If Only…. The Economic Regrets,
Dreams and Possibilities of Women

by Joline Godfrey

if_onlyIf only… my parents had put $500 away when I was born (a lot of money back then) and then added $500 a year until I was 18 years old. And then, IF ONLY I’d left it there, today I’d have about a half million dollars* in what we quaintly refer to as a ‘nest egg’ or the start of a retirement fund.

Many women (and let’s be clear—men too, though that’s not my focus here) have a long list of ‘If Only’ regrets:

  • If only I’d put $500 away every year instead of buying all those shoes…
  • If only I’d started an investment account before getting a credit card in college…
  • If only I’d left the money my dad gave me in the account instead of taking it out…Lingering on our ‘if onlys’ is worthwhile if it’s motivational, but not so useful if it’s simply an act of self-flagellation that paralyzes new behavior. I began to think about those ‘if only’ actions in our lives in June when, as a speaker at the San Francisco Area Women’s Summit, I had a chance to ask a roomful of women:
  • How many of you save regularly? At least 2/3 of the women in that room raised their hands.

Then I asked:

  • How many of you invest regularly? Just a smattering of hands went up.

I couldn’t help thinking: IF ONLY, you had invested that money in a passive investing account, like Schwab or Vanguard for example, you might have a larger nest egg today. I wasn’t surprised to find savers in that room at the Summit for Women; one presumes people attracted to the topic ARE savers. What puzzled me was that these savvy, financially thoughtful women did not routinely INVEST their money.

Strangely, hard as I looked, the only actual statistic I could find comparing the percent of women investors to male investors was done by The Telegraph, in the UK. According to them, just 10% of women are invested in stocks and shares versus 17% of men and the ratio of male to female customers among the top 10 DIY investment platforms is 68 to 32. (Can I entice some brainiac business student to take this on as a Ph.D. research project??) But just ask around: how many of your female friends are investing vs. saving? How many of your male friends are investing vs saving?

I left the Bay Area Summit less curious about the math of what their money would have made had they put their hard earned dough into an investment account rather than a savings account– than about the reasons so many of them save but don’t invest. Women NEED their money to work harder because their earning power through wages and salary is still so much less than that of men. And that may be true for years to come. I hate to be a pessimist, but let’s be real. According to the US Census:

  • Women who work full time STILL earn less than men (77 cents for every dollar earned by men);
  • Most women outlive their male partners; and while two-thirds of men over 65 live with a partner, less than half (44%) of women over 65 live with a partner.
  • Given that the average annual income for an elder man ($24,300) is almost 75% higher than an elder woman’s annual income ($14,000) those women living alone are that much more vulnerable.
  • The jobs that pay women more on average employ about 1.5 million women, or just three percent of the full-time female labor force.

Women need their money to work like a brutal spinning class because just counting on salaried and hourly earnings keeps women less economically safe than men. So why aren’t women investing routinely and what do we need to change to get those women with the discipline and means to invest actually in the game?

There are many explanations for why women don’t invest. Sally Krawcheck, one of the most powerful women in finance today and the creator of Ellevest, a female friendly platform for investing, now in beta, maintains that women are misunderstood and mishandled by their male financial advisors, so women simply withdraw. That’s part of the reason for sure. Women’s goals are often incomprehensible to men. For the male advisor the game is often to ‘make as much money as possible.’ But their female client may have other things in mind (not taking unsupportable risks; aligning investments with values; taking a slower, incremental approach to growth, for example).  With their hard won money at stake—women will walk rather than trust their assets to someone who does not share their vision.

And according to Helene Olen, co-author of The Index Card (one of the best inventions in personal finance ever!), a group of Harvard University academics uncovered a robust list of bad behaviors among financial advisors: making unnecessary but fee triggering changes in their portfolios; directing them to more expensive, higher risk investments; and demanding inappropriate access to all their personal information. While these behaviors appeared to be ‘equal-opportunity’ awful, women were more frequently targeted – seen as vulnerable, less knowledgeable and more gullible.

I don’t think women avoid investing, I think they avoid the barriers and baggage that surrounds investing as it evolved over the last thirty years.  In 2008/09 when stock prices were in the cellar – there were real investment opportunities. But that was also the moment when the malfeasance of the big investment firms came to light. Women raised to stay out of cars with strangers, were not about to get into an investment relationship with the same ‘guys’ who had just taken the country on a reckless ride that ended in a monster wreck. And in the last eight years, as the financial industry has chipped away at the fiduciary standard that SHOULD guide the way they behave with ‘other people’s money,’ women have watched with more disgust than horror and simply avoided the whole industry.

So what do to? Hoping Wall Street will rediscover its moral compass (yes, I believe it once had one) is naïve. But it’s not crazy to think that a slice of the investment world is beginning to see opportunity in providing women (and men) with the kind of trustworthy, reliable investment advice they need. And of course if that slice of the industry DOESN’T deliver, more women – and men – will turn increasingly to services like Vanguard, and similar platforms that don’t prey on the clients they’re supposed to serve.

But even as the investment world morphs from unscrupulous human advisors to (hopefully) more reliable technical algorithms, millennials are changing the face of the investment world with practices not possible even a dozen years ago. Growing up digital they’ve driven the invention of platforms like gofundme.com, kickstarter, and indiegogo. Conventional philanthropy and entrepreneurship are melding together to give people who were either philanthropists or investors vehicles for aligning their ‘doing good’ impulses with their ‘making money’ desires. From the socially responsible practices of a Boston Common Asset Management to the inventive possibilities of a Kickstarter campaign, new, accessible and appealing institutions will eventually replace the unsavory dinosaurs hanging on to old ways.

If only Wells Fargo, for example, could see that consumers – of both genders – value integrity; if only financial advisors trying to trick their clients into unsafe financial practices, could imagine an industry that was aligned to build the future, not just game it, we’d all be in better shape.

One reason I’m so excited to be a guest blogger on Paul Merriman’s site is that I think he is part of the new; part of the future of a more ethical, responsible movement to support the dreams of people seeking sustainable, creative lives—using practices driven by purpose—and a solid moral compass. I’ll be anxious to hear what you think the future will bring—and welcome ideas for making the world of investing more enticing to women everywhere.

*$500/year for 18 years compounded at 7 percent for 18 years (1960-78), then left to compound at 7 percent with no additional contributions to 2016 is $480,800 – a 53-fold increase of the $9000 contributed by the benefactor.