Women Investors: 3 Things to Know

Each year on March 8, we are reminded that despite the tremendous progress women have made in the financial world over the last several decades, there are still hurdles to overcome. International Women's Day is a day recognised around the world to acknowledge and celebrate the social, economic, cultural and political achievements of women.

This year's theme is #BreakTheBias and I thought it might be fitting to look at a few of the common biases when it comes to female investors - and how financial advisers can work toward better addressing some of these, not only with clients, but with their teams as well.

1. All the single ladies?

Demographics are reason enough for women to play an important role in financial planning and its decisions. My father would always tell me about the strange looks he would get when he explained to friends and teachers in school that he had two working parents. Back in the 1960s, it wasn't so common for women to return to the workforce once they had children. We have come a long way! Women today are more likely than ever to further their education¹, delay marriage², delay starting a family³… if at all, because more women are choosing to forgo marriage and family altogether.

This, combined with the fact that women generally outlive their male counterparts4 and are more likely to become widowed at an earlier age5, means that women are set to inherit a staggering amount of wealth over the next several years. By 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers will possess.6 This wealth transfer is just too significant to ignore.

How are you engaging with your female clients?

2. Risky business

Women tend to be perceived as being more conservative when it comes to investing relative to men, when this couldn't be further from the truth. Women are significantly more risk-aware than men, meaning we are more likely to do the research to ensure we are properly rewarded for taking on additional risk. A recent BNY Mellon study found that if women had invested at the same contribution rate as men, there would be at least an extra $3.22 trillion of assets under management from private individuals today.

So why aren't women investing as much as men? The disconnect typically lies in investor confidence. Women are less likely to invest, period. Behavioral finance tells us that there are reasons to explain this. Studies7 have shown that men overestimate their abilities and performance; women underestimate both, yet their performance does not differ in quality. When it comes to wealth, particularly women's financial wellbeing, this lack of confidence can be costly.

What steps can you take to empower your female clients?

3. Mind the gap

Though women today are in a better earnings position than they have been throughout most of history, the wage gap has remained relatively stable over the course of the last decade and a half. In 2020, a woman in the workforce received approximately 84 cents for every dollar that a man earned8 for the same job. Unfortunately, for women of color, this gap is even more pronounced.9 I would be remiss if I didn't also mention the impact that COVID-19 has disproportionally had on women. Not only have many women been forced to leave the workforce, but many also had to take a step back in their careers to focus on family and take on significantly more responsibilities in and outside the workplace.10

The good news is that women are moving up the corporate ladder and the wage gap narrows as career advancement does. There are more companies run by female CEOs today than ever before11 (I am proud to be part of one!) and the number of female entrepreneurs has grown an impressive 114% in the last 20 years.12

How can you better tap into the needs and concerns of your female clients?

5 ways your Russell Investments team can help

  1. Women Wired to Invest: Your Russell Investments regional director can share additional facts about how women are wired and tips on how to serve them best.
  2. Women Wired to Invest client presentation: Invite your female clients and prospects to a special event and have a Russell Investments expert share how a trusted financial advisor like you can help women unlock their financial power and take control of their future.
  3. Get organized checklist: Provide your female clients with a checklist to get them organized on issues that will shape their financial future.
  4. Deep discovery: Engage your female clients and prospects through a deep discovery process designed to identify their true priorities.
  5. Effective client reviews: Deepen your client relationships in every review meeting by providing perspective, reviewing your process and their progress and exuding poise.

The bottom line

Women are wired to invest. Whether they earn it, marry it, or inherit it, the undeniable fact is that at some point in their lives, 90% of women will be in control of their personal finances. It is each of our responsibilities to empower women and the future generations of women to make sound financial decisions and be a part of the conversation. Awareness is a powerful tool to show us just how far we have come and where we still have to go.

"Every woman’s success should be an inspiration to another. We're strongest when we cheer each other on." - Serena Williams


¹ https://data.worldbank.org/share/widget?indicators=SE.SEC.CUAT.PO.FE.ZS&locations=CA-US
² https://ourworldindata.org/grapher/age-at-marriage-women?country=GBR~USA~CAN
³ https://www.forbes.com/sites/ashleystahl/2020/05/01/new-study-millennial-women-are-delaying-having-children-due-to-their-careers/?sh=28e572a5276a
https://data.worldbank.org/share/widget?indicators=SP.DYN.LE00.FE.IN&locations=CA-GB-US
https://www.census.gov/library/stories/2021/04/love-and-loss-among-older-adults.html
https://www.ipcc.ca/documents/23852/531463/08_17_PW_Women+and+Wealth+White+Paper-Aug14_02_FINAL/3c6f8b93-6381-4454-b270-7efaf6a086b4?version=1.0
https://www.theatlantic.com/magazine/archive/2014/05/the-confidence-gap/359815/
https://www.pewresearch.org/fact-tank/2021/05/25/gender-pay-gap-facts/
https://leanin.org/data-about-the-gender-pay-gap-for-black-women#the-pay-gap
10 https://www.mckinsey.com/featured-insights/diversity-and-inclusion/five-fifty-the-pandemics-gender-effect
11 https://www.cnbc.com/2021/06/02/fortune-500-now-has-a-record-41-women-running-companies.html
12 https://www.fundera.com/resources/women-owned-business-statistics

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