When I was CEO of Merrill Lynch, we spent hundreds of millions of dollars a year on our investment organisation — the vast majority of the money focused on picking investments that would go up (that is, higher risk, higher return). As for our investment in asset protection — that is, avoiding losses — to say it was an afterthought is being kind to afterthoughts. So our offering was very geared to what men were looking for — risk.
We could have — and did — try all sorts of different means of marketing our existing products to women. But we missed the fundamental point. We weren’t marketing to women incorrectly; we were serving women incorrectly. It is as though today’s investing industry is speaking Chinese, and women are speaking French.
It’s a totally different language and a different approach. To me, it’s probably not a coincidence that an industry where more than 85% of its financial advisors are men — and whose management teams that went into the downturn were white, male, and middle-aged, and came out whiter, maler, and “middle-aged-er” — hasn’t met the challenge of serving female customers.
Okay, so you’re over the myths. You’re ready to take financial control. The first step? As in so much of life, avoiding common mistakes is half the battle. In my experience, these are the top eight financial mistakes women make.
Sallie Krawcheck’s mission is to help women reach their financial and professional goals. She is the CEO and cofounder of Ellevest, a digital investment platform for women. She is also the chair of Ellevate Network, the global professional woman’s network, and chair of the Pax Ellevate Global Woman’s Index Fund, which invests in the top-rated companies in the world for advancing women.
This article is an excerpt from her latest book, Own It: The Power of Women At Work, now available.
Letting your partner manage the money without your involvement.
Very 1964...and not in the cool, mod, Beatles-concert way. Few of us think we’ll get divorced or that tragedy will strike, but it does. As I learned the hard way, you don’t want to be introducing yourself to your financial situation while you’re in emotional shock.
Illustrated by Tristan Offit.
Using your partner’s financial provider, even if you don’t know or can’t stand him. (And he is usually a “him.”)
Here’s a test: At your next joint meeting, how much does the advisor engage you/speak to you/look at you? If he spends most of his time talking to your partner, find your own money person or firm. This is one of those situations where trusting our instincts is essential.
Illustrated by Tristan Offit.
Not taking into account greater longevity in your investing plan.
If you’re partnered with a man, remember that you’re likely to live five-plus years longer than he does. Does your financial plan take this into account, and your years without him? Even if both of you are “moderate risk” investors, that means different things if you’re living longer.
Illustrated by Tristan Offit.
Not asking for jargon to be explained.
Don’t let politeness — or shyness, or embarrassment, or anything else — get in the way of getting the information you need to understand your finances. And keep asking until you understand. It’s your money, and your right. If you are working with an advisor who won’t give you an explanation that you understand, it’s not you; it’s him or her. Move on.
Illustrated by Tristan Offit.
Not buying long- term care insurance.
Here’s a shocker: 70% of 65 year olds will need some form of long-term care. And, again, we’re around for five-plus years longer than men.
Illustrated by Tristan Offit.
Not taking enough smart investing risks.
I’ve noted that we women tend to be more risk-aware in our investing. While this may sound counterintuitive, our longer lives — and the fact that we retire with two-thirds the retirement savings of men — can call for somewhat greater (but still prudent) risk-taking, for the potential to earn a higher return. If the market goes down, our greater longevity may actually give us more time to recover.
Illustrated by Tristan Offit.
Waiting until a less risky time to invest...or procrastinating.
“Gee, the market feels iffy.” Or “I feel like I need to get through that stack of reading on the markets.” Or “I’ll find time later. Really, I will.”
If you want to, you can find many reasons to wait to invest. But timing the markets is almost impossible, even for people who do it full-time. Investing steadily over time may help to smooth out the market ups and downs...and is historically a vastly better alternative than keeping your money in cash. Besides which, investing shouldn’t be a one-time, “you’re right or wrong” thing; instead, you should invest steadily. That means sometimes you’ll “buy low” and sometimes you’ll “buy high”; it may even out.
Illustrated by Tristan Offit.Like what you see? How about some more R29 goodness, right here?
A Week In Buffalo, NY, On A Joint $111,000 Salary
The True Difficulties Of Being Queer At Work, According To You
This Illustrator's 'Work-From-Home Fashions' Are Just So Spot-On