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Making investing a little friendlier for women

Mark LaMonica, CFA  |  07 Mar 2021Text size  Decrease  Increase  |  
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I approached the assignment of writing an article for International Women’s Day with a fair degree of trepidation. I wasn’t sure what perspective I could provide or how I could contribute but here is my attempt at looking at the day through the prism of the investment industry. International Women’s Day is an opportunity to assess our progress as a society in creating a future where gender equality is finally realised. When looking at the investment industry it is evident that while some progress has been made, the future of gender equality remains a distant dream.

The industry remains overwhelmingly male, which helps to reinforce parochial views about gender roles when it comes to finances. This attitude and the inability to effectively engage with half the population has an impact. According to a study by Wealthsimple, women invest 40 per cent less money than men. As a passionate advocate for investing’s ability to transform lives, I find that stat disheartening. I’ve seen the impact in my own life. My mother got divorced later in life and subsequently was faced with the task of managing her finances in her early 60s. Trying to navigate the transition to retirement can challenge even the most experienced investor. Having previously relied on my father to deal with all of the family finances, this was a bridge too far for even my Ivy league educated mother who successfully ran a company.

I could fill this article with stats demonstrating how the investment industry and society at large have let down female investors. Anyone who is paying attention has seen the disparity in superannuation balances and the studies showing financial advisers put women into more conservative portfolios than men even when they have the exact same objectives. Needless to say, we have work to do to ensure the generational attitudes to money that my mother faced are not passed along as barriers to future generations.  

So what do we do about this? The first thing we can do is to celebrate women who are taking control of their financial future. I’ve had the opportunity to hear some incredible stories from our own subscribers. We recorded a couple of them and I find myself watching the videos as a pick-me-up after I’ve had a hard day at work. I invite you to read about the experiences Margaret or Patricia or Mathilde and to share their stories with women you know today to show them investing isn’t something that is just for men.

The other thing we can do is continue to ensure that the investment industry is more representative and accurately resembles society at large. Having more women in the industry will lead to better outcomes for female investors. Studies show one way to increase the chance of getting good financial advice for women is to simply find a female financial adviser. According to a 2018 study from King Business School, women advised by a male financial adviser feel significantly less knowledgeable about their investment decisions and hold more than 14 per cent more cash in their portfolios compared to women with female advisers.

Once again, we have a long way to go to make this a reality. The investment industry has not had a great track record with women. That means that when you see a woman at any level in the industry it is more than likely that she has overcome so much more than her male colleagues. She has likely dealt with slights, “innocent” remarks and outright harassment that has left her feeling uncomfortable and disrespected at best but in many cases belittled, bullied and isolated. This prolonged emotional abuse can lead to anxiety and self-blame. And women have been asked to continue to trudge ahead, dismiss this as the actions of a couple bad apples. They’ve had to overcome all of this to try to get ahead. They have been made to feel like they are lucky to have a seat at the table when they’ve all had to work 50 times harder to get there. And they’ve been told that they are valued members of their organisations while expected to turn a blind eye as companies ignore and reward poor behaviour from their executives.

So today is a day to focus on chipping away at the problem. If you are an experienced or aspiring female investor—keep it up. It can make an incredible difference in your life. If you are a woman in the investment industry—hang in there. What you do matters, and you are setting an example for future generations who hopefully will have less of a hill to climb. If you are a man pass along encouragement to the women in your life and send along some of the resources we have to help female investors, including the Morningstar Guide to Investing for women or the Investing Compass podcast which features an episode dedicated to improving investing outcomes for women.

Investing Compass
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Finally, I wanted to thank all the women on our individual investor team and everything they do to support our mission of improving investing outcomes. That includes Emma and Shani who are the public face of Morningstar but also everyone working behind the scenes to build a great product—El, Laura, Sylvia, Pallavi, Leisa, Sheridan and Rinchen.

Morningstar's Global Best Ideas list is out now. Morningstar Premium subscribers can view the list here.

See also Morningstar Guide to International Investing.

is a product manager, individual investor, Australia.

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