Last week, Sallie Krawcheck, CEO and cofounder of Ellevest, tweeted: As we round the corner into March, there's another money lie we should put to rest: that the financial and economic progress of women is inevitable. (Hint: It's not.)
One of the most powerful women in finance, her mission is to help women reach their financial goals.
Here are some misconceptions she speaks about with respect to women and finance. These have been extracted from her blogs and her interaction with Morningstar in a podcast a year ago.
Lie: Women aren’t aggressive.
Truth: They don’t invest enough.
It is not that women don't invest aggressively enough, it’s that women don't invest enough. We see nothing that says when they do invest, they do so less aggressively than men.
What we are NOT seeing: “Hey, women are investing, but they're just in 2-year bonds. The dudes are all in Internet stocks.” What we are seeing is that they don’t invest as much as men do.
When getting women to invest, our biggest competition is cash and inertia. This traces back to their history with money. In households, families talk about money with their little boys more often than they do with girls. To compound that differential, even the content and context differs. For boys, it’s more about how to build wealth and learning from their fathers as they invest. For girls it’s more about saving and budgeting, and learning from their mothers.
Lie: Women aren’t motivated.
Truth: Their goals motivate them.
The biggest mistakes men make when it comes to investing is probably overtrading, spending too much in fees, and believing that they can time the market perfectly. Those aren't the mistakes women make. The mistakes women make is not investing as much.
Women are not motivated by trading. They are not particularly driven by a goal of having more money.
They are propelled by their financial targets. They find it purposeful if they know what they are investing for. If they can see themselves starting a business in five years, buying the home they want in seven years, having a baby in two years, retiring well, taking the trip around the world, and so on. Those are the things that get them excited.
Nowhere on our website do we have a pure performance focus with a relevant index. It doesn’t matter. It's not our goal. We're not just trying to get her more money or the most money. Our goal is putting together diversified investment portfolios. We help her calculate how much home she can afford. How much she needs to retire at the age of 65 with 90% of her income at the time, annually available to her every year through the rest of her life. How much she should put aside to start a business in x years.
We also tell her that she actually can't afford the entire future envisaged: to retire, have five kids, buy the home, start the business, and take the trip around the world. She would have to make trade-offs amongst those goals, prioritize them or invest for both simultaneously.
Lie: Women aren’t interested.
Truth: Their advisers talk at them, not to them.
Women often outsource the management of their money to their spouse. But since women tend to outlive their husbands, that money comes back to them. The year after their husbands’ death, a huge number of them leave their joint financial adviser. I was running these big companies. I remember I'd stand up on stage and say, we brought in this much in assets yesterday and we lost this much to death.
Women say, “I just didn't feel like he was my financial adviser. He and my husband would play golf, and I would go to the meetings and they wouldn't sort of talk to me, I never really understood, there was a lot of jargon and now I'm going to take the money and go to the bank and just keep it safe.”
We would do all kinds of focus groups and tests. There was a group of meetings we did in which the financial adviser would meet with a couple, and we'd watch it behind the glass. When they left, we would ask the financial adviser what percent of the time was spent talking to him versus her? And the financial adviser might say, “Well, 55% him, 45% her.” And then we would run the tape and it would be like 85-15 or 90-10. They would overestimate how much they spent talking to the woman and underestimate how much they spent talking to the man.
We hear a lot from women telling us that they were not understood. They were talked down to and made to feel not smart. That too much jargon was flung at them. And then we wonder why women stay away.
Lie: Women like to take career breaks.
Truth: Sometimes, it’s not really a choice.
Through the ages, we have lived in a patriarchal society that has dictates to us that women take more career breaks. They are the caregivers – whether it is babies or parents or in-laws. Some women step out of the workforce for a year or two years, which obviously impacts their earnings not only in those two years but in the years after.
We can talk about it as being a women's choice, but mostly she has no choice. Sometimes, families are being driven into choices that are not true choices. They are made from, positions of, somebody has to take care of this child and I don't have the ability to do it while I have to be at work. And society still dictates that it's a woman's place, not a man's place. Businesses dictate it because so many businesses today will still provide maternity leave--they may not provide a leave for the father or the nonprimary caregiver.
Lie: If she is not earning much, she is not that good.
Truth: Sometimes, it is not your fault.
Women are socialized not to negotiate as much, not to be as aggressive. Over the course of my career, I found that if you give an offer to someone and they negotiate, you may give them more money. If you give an offer to someone and they don't negotiate, you're never going to give them more money.
In our firm, we actually had a engineer prospects. When we made the male an offer, he negotiated. The female, for exactly the same type of role, did not negotiate. We ended up giving him additional pay because he negotiated; we ended up giving her that as well, because it really is the exact same job.
White men are promoted based on potential; women, people of colour, and minorities are promoted based on achievement. So the bar has historically been higher for individuals outside of the business majority. Consequently, we are decades away from white women earning at a similar rate to white men, we are 100+ years away for black women, and we're 200+ years away for Latinx women.
Research shows that middle management is where diversity goes to die, and that your boss might be a terrific and wonderful human being--but they have been brought up in a society in which leaders are men, in which CEOs are white males, in which senior executive or traders are men. And if you are a white man, you might be more comfortable promoting people who remind you of yourself.
It's supposed to be just “work hard, take risks, you go girl, don't let them get you down, speak your mind, bring your best self to work”. I'm just going to be perfectly honest. If you're not getting ahead, it might not be your fault. There are times you cannot work any harder. It is not you.
