Now I do not think that there is a difference between what a man and what a woman should make in the workforce, and there is no reason why women cannot be successful in investing. Now I have little control over the pay issue as I have no employees what so ever. And I truly believe that women can do every bit as well as a man when it comes to investing. I do not have to look far to see successful and strong women in my life. My wife is from Peru and was a successful dentist there who is studying to be a dentist here. She worked extremely hard and has a good sense for what to do with the money she makes. And there is my mother who took control of our family’s finances when my sister and I were young and built a sizeable nest egg for her and my father. She had some help along the way, but for the most part, she called the shots on all of the financial matters in our household.
Let us be honest here and just flatly state that women and men approach finances in many different ways. Men tend to think of returns and risk regarding how does it compare to a standard deviation. Women tend to think of risk more in terms of can I live with the result or am I achieving my set goals that I am saving or investing towards. It is pretty plain that men and women, while both equally able to handle investments, look at the art of investing very differently. Men tend to get caught up in financial terms and the language of Wall Street. All you have to do to see this in action is watch a day’s worth of CNBC or Bloomberg television. It is a non-stop string of financial jargon that is alien to most men and women alike.
Most financial planners are geared towards dealing with men not women as well. A good planner will take a holistic approach to the financial plan that they are preparing, but in almost all instances it will be geared and directed at the men and not the women. That is because most men assume that they are superior to women when it comes to finances. That is complete and utter BS in my opinion. Men have no distinct advantage over women, and there is no reason why a financial plan cannot be designed to appease both a man and a woman. Good planners understand that there is a very distinct difference between how men and women see the financial world. Now I am not saying that one is correct, and the other is not, but I am saying it is approached in different and distinct ways by the two sexes.
In recent years there has been a new way to invest that did not exist ten years ago, and that is by robo or computer driven advisors. Just as with most financial aspects of the current world, they are also geared towards men and not women. When men invest, they think of returns, risk, and their retirement funding. Women tend to think more long term and invest differently depending on what it is they are investing for or saving for. And women tend to live longer, so they will take a different approach to their investments due to this fact. Now there are many different robo advisors out there from Betterment to Wealthfront and even the newer Acorns that is based on round-ups from linked financial accounts. But now there are two robo advisors that are geared towards women and are run by some extremely capable and experienced women.
The first is Ellevest which is run by CEO Sallie Krawcheck who once ran Bank of America’s Merrill Lynch division. She says women are more goal oriented when it comes to investing and not driven by simple risk. For women, it does not matter as much as it does for men to beat the markets. Women are more concerned with achieving their goals and Ellevest is set up to assist women in doing just that, achieving their goals. The company uses a questionnaire to assist in developing an investment strategy. Then it develops such goals as “Retirement on my terms,” “Once in a lifetime splurge” or “Me” which is designed to focus on net worth. This is a very different approach than robo advisors that are geared towards men. They then use low-cost exchange-traded funds to invest in to help reach your goals in what is a customized target-date portfolio designed to be successful in 70% of market scenarios. Most other robo advisors us a 50% model.
Another new company that is also geared towards women is WorthFM which is currently in beta testing. Like Ellevest it uses low-cost exchange traded funds and customized portfolios to achieve targeted goals, not just investing for retirement. It mainly uses five model portfolios in conjunction with other financial aspects of one’s life such as emergency funds and debts to take a holistic approach to one’s complete financial picture. This is a company to watch for when it goes live and to keep an eye on. It has reasonable fees and will offer a fairly comprehensive financial package to not only women but men. But it will be geared towards a woman when it is all said and done. According to WorthFM’s CEO Amanda Steinberg, 15% of their current beta customers are men.
While Wall Street and investing tend to be dominated by men, women have a place in the mix and are becoming more and more represented. These are just two examples of robo advisors who are targeting women, and I am sure there will be more in the near future. Also, more and more financial planners realize that the woman in the families they serve play an extremely important role in the financial dynamics of the family. As planners and more companies shift from the male version of investing to more of a neutral one women will be better served.
If you have any questions or comments on these new companies or robo advisors in general, feel free to contact me.
