Are you a woman? How do you feel about investing?
I clearly remember the day a long time ago when I called my fund company for the first time because I didn’t know how I was supposed to fill out the application form to open an investment account.
I was terrified I would sound like an idiot to the customer rep on the other side. I was doubtful I would be able to answer any question he asked me about what kinds of funds I wanted to invest in. I had looked at all the information, and most of it didn’t make much sense to me.
Oh, I had no problem conceptually understanding mutual funds. But even with my finance background, somehow it was scary to step into the real world and try to translate that into actual forms, disclosures, allocating real amounts of money. And all of a sudden I was beset with doubts.
What if I all I had was just theoretical knowledge? What if I made dumb decisions? What if I lost all my money? How would I know how to pick between stocks and funds? And how would I even pick among funds? It was very confusing.
Seems silly in retrospect. Anyone would tell you it is the easiest thing in the world these days to do anything you want. The internet is free. The world is wide open, and you go, girl!
Yet, is it?
Even today I see women facing significant challenges when they start to invest for their financial future. You are not imagining it, and you are certainly not alone!
Why is this so?
Internal programming and self-image doesn’t jibe with investing
Where I came from and even where I am today, it is not exactly coffee-table conversation among women to talk about investing or to even admit that we (gasp!) actually have money to our names and we (double gasp!) actually have an interest in doing well with it. Couple this with whatever messages we have consciously or unconsciously internalized, and you have a recipe for massive internal barriers to do something that feels fundamentally alien and unnatural.
Industry attitude is a big barrier
While this is not uniformly the case, women face vastly different treatment at the hands of people who represent the financial services industry. I need to dig up the actual study references, but here is one example of research that proves that even among millionaire investors, women get worse treatment than men. You don’t have to stretch your imagination very far to understand how younger women with fewer assets get treated by the industry.
Industry positioning is geared to men
This is related to the second, but I’ve called it out separately because it impacts how you go about evaluating and selecting your investments. What I have seen to-date, much of it industry-based, suggests that the investing industry positions its offerings and value propositions towards “winning” and touts complex strategies and assets that typically tend to appeal more to the male buyer.
Additionally, the sales process and approach is geared linearly towards how men think and make purchase decisions. While largely anecdotal and qualitatively based, my assessment is that women’s objectives, decisions and purchase process, whether it is for stocks or clothes, tend to be very different.
Both want to do well for themselves, and in many cases, aspire to the same outcomes. But they get to that point on vastly different paths. Women’s paths tend to be more nonlinear and more information intensive. Consequently, the way that financial products are pitched doesn’t resonate with women. The fact that they are starting off with a negative stereotype doesn’t help when they ask for / seek more information pre-purchase.
The end-result is the same: a frustrated customer who is simply not getting what they need to make a “purchase” in the market of investment products.
Nobody wins in this scenario.
So what can you do to overcome these? Here is what I did and it worked for me:
- I gave up thinking that others (whether it is the industry or the internalized voices in my head) “knew better” and that I should just defer to their opinion. I realized that everybody is acting out of their own motives, and these are sometimes good, sometimes, not so much. Therefore, I decided I would take over steering my own ship, no matter how “dumb” or how slow.
- I started making my own decisions. I unapologetically sought the information that made sense to me. Seeing as no one would talk to me, I sought knowledge in books that seemed sensible, and solidly grounded in fact (my favorite authors to this day are John Bogle, Ben Carlson and Peter Bernstein, among a growing list)
- I started small and with low risk, just to get my toe in the water. I judged my progress by my actions , not by outcomes. In other words, I called it a win if i invested consistently and according to some simple plan I had laid out (example, at least $100 every month consistently in the S&P 500 index fund), regardless of whether the market went up or down. Then I forgot about it and went about my business.
- I learned to analyze people’s motives and incentives when dealing with money, especially in the financial services industry.
- Last and most important, I stopped talking about it with others. I keep my own counsel. I seek the wisdom of people who have no vested interests (as evidenced by the source or their position). I evaluate what I see on its merits based on whatever my level of knowledge is at that moment. Then I make a decision and move on. If five of my peers beat my returns by x amount, I really don’t care. More power to them.
This may not be glamorous, but it has made me much better off financially than I was ten years ago.
How about you? Do you invest? What challenges do you face? I’d love to hear your experiences and thoughts in the comments below.
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