WOMEN INVESTORS: STORY BY NUM8ERS

Even though women are primary breadwinners in 41% of American households, women control 51% of American wealth, only 7% of American investors - are female.

Source is Tech Crunch article, 2017.

Methodology

We are looking at investors, who are American citizens, reside in the United States, and manage their own investable assets. 401k counts too, if an individual is managing it themselves, with or without professional help. Having 401k managed by one’s employer, does not make that individual an investor.

Investor

An investor is any person who commits capital with the expectation of financial returns. Investment products are: stocks, bonds, commodities, mutual funds, exchange-traded funds (ETFs), options, futures, and foreign exchange. Investors typically perform technical and fundamental analysis to determine favorable investment opportunities.

Investable assets

Investable Assets include cash and bank accounts plus securities and investment accounts that can be readily converted into cash. Excluded are Liquid Physical Assets (not easily converted to cash) such as real estate, automobiles, art, jewelry, furniture, collectibles, etc.

Why don’t more women invest

It starts early

"According to a survey of 1,000 parents conducted by Giftcards.com, respondents were more likely to teach their daughters fiscal restraint, while their sons were more likely to be taught about building wealth."

Source is Fast Company article, 2019.

It lasts a lifetime

Common reasons why women do not invest:

? Don't understand financial products or jargon

? Distrust Financial Advisors

? Don't have time to plan and manage investments

? Believe not to have enough money, to invest it

Women are often not happy with their Financial Advisors

Source is Data USA website. Section #3.

Source is Fidelity study. Page #16.

Source is Prudential study from 2012-2013. Page #8.

Why does it feel like financial advisories ignore the needs of female clientele?

Financial Advisory communication model - as it should be

Research & Development should provide Intelligence directly to Senior Leaders. Senior Leaders create Strategy, and deliver it to to Financial Advisors, who work with clients. Financial Advisors implement the Strategy, and provide Feedback, back to Senior Leaders. Who then talk to R&D again, to find answers. That’s how the loop should work.

Financial Advisory communication model - as is

What we have is R&D, speaking directly to FAs, who are not sure what to do with the feedback. The lines of communication with Senior Leadership, are broken. Not because R&D and Financial Advisors are not reaching out, but because there appears to be lack of interest, on the Leadership end.

Source is BCG (Boston Consulting Group) study. Page #8.

What women want and why are their financial needs unique?

Women’s earnings peak sooner (around the age of 39), and then begin to decline. Which means women need to amass most of their assets, sooner than men.

Median usual weekly earnings of women and men who are full-time wage and salary workers, by age, 2016 annual averages

U.S. Bureau of Labor Statistics

U.S. Bureau of Labor Statistics

U.S. Bureau of Health & Human Services

Family Caregiving Alliance

Demographics: by ethnicity

Asian women are most financially prepared

Source for the Demographics by Ethnicity data is Prudential study from 2012-2013. Page #10.

Source for the Demographics by Ethnicity data is Prudential study from 2012-2013. Page #10.

Demographics: by age

Women who use a financial professional are more than twice as likely as those who do not to consider themselves on track or ahead of schedule in planning for retirement.

Source for the Demographics by Age is Prudential study from 2014-2015. Page #7.

Demographics: closer look at people in their 20s

I was curious to find out more about women in their 20s, and their attitudes toward finances. So I spoke with them.

Field research: Men and women, ages 22-28 (sample of 16 women, and 16 men).

Demographics: by region

Source for the Demographics by Age is Prudential study from 2014-2015. Page #12.

Society trends: mobile research, on the App Store

What happens when women invest?

? Women study and observe more, before making investments and trades.

? Women are patient. They buy and hold. They trade less.

? Women focus on long-term goals. Eventually, their investments outperform mens’. 

Sources are Fidelity article from 2017, and Barclay's article from 2018.

SUMMARY & OPPORTUNITIES

Why take action

? If you are a Financial Advisor, some of your assets may be at risk now, as you may not be effectively engaging female segment of your clientele.

? With $100,000 investable assets, 60% of women would ask for Financial Advisors' help vs. 46% of men (PIMCO, 2018).

The cost of doing nothing

? In 2009, women controlled 27% of world’s wealth, with most of it being in the North America, 33% (BCG, 2010).

? In 2015, women owned 39% of American wealth (Fidelity, 2015).

? In 2018, women controlled 51% of world’s wealth (PIMCO, 2018)

Companies that survive will be the ones who:

? Establish deep understanding of women’s unique needs, and challenges. Women invest to reach certain goals, not to beat the market.

? Adapt their strategies to best assist female clients.

? Earn the trust of female investors, and position themselves for growth, as female wealth and influence expands.

? Build a connection with Millenial women, as this generation faces harsher retirement conditions, than any prior group.

How technology can help: Artificial intelligence

? Chatbot: “Women feel intimidated talking to an Financial Advisors; would prefer talking to a Bot. 1 in 5 women (20%), prefer trusting a Bot, agreeing that robo-advisors understand their needs better than humans.” (PIMCO, 2018). 

? AI takes out the bias: Women face a lot of bias. Such as being risk averse, or interested only in socially responsible investment options, to not being taken seriously when part of a couple, etc.

? AI to explain the risks and explain the options: Women do not understand Wall Street jargon, and feel embarrassed about lack of knowledge about financial products - AI could help them learn.

? Women are more time-strapped than men and take more time to make investment decisions. Implementing technology to weigh pros and cons, in the comfort of their own home, would be favorable. AI would enable them to learn about financial products on their own time.

? AI predictions: Women’s lives are disrupted by life events. 73% of women take career breaks to care for loved ones, vs. 27% of men (Family Caregiver Alliance, 2018). Women invest to enable themselves to navigate these life events, with minimum disruption. Men invest to beat the market. Thus, since Financial Advisors are time-strapped, artificial intelligence should be utilized, to help women visualize different life scenarios and entertain options.

? AI predictions plus gamification: To engage younger women. Same concept as above, only with younger scenarios, and with some playfulness, to create stickiness. Also, to create awareness about the power of investing, and women’s issues: Women’s incomes peak at 39, men’s at 55 (U.S. Bureau of Labor Statistics, 2018).

? Education events: Fidelity suggests the following, in their advice to Financial Advisories: “Consider using the topics in your thought leadership program plus the following:

? Teaching kids about money and what’s appropriate for each stage of a child’s life

? Family finance day: a half-day event for parents/grandparents to come with teenage children/grandchildren to discuss investments and the importance of budgeting

? How health and wellness can lead to financial wealth” (Fidelity, 2015).

Conclusion:

For companies: “Within 12 years time, 80% of financial firms will either go out of business or be rendered irrelevant by new competition, changing customer behaviour and advancements in technology", according to 2018 forecast by Gartner.

For women: Women should take steps towards financial empowerment, and start investing. No amount is too small. There are many options, apps where you can start with $100, or $5.

The best time to plant a tree was 20 years ago. The second best time is now.

Sources:

Institutions, companies & organizations

Data USA: Explore, map, compare, and download U.S. data

Family Caregiver Alliance, Women take more career breaks, to provide care for family members

U.S. Bureau of Labor Statistics, Women’s earnings peak at 40, Men’s at 55; data as of 2016

U.S. Bureau of Health & Human Services, Life Expectancy

White Papers

Boston Consulting Group, July 2010, Leveling the Playing Field: Upgrading the Wealth Management Experience for Women

Fidelity, 2015, Maximizing a Major Opportunity: Engaging Female Clients, A Guide to Client Engagement

PIMCO, 2018, Women, Investing and the Pursuit of Wealth-Life Balance

Prudential, 2012-2013, Financial Experience & Behaviors Among Women, Prudential Research Study

Prudential, 2014-2015, Financial Experience & Behaviors Among Women, Prudential Research Study

Field Research

I interviewed Millenials, ages 22-28, in Hoboken, and in Central Park. 16 men, 16 women.

Articles

Barclays, 2018, Are Women Better Investors

Fast Company, 2019, How parents talk about money differently to their sons and daughters

Fidelity, 2017, Who’s the Better Investor: Men or Women?

Forbes, 2014, Women and money management: sad story

Gartner, 2018, Most Banks will be made irrelevant by 2030

Investors.com, 2018, The Gender Wealth Gap Is Real. Here’s How Women Can Start To Close It.

Investors.com, 2018, Are Women Better Investors Than Men? Here’s What The Studies Say

New York Times, 2014, Women to Wall Street: Are You Listening?

Smart Investor, 2017, Are women better investors?

Time, 2018, There’s an Investing Gap That Costs Women Up to $1 Million. Here’s How to Fix It

Time, 2018, The Richest Women in America