Archaeologists have found that in the Middle Neolithic periods of 3300 BC, gender inequality started to rear its ugly head, where the growing association of men with violence began to surface. While men were depicted in drawings with weapons and projectiles, women’s burial sites were adorned with ceramic pots.
Let’s take a moment to acknowledge that as a society, we have progressed far beyond some 5000 years ago, and as a relatively more “woke” generation we understand that gender inequality — although it still exists — ought to be a social ailment that we continuously fight against.
On the other hand, in the finance world, gender inequality unfortunately continues to be an uphill battle. Women are commonly seen to be less dominant a la Wolf of Wall Street and even less powerful when it comes to investments and monetary matters. It is almost as if on this side of the workplace, time stood still and the keys to success remain elusive to them.
So, while proverbial glass ceilings are being shattered almost everywhere in developed countries, we should also continue to explore the common misconceptions about women in the financial industry, and attempt to correct these notions. We need to take steps to reframe women investors — and all women, really — as more than “risk-averse”, “less investment-savvy”, “too emotional” human beings.
After all, it is 2022, and it is time to #BreakTheBias — as this year’s International Women’s Day theme aims to achieve.
We bring you a special feature highlighting some of the stereotypical perspectives prevalent in society, with respect to women investors, and women who work in the finance industry. We talk to two of our colleagues — Grace Ong and Stephanie Chew, both Vice Presidents of Distribution — to discuss them.
1. Women investors are perceived to be risk-averse
Many research papers seem to suggest that women are scientifically proven to be more risk-averse. Of course, this neglects a complete set of controlled variables such as demographics, educational levels and other economic characteristics. What do you think?
Stephanie: Fundamentally, women have a different approach to identifying, classifying and analysing risks, and some of that is inherently bound to the natural ability of women to be the only gender that can bear children. Globally, many women now juggle very successful careers while at the same time birth children, raise a family and contribute to the family income. Given the multitude of considerations, I would say that women assess risks in a more holistic manner and they invest from the perspective of “patient capital”.
Grace: There is a fine line between being risk-averse and taking calculated risk. As the saying goes, women tend to think a lot. And there are some good reasons for that — making that careful cost-benefit analysis before we take the next step. Taking less risk doesn’t necessarily mean it’s a bad investment, nor does taking more risk mean a great investment. Assessing the right amount of risk counts, i.e. risk/reward reaps the benefits in the long run.
2. Women are less confident than men as investors
Do you feel that women lack confidence when they invest, doubt their competency levels, or feel less capable when comparing themselves to men? Do you think men are overconfident in their investing methodologies, such that women are being compared against an inaccurate benchmark? Is confidence relevant in investing, as compared to actual competence that comes with knowledge?
S: As a female investor, I do not feel less competent than my male counterpart. As far as investing methodologies are concerned, I think confidence is relevant in investing, and that confidence is built up over time and experience in investing through different market cycles. Historically speaking, men have been investing much earlier than women, and that may be why their confidence in making investment decisions seems much stronger than women. With time and commitment, women are equally capable to become equally competent in investing, if not more than men.
G: Definitely not. I don’t think it’s so much about a lack of confidence than it is about women tending to have self-doubt. But what it means is that when we make up our minds to invest, we’d be very good at it. According to Fidelity’s 2021 Women and Investing Study, women investors have a slight edge over men when it comes to long-term gains. As I mentioned previously, women tend to make careful cost-benefit analyses and can outperform broadly as we also tend to invest more consistently.
3. Women are perceived to be more emotionally driven in making investment decisions
Having been in the finance industry for a while, do you think that this is true? Do you think emotions play a part in investment decisions?
S: I have been a private banking relationship manager for several years, and have had the opportunity to work with both men and women clients on their investment portfolios. My experience with women investors is that they are increasingly more open-minded when it comes to asset classes they have not invested in. They are willing to put in the time needed to understand the asset class, which may affect how swiftly they decide on an investment. However, they stay the investment course with conviction across market cycles and volatility.
G: When it comes to investment decisions, I disagree with this statement. Risk-taking is usually associated with masculine traits, which some may say are inclined towards accepting a greater degree of uncertainty in exchange for potentially greater returns. While the element of risk is necessary in any investment decision, women take a longer-term approach to investing and focus on goals-based investing rather than just short-term performance. Men have also shown to be more sensitive to news events than women which leads to more short-term trading. Having been in the financial industry for a couple of years now, the fun fact I’ve noticed is the ratio of female financial advisors to male is always higher, and I wonder why! 😊
4. Women tend to manage more emotional, nurturing responsibilities than calculated, financial responsibilities like investment
This is a very broad generalisation associated with how people think of traditional gender roles. How do you think we can correct this misconception?
S: Women are still expected to keep up with the traditional gender roles like raising children, making sure the home is well kept and running in an orderly fashion, while at the same time maintaining successful careers — and in some cases contributing equally on a financial basis. This imbalance is likely to persist and hopefully will become less observable as future generations appreciate that aside from childbirth, men and women are more alike than people think.
G: Isn’t family an investment too? 😊 It is all about priorities. I cannot imagine who does it better when it comes to managing / running the family matters at home, nurturing the kids and juggling work matters/issues at the same time whilst having a social life as well.
5. Women don’t know much about finance or investment
“Women actually know more than they think about finance.” Instead of a true gap in knowledge, a study finds that it is more related to confidence when it comes to financial literacy. How do you think we can start to empower women to take charge of their financial knowledge, so that we can reframe the way women are seen as financially illiterate?
S: Financial literacy should not be confused with financial knowledge, and this applies to both men and women. To me, financial literacy is having practical experience in investing, whether it's in financial assets, private companies or even cryptocurrency. I’ve recently been inspired by a young local female investor who promotes inclusivity by forming a trading community. She hand-holds her members through practical aspects of trading, such as providing advice on setting up their accounts, creating technical analysis charts, pointing out the news they need to be reading, and investing in real-time with her members using the same price points on entry and exit. If we have more mentors like her who are willing to share their financial literacy through practical applications, we can build bigger communities of women who know what to do with the financial knowledge they have amassed, and share them with the rest of the women around the world.
G: Doing lesser investments doesn’t mean not knowing much. By engaging, educating and encouraging more women to take control of their finances, we will raise awareness across society to support mindset changes. Women can start by interacting and discussing with their female friends who are already in the financial sectors or participating in financial workshops to improve their financial literacy and knowledge. Closing the financial literacy gap will empower women to be more confident when we know we are making informed decisions before investing. The next evolution would be to have more women displaying that self-confidence to change how society perceives women.
Empowering that mindset change
It is clear that today's women are as much sophisticated investors as men, and can have a risk appetite that can rival most "Wolves of Wall Street".
Success anywhere — not just in the financial world — is not defined by gender, but defined by the drive, confidence, and motivation to see results.
Grace and Stephanie are proof that gender does not equate to investment capabilities, or capabilities to succeed in the world of finance. It’s time to put away your biases, and start thinking about women as equally powerful individuals in every arena, be it the workplace, the investment realm, or at home.
Let's start to #BreakTheBias.