This article was originally published in ACM Wealth
As a financial advisor, I consider it my life’s purpose to educate women in financial literacy and to collectively raise up all women within the profession. In college, I majored in history, and I was told it is his story—in other words, women were not important enough to be included. Thomas Jefferson wrote, “We hold these Truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.” In the hit musical “Hamilton,” Angelica Schuyler says, “When I meet Thomas Jefferson, I am going to compel him to include women in the sequel.”
In recognition of Women’s History Month – or as I like to call it, Herstory Month, I thought it would be fit to recognize some real concerns that women continue to face today.
Women and Wealth
Women have been fighting for equality since the days of America’s Forefathers, yet when it comes to finances, as of 2020, 33% of U.S. millionaires are women. By 2030, women will control two thirds of the nation’s wealth, according to the Family Wealth Advisors’ Council.
Society expects women to plan for many things, like vacations or weddings—but it doesn’t expect them to plan for their financial futures. With 92% of women wanting to learn more about financial planning, according to Fidelity Investments’ 2015 Money FIT Women Study, it makes sense to dedicate financial planning services to women.
The Gender Pay Gap
The financial industry media often runs stories emphasizing that the financial advisory industry has one of the largest gender pay gaps of all industries. In recent years, websites such as MarketWatch, Fortune, Financial Planning, and ThinkAdvisor have all run stories covering the large gender pay gap for financial advisors.
On average, women earn 80 cents for every dollar earned by men, according to the National Partnership for Women and Families 2018 report. This statistic shows that the pay gap is real. It’s so real that on January 16, 2019, Citibank even stated that their female employees did make 28% less on average than male employees, but they also pledged to reduce that gap moving forward.
Some countries are making strides in closing this gap. Last year, Iceland outlawed the Pay Wage Gap on January 3. In the United States, it is difficult to navigate pay since pay transparency doesn’t exist in most US companies. What I’ve found useful is Motto and TIME’s How Much Would You Make if You Were a Man? Calculator. When I used it, it said I would make 90% more if I was a man. Even worse, it says the gap widens if you have children.
While pay transparency is still a work in progress, in the US, Equal Pay Day is recognized on March 14, 2023; this date marks how far into the year women must work to earn what men earned in the previous year.
Women and Careers
We have unconscious and conscious biases against us in the field of finance. I’ve been told that when I got to a certain asset size I could “play with the big boys.” I’ve heard, “Why is your hair so long? Why is your hair so blonde? Why are you so happy and smiling, you must be deeply insecure and hiding something.”
I’m still wondering if any man has had to deal with these types of questions in this profession.
The Confidence Gap
Studies show women generally underestimate their abilities and knowledge, which can impact risk tolerance and therefore investment returns. In my experience, women are more risk averse. They hate to lose money and feel that they can lose it all in the stock market.
I like to show them Callan and Ibbetson charts. I tell them the only way they can lose it all is if they put all their money in a stock that goes bankrupt, or if they invest in a Ponzi scheme—and with me, neither scenario is going to happen. I also have seen women hoarding cash because they think it is safer. I have to explain how inflation hurts them and how they are losing money with low rates, taxes, and inflation.
When it comes to going for jobs or speaking up at a meeting or self-promoting yourself, there is also a confidence gap. These can be very difficult things for us! I always say that women have to have all 10 skills to go for a job while the guy who only has 3 goes for it too.
I believe that we, as women, have to educate each other, talk more about money, and help each other professionally. Mentorship and sponsorship is a great place to start. Let’s help each other change herstory and make the hashtag come to life: #thepresentisfemale #empowerher
