family finances so this is a big deal for financial services firms.
In 2009 the Boston Consulting Group conducted a massive survey about women and consumerism. They surveyed 12,000 women from 21 countries and diverse socioeconomic classes. The report highlighted that of all the industries that affect their daily lives, financial services is the industry that women are most dissatisfied with. I quote from the report, ‘women continually feel exasperated by the way financial companies serve them’.
BCG asked the question ‘what exactly do women want from financial services providers that they are not getting now?’ The response; ‘they want recognition from the industry that women view money and wealth differently from men. By and large, women do not seek to accumulate money for its own sake, but view it as a way to care for themselves and their families, improve their lives, and most important, ensure security.’
This general lack of satisfaction among women is reflected in the fact that women keep 70% of their assets in cash. This is a huge problem given that women still earn $0.83 on the dollar compared to men, and live, on average 5 years longer than their husbands.
This difference between how women manage their money and how men manage their money has been coined the ‘gender investing gap’. Women, on average, tend to invest less than men. One study found that men held double the amount of investments held by women. Another study mirrored this finding by showing that women have half as much in their pension accounts as men. It’s self-fulfilling – lower earnings coupled with lower returns. This is a massive, underappreciated and under-reported issue.
Women have come a long way in the last few decades. Today 45% of US millionaires are women and 40% of women are their family’s primary breadwinner (according to the Pew Research Centre). Financial services firms have only fairly recently started treating women equally. Before 1974 a woman could not get a credit card in her own name. She needed to bring along a man to cosign any credit application, regardless of her income. Given that there are certainly still financial advisors working today who started their career with that as their backdrop, it’s perhaps not surprising that women are busy firing their advisors when they get the chance.
The industry still refers to women as a “niche”. A “niche” could be partners at law firms, or young doctors, or tech execs at Google, or women undergoing transition through the loss of their spouse. But it’s a push to refer to half the population as a “niche”. We still have a long way to go.
It has to change. We women must feel comfortable moving our assets from the perceived safety of cash into an asset class (equities) that is going to protect our purchasing power over the long-term and give us security as we go through life. Whilst we are still fighting the gender pay gap (and research suggests we will be for many more years) the gender investing gap is something directly within our control. Getting a return on our hard-earned money must be a priority.
My mission has always been to show women that there is another way. You don’t have to find yourself in an uncomfortable conversation with someone who doesn’t get who you are telling you what to do. I know you don’t want to be told what to do. I know you want to be given information, you want education and you want to make the decisions yourself. You want to understand what you are doing and why. You want to feel in control and you want to feel purposeful. I am not saying to you men that you don’t want these things either, but women have been denied these luxuries for centuries. If 2019 is not the year, I don’t know when is.