Women should run the Asset Management World!

Women are often portrayed as incapable of money or risk management. Even individuals whose mission empowers women often reinforce these negative stereotypes. Suze Orman, best-known personal finance, female writer wrote: “You simply won’t bring yourself to take care of yourself financially.”

Data shows women are the more sober sex. To the surprise of the financial services industry, women outperform men in personal investing by a wide margin. Broker, Paine Webber’s 2001 study, “Boys Will Be Boys: Gender, Overconfidence and Common Stock Investment,” showed women earned ROI at nearly 1 per cent more per year than men. Very few Wall Street professional investors consistently outperform by 1 per cent per year.  Generally, men and women reduce ROI with trading mistakes. Men make 50 per cent more mistakes. Combined with additional trading costs, this substantially reduces men’s returns, findings confirmed by a 2010 Vanguard study of 2.7 million investors. Women’s investing advantages aren’t limited to amateurs. Professional female investors outperformed men by even greater margins.

A Reuters report from January 2007 to June 2013, indicated women-run hedge funds returned 6 per cent, compared to a loss of 1.1 per cent in the HFRX Global Hedge Fund index (the vast majority of hedge funds are headed by men). Female hedge fund managers’ out-performance may be due to management of smaller funds. Smaller funds tend to produce higher returns. Why aren’t women entrusted with larger funds when their out-performance proves substantial? According to a 2013 study by the American Economics Association, women are not trusted with money issues as much men. This study found that for men, “who” you know is sufficient. For women investors, the perception lies with performance. Their credibility bar is raised far higher.

Not surprisingly, the personal finance industry benefits from negative female stereotypes, particularly those undermining women’s confidence. Women who require financial advice find fees shockingly higher.  A 2009 survey by Boston Consulting Group found 70 per cent of women feel mistreated by financial professionals. A recent study by Fidelity Investments showed 70 per cent of widows fire financial advisers within a year of loss of a spouse. Women aren’t happy with the financial services sector. The personal finance industry has little incentive to provide transparency, lower fees or light-touch marketing, with serious consequences.

Women live longer and their incomes remain lower than men’s. Women over age 65 are 50 per cent more unlikely to meet basic daily needs, according to a study of US Census Department data, conducted by Wider Opportunities for Women, a non-profit organization focused on women and workforce issues. Women need to understand their money management strengths and demand better services from financial service providers for a more secure retirement. Women are excellent retail investors. They see the bigger investing picture and are less likely to churn in their accounts or time markets.

When Financial Service providers address women’s natural strengths in risk management, society, politics and business benefit. Money in more women’s hands becomes a linchpin to improve poverty and health issues for families. The gap in confidence in women investors won’t happen overnight. It time to end stereotypes that money and women is an oxymoron.

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One response to “Women should run the Asset Management World!

  1. Pingback: How to Remove a Nonperforming Asset Manager? | Alpha Banker·

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