Should women rule the investment world?

On Tuesday night, January 18, at the Cornell Club in New York City, Myron Kandel, one of the founders of CNN, moderated a panel in which I sat, along with four other financial professionals. Our most irritating question: “Should women rule the investment world?” In fact, I took the presumptive approach upon entering and while on the panel. I told my guests that the panel was called “Why Women Should Rule the (Investment) World.” Because all the data points in that direction.

To consider:
• For the first time in our nation’s history, in 2010, women controlled the majority of our nation’s wealth. In fact, we control 60%.
• By 2030, 54.9% of all boomers will be women.
• We are currently two-thirds of the workforce.
• Women spent 81 cents of every dollar.
• 80% of women will be responsible for all financial decisions in households.
o This supports a study by Citibank that found that 73% of all women who work full time see themselves as the CFO of their family, moving from seeing themselves as the “purchasing managers” of his family.

Still:
• 90% of women feel financially insecure.
• 50% fear losing everything and becoming a bag lady (and that includes 48% of all women who earn at least $ 100,000 per year).
• Only 1 in 5 women reads the financial section of a newspaper (while 3 in 5 men do).
• 42% of women do not know what an investment fund is.

Come on, Wall Street! Wake up and smell the Starbucks! Women have earned all this financial and fiduciary responsibility, but they are not getting the information they need to make sound financial decisions! Are they going to go to the big Wall Street firms to get it? (I don’t think so. Wall Street lost much of its credibility and is only now digging). Are they going to go to the talking heads of “Money TV”? (I don’t think so. Most viewers perceive that as entertainment versus education). Will they go to their financial advisor? (I don’t think so. 86% of all financial advisers are men). And we already know that women are not reading the financial section of a newspaper.

And frankly, since most financial writers come from journalism, compared to economics or finance, and have never had fiduciary responsibility for other people’s money, can anyone really trust that they have a deep understanding of what is going on? happening? (NOTE: There DO exist wonderfully gifted, talented, and brilliant finance writers and talking heads, but they are few and far between. The good ones are usually REALLY good; most of the rest are not financially educated enough to communicate their important lessons).

Wall Street needs a good shake up and turn it around. Your language must be communicated creatively for all women to understand. Most women don’t read much of the material on finance because it is as boring and dry as sawdust. Therefore, finances seem overwhelming, complicated, confusing and … BORING to most women.

It’s no wonder we’re in trouble.

My participation on the panel included these talking points, and more:
• The first question to answer is: “Do you know what you own and why do you own it?” As I mentioned that night, I ask this question of all clients and prospects. I have never met anyone who can answer both sides. We are not talking about Monopoly money here. This is real money. Serious money. You better be able to answer this very simple question about your own money and investments or if someone is sleeping on the switch.

• The female money brain is different from the male money brain. Ask any woman who has more than one gender in her offspring. Women:
o Desire to embrace their femininity, which will produce different gender-specific decisions about how to spend the money.
o Desire to nurture their children and families, which will produce different risk management measures.
o They are more downpour of risk. When the combined real estate crisis and financial crash of 2008 wiped out half of investor wealth, men tended to look at the world with anger and perceived that the world was less risky. Women tended to look at the world with fear and perceived the world as more uncertain.
o They are less likely to take “The Big One”.
o You trade less often than men. Men trade on average 45% more than women. Single men trade more often than married men, who trade more often than single women, who trade more often than married women.
o Double profitability when running hedge funds. The problem is that only 6% of all hedge funds are managed by women.
o Portfolio managers average 1.4% more profitability than those led by men.

• Work on personality theory, supported by the various disciplines of philosophy, psychology, behavioral finance, psychoanalysis, psychometry, and neuroendocrinology, shows that different personality types “see” money differently. different. I am using this research in my next book, What Color is Your Bag? get women back to finance. My goal is to see women fascinated by money, choose to study it, ignite their imagination and fuel their inspirations.
o Hippocrates noticed personality differences as early as 400 BC
o Galen named the Four Personalities.
o Carl Jung developed the type-trait personality.
o John Holland studied the “science of personality.”
o Freud, Kant, Erickson, and Myers-Briggs developed their own version of the personality type test.
o Recent writers who subscribe to the notion that there is a “money personality” have got it backwards. There is no money personality. Each of us has a personality, from which we derive the way we “see” and handle money. How we earn it, spend it, save it, invest it, and give it away depends on our personality (not the other way around!)

• The relatively new field of neuroeconomics shows that “animal spirits” question or emphasize efficient market theory. It turns out that people don’t use logic and reason to make investment decisions; they behave irrationally.
o Investors are more willing to take more risks to avoid losses than to make a profit. It turns out that investors essentially get risky to avoid losses!
o Investors face the fear of regret when dealing with their own money.
o Investors tend to have excessive confidence in their ability to invest. They tend to confuse luck with skill.

Should women rule the investment world? In many parts of the developing world, they certainly are. As Mark Monchek, a guest of the audience at the question and answer session, pointed out, almost all microfinance is dedicated to women’s businesses. If money rules the world, and the hand that rocks the cradle rules the world, I’d say it’s pretty safe to assume that women are certainly getting there. But we have to control it. As a woman, you need to know who you are, where you are, where you want to be, and how money can help you get there. And to do all of that, you really have to “get” money.

Panelists from the Cornell Club of New York City’s Money: More Money Series on January 18, 2011: “Should Women Rule the Investing World?” They included: Nancy Trejos (The Washington Post); Liz Pulliam Weston (called the most widely read personal finance columnist on the internet; Muriel Siebert (the first woman to be listed on the New York Stock Exchange and founder of Muriel Siebert & Co., Inc.); Jason Zweig (The Wall Street Journal) and Carolina Fernández (VP Investments, Source Capital Group and founder of “SheEO Network”). Myron Kandel, moderator, is one of the best-known financial journalists in the country. As one of the founders of CNN, he pioneered the news financials on television and served as the network’s financial editor and economic commentator for 25 years.In 2000, he was named one of the 10 most influential financial journalists of the 20th century.