Women, on average, live five years longer than men. They make, on average, 21 percent less than their male counterparts, they take more “career breaks" than men do, and their salaries peak much earlier — at age 40 versus 55.
When you take these factors, and others, into consideration, a woman will retire with substantially less than her male equivalent even though she's more likely to live longer. It's a no brainer — the short answer to “should women invest differently than men?" is a resounding, “Yes!"
The Status Quo
“We often read about the gender pay gap that affects women; much less well-known is the gender investing gap," said Sallie Krawcheck, the co-founder and CEO for Ellevest, an investing firm that caters specifically to females. “Investing less than men can cost some women just as much as the pay gap over their lives. While most big investing firms have 'women and investing' programs, most of them have missed the mark. In my opinion, it's because they all tried to market to women, not to serve women."
Currently, 86 percent of investment advisors are men, which translates into a clear lack of the female perspective in a field that affects the sexes equally. Krawcheck founded Ellevest to fill a clear need in the investing market, and the firm has gone back to the very basics to carefully examine, question, and alter the status quo. Along the way, they've discovered that women don't care about outperforming the market, which is the traditional investing goal. Instead, they care very deeply about planning for their goals and investing to reach them.
Susan Conrad, the chief client experience officer and an advisor at Plancorp, has worked in the investment space for 25 years and is particularly knowledgeable about goals-based, purpose-built investing. She agrees with Krawcheck regarding a woman's investment goals versus a man's.
“Women want to feel secure, to know that they are not going to outlive their money. We often set family related goals, such as paying for children's college or assisting with a down payment for their first home and leaving a legacy for the next generation. Men, in contrast, are often focused on investment performance and trying to hit a number that they think reflects success," she said.
Neither is an inherently wrong approach, but Conrad added that “as advisors, we should address the information needed by our clients. I think it's imperative for an investment strategy to be based upon a financial plan that includes the personalized goals and dreams of each client."
Sallie Krawcheck. Photo courtesy of Girlboss
Changing the Investing Tide
A woman outliving her retirement fund because an investment manager assumed a man's lifespan, or didn't account for other female-driven variables, can be catastrophic. And the fact that women are investing less than men, on average, is a sign that the industry hasn't been doing a great job serving the female market. Clearly, real change in the investment world is needed, and we're on the cusp of a tidal shift thanks to female-driven companies like Ellevest, and advisors like Conrad.
In addition to taking into account obvious changes (such as longer life spans, pay disparity, and salary peaks), subtle findings are being accounted for.“[For example], women won't invest in what they don't understand, while men will. Women are not more risk averse — as so many believe — but are more 'risk aware.' That means they want to understand the risks they are taking, and once they do, we have found that they are willing to take them," said Krawcheck.
“We built a proprietary investing algorithm that helps women choose their goals, make trade-offs among their goals, and put together an investing plan to reach their goals. If the client falls off track, we provide her with personalized tips for getting back on track."
Conrad added, “Over the next decade the largest wealth transfer in American finance history will occur. It will affect women, their children and millennials more profoundly than any other demographic.
Add to that the fact that 70 percent of buying decisions are made by women, and you can see why it's so important for advisors to understand women and address their concerns."
Wellness is such a buzz word these days. Taking care of yourself needs to be a top priority. I know that you may feel stressed and overwhelmed with work, family, friends, or other commitments, but at the end of the day, your health should be your most prized commodity.
My theory is that an individual's personal wellness must be a top priority in order to achieve one's major corporate goals. Not only do I teach this method, but I live it too. Every. Single. Day.
I make a conscious effort to prioritize my health and well-being in my daily life. As a competitive athlete and avid runner dedicated to a strict fitness and nutrition regimen, I participate in ongoing marathons and IRONMAN 70.3 competitions across the globe. And of course, when I am not competing, I spend my time training and fueling myself for the next race. Following this routine has strengthened and nourished my body and mind in numerous ways and I reap the benefits of it every day. Over the next few months, I will embark on several major races. In September, I will be running a Marathon in Capetown, South Africa. Then in October, I am going back for my second year running 55 Miles through the Serengeti in Africa. This time I will bring along a mentee, friend, and Olympian, Veronica Day. Last year when I did this run, it was one of the most incredible and life changing experiences that I have ever had. Speaking with the young girls there was eye opening and I learned just as much from them as I hope they did from me. Embracing the open terrain and being with my thoughts as I ran was incredible. The self reflection and how I was able to push my body to the edge with such a strenuous run is something that I had trained for so year after year.
To keep the momentum going, in November I will be running in the TCS New York City Marathon. And then in December, I will be completing an IRONMAN 70.3 in Cartagena, Colombia. I did not always compete in these types of races, however, I worked up to it through rigorous training sessions. I was sure to put my health and wellness as a major priority. I needed to. With all of the travel and stress of managing a global team, wellness needed to take precedence. The emails can wait, your health cannot. Something very serious to consider.
Being conscious of my health not only benefits my body and mind, but my corporate life as well. I have completed many races this year – all of which helped me stay focused in my personal life and in the office. Following a schedule and setting goals when training and competing fosters an organized and centered mind when I am at work. I can focus on what I want to execute and achieve. The cadence of training is very similar to the way that I operate in the corporate landscape.
Similarly, I attribute many of my most prized leadership qualities, including motivation, perseverance and a stellar ability to navigate the daily struggle of balance, to an active and healthy lifestyle that is the impetus for day-to-day accomplishments. I first learned how to motivate myself to prioritize my well-being and how to persevere when training becomes a challenge. I worked to find a balance that fit my lifestyle. Then I was able to transfer those skills that I learned to helping others. After all, if you cannot take care of yourself, you cannot take care of your team.
These are just a few of the reasons why I choose to make my health and well-being a top priority. Now the question is how do I balance this choice alongside corporate ambition? How do I find the time and motivation? One way that I am able to do both is that I actually do much of my business strategizing while working out. I am able to let my mind think about business while my body focuses on my wellness. It also helps that training gives me a sense of fulfillment. I want to exercise because I like the way I feel afterwards and I am happy with what I accomplished. This translates to the business side of things as well, the sense of completion.
Schedule your fitness into your calendar. If it's on the calendar it is real.
Set goals. Reward yourself when you make progress, whether it's with a new outfit, new running shoes, or a pedicure that you have been dying to have. Treat yourself.
Make time to move. Choose a fitness goal and obtain it. Whether it be running a 5K or a marathon. Every time you train you will become stronger.