Empowering Women to take Stock of their Finances

WORDS: Lou McGregor PHOTOGRAPHY Supplied

THE SOCIAL AND ECONOMICAL IMPACT OF FEMALE INVESTORS IN 2022

WHY OUR WORLD NEEDS THEM MORE THAN EVER AND WHAT ONE WEALTH MANAGEMENT COMPANY IS DOING TO LEAD THE CHANGE.

With a third of the world’s wealth under their control, women have become a sizable economic force. They are increasing their wealth faster than before—adding $5 trillion to the wealth pool globally every year—and outpacing the growth of the wealth market overall.

What’s more, the investment made in environmental, social, and corporate governance has skyrocketed since the onset of female investors causing a more balanced and long-term positive approach for our world.  This was no more evident than during the Covid_19 pandemic.

In short, as more women become the breadwinners in the family, more dollars go to ESG investments. Which despite talk that the majority of this extends from younger female investors, most women under the age of 60 favour this type of investing.

“Women do not just want to boost the bottom line; they also want to help develop the communities we live in, by investing in education, health care, and our planet.”

Despite these positive elements, there is still a way to go in balancing the gender disparity with investing, a lot of which comes down to a misunderstanding of what women want!

Jen Kane, Director of iInvest Trading & Advisory, Australia’s No. 1 options trading desk, is determined to switch this perception and is calling on more industry players to follow suit.

Why does she believe this gender discrepancy still exists?

“Too many banks and investment firms rely on broad assumptions resulting in products, services, and messaging that can feel superficial at best and condescending at worst” she says.

“I think because women traditionally BELIEVE they are generally not risk takers and don’t back themselves as much as men i.e., they don’t regard themselves as “investment savvy”, which is false, as they are!

This notion seems to be perpetuated by the seemingly ‘accepted’ cultural constructs ‘on show’ in the entertainment industry, which has not been helpful in changing the stigma.

When popular movies such as The Wolf of Wall Street and The Big Short ALWAYS ensure major financial activities and decisions are accomplished by men and use the role of the female as a physical porn to lure in audience and ‘dumb down’ finance speak, it is no wonder that perceptions are taking longer than other industries to shift.

A 2021 ASX Investor Study report showed that men were more likely to take greater risks than women giving the illusion they are better investors than woman.

Gemma Dale, Director SMSF and Investor Behaviour at Nabtrade contributed to this conversation by explaining that, “The real reason for many men’s success is due to the learning experience from investing itself. Women tend to be more realistic about their abilities and knowledge, making them less likely to trade and therefore missing out on investing and its learning experience.”

She continues: “The biggest challenge for women is that they face far more headwinds in simply generating enough surplus cash to be able to invest due to reasons such as taking career breaks and being more likely (than men) to be engaged in part-time or lower-paying employment. This means women often focus more on financial security rather than wealth accumulation.”

So, while this leads to presumptions that the risk profiles of female clients are conservative, Jen believes wealth managers just need to have a better understanding of these psychological and circumstantial factors and dig deeper.

Jen continues “I remember a few years back we had a potential new client who had been referred to us by a previous male financial planner who had called to inform us before our meeting that this woman was incredibly risk averse regarding her assets.  During our meeting with her, we took the time to clearly explain the various risks associated with certain investments, using concrete examples, which led to a constructive conversation.  She asked lots of questions and after this analysis, it turned out that her risk profile was in fact high!”

“I’ve had many smart, articulate women contact me at iInvest, as they had previously experienced being ‘spoken down to’, as if they did not know what they were doing”.

Jen, however, also believes that women themselves need to play a significant role to shift this and take the matter into our own hands,

“I believe more women would feel confident in investing or anything to do with finances for that matter, if it were a normal part of our general conversations amongst trusted friends. We talk about fashion, movies, relationships, social impact but rarely do we talk about investing. This is something I believe would bring a powerful shift.

To this end she is about to launch a social enterprise entitled ‘I INVEST IN ME’, where one of its activities involves a quarterly dinner where women of all ages are invited to get together around the dinner table to learn about trading in a relaxed environment and openly discuss finances, ask questions and concerns, in the same way they do about other topics.

With $93 trillion globally to be in the control of the investing fingertips of women in 2023 plus the enormous positive impacts of where this money will be invested, there has never been a more convincing time to encourage more females to take control of their finances and make their impact on our world.     It’s now the job of financial advisers, our often-patriarchal entertainment culture, and banks to focus on the individual, whilst being aware of general gender differences in trading.

 

Jen’s quick tips on the differences of female investing and what financial advisers can do to assist the way forward: ·       Women are much more likely to base their investment decisions on facts over emotion. They want the details, the data, the explanations.   ·       Women tend to invest for specific goals, whether those goals involve leaving a legacy for the next generation, supporting a post-retirement lifestyle, endowing a family business, or making a social impact in their community.   ·       They are also more likely than men to invest based on their values, favouring funds that not only perform well but also create a positive impact, as opposed to investing solely for performance. For example, 64% of women said that they factor environmental, social, and governance (ESG) concerns into their investment decisions compared to 96% of males  (2020, Managing the next decade of women’s Wealth, BCG Group)   ·       Millennial women are far more confident with their wealth than their predecessors and are paving the way. ·       The finance industry needs to make a shift from a culture that perpetuates wealth inequality; an example of this is the use of confusing and intimidating jargon that can seem like a whole new language which can be exclusionary, creating an ongoing cycle that perpetuates wealth inequality.

 

The first iInvest in me dinner will be held at Edgewater Dining on Wednesday 30^th March.  Cost is just for food & beverage…the education, conversation and company are free!