"I save but don’t invest," my friend said. "I just can’t afford to lose my money."
I was puzzled. How is it possible that a highly-educated, well-earning woman keeps her money in savings accounts and has no confidence to invest.
In the last post, we discussed how women are good at nurturing wealth as they are calm, do extensive research and trade less compared to men.
In this segment, we will look at why most women don’t invest and why we still see a few of them taking up investing jobs.
Research from Fidelity, aimed to find out why women are reluctant to invest, questioned both men and women with cash savings but no investments.
More than a third of the women who participated in the study said they did not feel confident investing compared with 26 percent of men. More women also said they didn’t have sufficient knowledge to invest and that they did not understand the stock market.
It’s an issue that many financial firms say they are attempting to tackle by encouraging more women to invest. However, none seems to have hit on the right formula.
So what's making women less confident about their competency and skill set? We spoke to a couple of financial counsellors and here's what we found it:
Patronising Society "There are many issues and one of them is the patronizing society," says Deepali Sen, the founder partner of Srujan Financial Advisers, a financial planning firm based in Mumbai.
Yes, believe it or not, a patronising society is one of the major reasons why women fail to take up the investing plunge. Even today parents talk to boys about making money and investing. To girls, the conversation is about saving money and being careful with it. Not just that, girls get lower allowances at home than boys for the same chores.
"If we talk about women investing or taking investment decisions, it has got so much to do with our society rather than the natural thing," said Renu Maheshwari, the first Sebi registered investment adviser in Tamil Nadu.
"Biologically also women are a bit defensive because they have to take care of their families etc," said Maheshwari.
Women & Financial Decisions
As we grow up, we see women being portrayed as someone incapable of making financial decisions. The result is women are stuck in a situation where they don't know whether they are a “Carrie” or “Miranda” money personality. In fact, Carrie herself was a tough, savvy New Yorker in every way–except when it came to money. She spent way too much on her Manolo Blahniks, so couldn’t afford to buy her apartment. Seriously!
That’s precisely why advisers like Sen are trying to involve more and more women in the process of financial decision making.
"When I deal with clients, I insist on speaking to both husband and wife ... when women participate, in 90 percent of the cases, they come up with great suggestions and with her participation, her engagement in money related matters also goes up," said Sen.
The majority of business news readers are male. The majority of people we meet in the investment, financial advisory and asset management industries are also male. Clearly, more men are seen in financial jobs vs women, but why?
"Women face greater time obligations outside of work, for instance, and finance is a profession that disproportionately rewards those who work long and inflexible hours," according to Brad Barber, Professor of UCDavis Graduate School of Management.
In a society where women still shoulder more obligations at home as mothers and wives, the demanding hours of a career in financing sets a barrier discouraging women from entering the field.
“I would say generally that men are much more willing to sacrifice family aspects than women,” May Seeman, former president and CEO of MEAG New York, said of the demands of the investment industry in a research note.It is likely no wonder that the money industries are overwhelmingly male, even as the research tells us that women are better investors than men, both as individual investors and professional investors.