Why aren't more women investing? Experts weigh in at E*TRADE panel discussion

A perspective from E*TRADE Securities 03/29/19

How do you feel when your friends gloat online about glamorous vacations and expensive homes? If images of exaggerated wealth somehow make you feel less successful, you’re not alone. According to a StreetWise quarterly tracking study, 47% of the experienced investors surveyed believe images of exaggerated wealth make them feel less successful. That figure jumps to 69% for women under 30.

In addition, more than half of the women under 30 surveyed believe that worrying about finances negatively affects their relationships and health.

What can be done to relieve the financial anxiety that some women—particularly younger women—feel when it comes to finances?

Last week, E*TRADE hosted a panel discussion at its New York headquarters to discuss themes around women and investing. In front of a capacity crowd, five distinguished investment professionals shared their personal experiences and offered professional insights. Below, we’ve included some of the highlights of the discussion.

"Women and Investing" panel discussion at E*TRADE New York headquarters, March 20, 2019

“Women and Investing” participants:

•  Moderator: Peggy Collins, US Investing Team Leader and Personal Finance Reporter, Bloomberg

•  Teresa Kong, CFA, Portfolio Manager, Matthews Asia

•  Wendy Longwood, Chief Operating Officer, Dress for Success Worldwide

•  Christy Oeth, Chief Compliance Officer, Virtu Financial

•  Mary Ryan, Senior Equity Options Strategist, E*TRADE Securities

Financial literacy is often lacking

Because studies point to a significant gender investing gap, a major focus of the discussion centered around what can be done to get more women into the markets.1

Virtu Financial’s Christy Oeth expressed disappointment that there’s so much mystery around investing—particularly given the abundance of resources in the information age.

“I find it frustrating with the growth of information that’s available today, that we’re still in the spot where women don’t feel that confidence,” said Oeth. “Financial jargon tends to be a real barrier for women. Any way that we can remove jargon from what is just a fundamental conversation about what you need to do with your money in order to retire would be a great step forward.”

Oeth believes that older women are at a particular disadvantage. “In some cases, women never have to take responsibility for their money because they cede that control to their spouse or partner,” she said. “As they get older and find themselves in a more vulnerable situation—maybe their partner has left or is deceased—they feel that informational gap even more.”

Women don’t always see themselves as investors

Part of the problem, according to Dress for Success Worldwide’s Wendy Longwood, is that women don’t always see themselves as investors.

“Almost all of the women in our financial education programs that we’ve worked with initially said they thought investing was for someone else. In many cases, they thought it was just for the ultra-wealthy,” said Longwood. “But once they had an opportunity to learn more and to invest, they showed a dramatic increase in confidence. They felt more comfortable discussing financial instruments and had informed conversations about making choices for themselves.”

Almost all of the women in our financial education programs ... initially said they thought investing was for someone else. In many cases, they thought it was just for the ultra-wealthy.

Wendy Longwood, Dress for Success Worldwide

Personalizing the investment experience

So, what’s the recipe for getting women more engaged about finances? One idea, said the participants, is to personalize investing from a woman’s perspective.

“Some studies have shown that women are responsible for up to 85% of consumer purchases,” said E*TRADE’s Mary Ryan. “Since we are the ones doing the majority of purchasing, it makes sense to focus on the companies we spend money on. I personally tend to invest in companies that I’m a consumer of and that I truly believe in.”

Women often get more serious about investing during major life events, added Matthews Asia’s Teresa Kong.

“When you make that first appointment for your sonogram, that’s when everything kicks in,” said Kong. “Women start to ask themselves, ‘Do I need a bigger house? Do I need to add a room?’ Financial services products could really be aimed at solving specific life issues for women."

Becoming comfortable with risk

The StreetWise study also reported that younger women tend to be more bearish than most investors.  

Ryan says women who’ve come of age since the 2008 financial crisis had not previously experienced significant volatility until 2018. 

“The S&P closed out last December with its worst year in a decade,” said Ryan. “A lot of older investors may have gone through a market downturn before. But for the females under 30, this was the largest market downturn they’ve seen.”

That’s why it’s important for women to understand their risk tolerance, said Kong. “It’s not about the upside. Everyone wants to make money. It’s really about the downside. How much are you willing to lose? 5% per year? 10% per year? That is really what your risk tolerance is all about. That will lead to your asset allocation decision.”

It’s not about the upside. Everyone wants to make money. It’s really about the downside. How much are you willing to lose?

Teresa Kong, Matthews Asia

However it’s done, the participants agreed that women would be better served focusing on financial objectives rather than performance.

“The aim isn’t monetary returns,” said Longwood. “It’s not an ROI. It’s not a number. It’s not a percentage increase. It’s a life goal.”

That’s a lesson all investors can take to heart.

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1. Acorns Equal Pay Day Stats on the Gender Investing Gap, 2018, https://sqy7rm.media.zestyio.com/EqualPayDay.pdf

Bloomberg, Dress for Success Worldwide, Matthews Asia, and Virtu Financial are separate and unaffiliated companies from E*TRADE Financial and its affiliates (“E*TRADE”).

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