US women bridging investment gap through financial advisory groups, Latest Business News - The New Paper

US women bridging investment gap through financial advisory groups

This article is more than 12 months old

WASHINGTON: As a professional woman in her late 30s, Ms Kate Packard was keen to start investing. Like many novices, her enthusiasm took a knock when she hit a wall of impenetrable jargon and was all but killed off by "mansplaining" from the men around her.

"They'll be like, 'Money is green. And it is paper,'" said the strategic communications manager from Virginia.

"Yes, thanks, I can get there on my own."

The 38-year-old turned to one of a growing number of groups run by women for women to help bridge the sex gap in investment.

Women are significantly less likely to invest in the market than men. Based on studies from 2016 and 2017, the micro-investing app Acorns found 57 per cent of women do not invest at all, versus 44 per cent of men.

Over a lifetime, that can translate into hundreds of thousands of dollars in lost income - and can hit particularly hard in countries like the US, where wise investment can make the difference between hardship and comfort in retirement.

Confidence is key: 61 per cent of women in the Acorns study felt they had a low level of understanding when it came to investing, compared to 43 per cent of men.

"For the novice, it is really intimidating," said Ms Pamela Sams, a financial adviser in Virginia, who hosts regular group meetings for women like Ms Packard who want to better manage their finances and investments.

Ms Packard's account backs that up.

"I'll see a word I don't know, so I look it up. But then there is another word I don't understand. Suddenly I am four definitions deep, and I am tired and discouraged," she said. "I wanted to be among women."

Ms Sams started the group in October last year, including an online forum where members can post questions.

"Women need a safe space to really find out about these things," she said.

Her experience has taught her many women are not comfortable handling longer-term investments, even if they feel fine managing daily finances.

Only 27 per cent of women feel their education prepared them to manage their own finances (versus 35 per cent of men), according to the study.

Ms Sheila Handler, a data and policy analyst in Washington, started looking into opening a market-linked retirement account in March and found herself ill-equipped.

"My parents have tried to instil good money sense in me, such as saving aggressively, but the next step is never something we have talked about," said the 24-year-old.

"Not that there is any real chance of loss, but it is such a large quantity of money," she said. "So I feel overly cautious."

A succession of studies has shown women to be more risk-averse than their male counterparts.

While this attitude can actually make them better investors - women outperformed men by 0.4 percentage points, in a Fidelity client data analysis for instance - it can also be what holds them back.

While Ms Handler is starting relatively early, a reluctance to invest can have heavy costs.

The women's investment advising company Ellevest estimates that over a 35-year period, lower investment can cost anywhere from about US$270,000 (S$365,000) to more than US$1 million, according to projections based on average salaries and standard asset allocation strategies. - AFP