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."
We're here. We're queer. Now that it's pride month, it feels like every store and corporation is flooding us with their best rainbow merchandise, capitalizing on a $917 billion dollar consumer market.
The rainbow flags are out. The mannequins are sporting pride tees. And corporate newsletters are full of interviews showcasing all their queer employees ("Look, we have a gay person here! We GET you!").
To me, this is blatant evidence that the future is queer.
These corporations follow the money, and with 20% of millennials and 31% of Gen Z openly identifying as queer, these businesses have to capitalize on the growing purchasing power of LGBTQIA+ consumers. With a recorded market size of $917 billion dollars in 2016, and a growing interest in socially conscious brands among young consumers, this is clearly a market opportunity that corporations cannot afford to ignore.
However, I'm always surprised by how little attention investors and the entrepreneurial community devotes to this undeniable trend, despite being constantly inundated with overwhelming statistics proving the importance of diversity and inclusion in entrepreneurship. Only 2.2% of venture capital funding went to women in 2018, less than .1% of funding has been allocated to black women since 2009, and only about 1% of venture-backed companies have a black founder or Latinx founder. These statistics are over-quoted but underacted upon.
This gender and diversity inequality significantly hinders economic growth, since 85% of all consumer purchases are controlled by women, and startups with higher ethnic diversity tend to produce financial returns above their industry norm.
The data is clearly leading to one direction: investing in women, people of color, LGBTQIA+ people, veterans, immigrants, and other minority groups in entrepreneurship leads to higher revenue and better business results.
As data-driven and forward-thinking as this industry claims to be, we haven't caught up to the queer founders, particularly queer women, who are rethinking the future. These founders understand and speak to a generation of increasing numbers of LGBTQIA+ people whose market share will only continue to grow exponentially. VCs and investors are already behind the curve.
SoGal Foundation, a non-profit on a mission to close the diversity gap in entrepreneurship, is helping bridge this divide between queer women founders and investors with the launch of applications for the second annual Global Pitch Competition for diverse entrepreneurs. Hosted in 25+ cities across five continents, and culminating in a final global pitch competition and 3-day immersive educational bootcamp in Silicon Valley, this is the first and only globally-focused pitch opportunity for diverse entrepreneurs.
Startups that are pre-Series A (raised less than $3M) with at least one woman or diverse founder, apply here to pitch! The top teams selected from each regional round will join SoGal's final global pitch competition and bootcamp in Silicon Valley for guaranteed face time with dozens of top Silicon Valley investors, curated educational programming, unparalleled 1:1 mentorship, press exposure, and a chance to win investment capital.
Women, people of color, and LGBTQIA+ founders: what's the best way to kick off pride? Apply to pitch!
Regional pitch rounds will be held August-November 2019; final pitch competition in Silicon Valley in February 2020. Details and additional cities to be announced.
SoGal Foundation is a 501(c)(3) non-profit and the largest global platform for diverse founders and funders in 40+ chapters across 5 continents; our mission is to close the diversity gap in entrepreneurship. SoGal Foundation's global startup competition represents the first and largest opportunity for women and diverse entrepreneurs and investors to connect worldwide. Join the SoGal community & follow us on Instagram, Twitter, Facebook.