Tuesday 3 December 2019 7:38 am CFA Institute Talk

Women and Wealth: Three findings and their risks

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Barbara Stewart, CFA, is a researcher and author on the issue of women and finance. She released the ninth installment of her “Rich Thinking” series of monographs on International Women’s Day, 8 March 2019. Stewart uses her proprietary research skills to work as an Executive Interviewer on a project basis for global financial institutions.

Barbara Stewart, CFA, is a researcher and author on the issue of women and finance. She released the ninth installment of her “Rich Thinking” series of monographs on International Women’s Day, 8 March 2019. Stewart uses her proprietary research skills to work as an Executive Interviewer on a project basis for global financial institutions.

In a decade of researching women and finance, I have interviewed more than 800 highly accomplished women globally from diverse ages, backgrounds and industries.

My three main findings relate to women’s preferred communication style for investing, the types of investments that appeal to most women, and attitudes to risk-taking.

So, what are these three findings, what changes do they demand from the investment industry, and what are their top three associated risks both for financial advisers and their female clients?

1. How women prefer to communicate about money and investing


Most women downplay their accomplishments or knowledge when asked. 

According to a 2018 report from FINRA (the Washington DC-headquartered Financial Industry Regulatory Authority): ‘Women answer “Don’t know” more often when surveyed. After removing respondents who answer “Don’t know” from the analysis, the gender gap in financial literacy narrows for boomers and Gen-Xers and nearly disappears for millennials.’

From my interviews, nearly all women favour stories about people rather than charts and graphs. Women are more inclined to share real-life issues with their friends and the next generation: family life is central. Women tend to talk about money matters in more grounded ways, with a view to how a financial situation or an investment is likely to affect their family and lifestyle.

What is risky about communicating in a woman’s language about money and investing?

For advisers:

  1. It can be a career risk to try and change the way things are done. About five years ago, when I was working as a portfolio manager, I shared an idea in an investment committee meeting: let’s come up with stories about each of the companies we hold in our client portfolios. That way it will be easier for clients to understand what they’re invested in. My idea received no comments – it came across as crazy. But now many firms use female-friendly social media and trading platforms with clear, story-based communication.
  2. The investment industry has a history of focusing on male clients. It is risky for advisers to change and start directing conversation to both the women and men in the room. What happens if the men feel demoted? We need to make female clients feel important, but without making male clients feel less so.

For female clients: Advisers’ job is not to judge the reasons why some female clients don’t invest – our job is to get them started. We need to effectively communicate. Why is this critical? Because cash is among the lowest-performing asset classes, and on average, women live nearly five years longer than men. That means the average female retiree needs to save and invest well over $100,000 (£77,500) more than the average man.

2. Women prefer to invest in causes and concerns that matter to them.


In 2013, I interviewed 100 smart women about how they were investing. At least half said they were spending some portion of their potential retirement funds on what matters to them now rather than investing in longer-term asset classes. In fact, 25% said they were investing a sizeable portion of their wealth in a business that was directly related to their personal cause. I have also conducted commissioned research on the same topic for banks, and this finding was confirmed.

What are the main causes that matter to women? Ideas that will benefit society by promoting health, children’s welfare and social justice. Investing is a powerful way to accomplish that.

As I pointed out in ‘The Female Asset Mix: Value Investor or Investor in Values?’, it is advisers’ fiduciary responsibility to ensure we have a deep understanding of clients’ investment objectives and constraints. Their values are just as important.

What is risky about investing in causes and concerns that matter?

For advisers: It may be against the firm’s policy to sell outside products that might better align with client values. Or it may mean the adviser earns less by doing so. But firms and advisers need to create deep value propositions that resonate with all customers if they want to stay relevant. They need to make applying environmental, social, and governance (ESG) screens as easy as a click on a drop-down menu. The finance industry needs to connect what is personally meaningful to each woman with relevant investment opportunities.

For female clients: Women are searching for investment opportunities that reflect their values. Often these securities will be in assets more ‘risky’ than the average stock.

3. Women aren’t risk averse; they are risk aware.

As long as an opportunity is aligned with a woman’s personal causes and concerns, she will be motivated to take a risk. Today, we have a powerful combination of digital tools and motivated women with a high tolerance for risk.

What is risky about getting risk wrong?

When we talk about risk tolerance, we often assume the risk we are tolerating is short-term market volatility. But the real risk is when longer-term investment objectives are not met.

For advisers: If clients don’t take enough risk or if they take too much risk, we end up with an unhappy client. Make risk a much broader conversation.

For female clients: It is risky when advisers blindly follow stereotypes about risk. A woman’s longer-term objectives will not be met. Advisers need to communicate in her language and hear her stories.

The overriding risk?

When it comes to women and wealth, the biggest risk for advisers is refusing to change. In turn, the biggest risk for female clients is settling for poorly delivered and outdated advice.

We as an industry must accept and embrace these findings or risk losing our clients and even our businesses.

Change can introduce lots of discomfort for both clients and advisers. But, paradoxically, change may turn out to be the best way to manage risk.

Visit CFA Institute for more industry research and analysis.

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Are you a woman in wealth? Or a woman of any kind? We would like to invite you to take part in the Rich Thinking® survey on how women are investing in 2019 and beyond. The survey takes about 5 minutes and is live until 31st December 2019. Barbara Stewart will release the findings on her website from January 6.


All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images

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