Women will have $22 trillion of investing wealth by 2020.
Now that women actually have their own money, they – like men – need to know how to make it grow with savings and investments. Women are projected to have $22 trillion of the investing wealth by the year 2020 – they had better know what to do with it.
Women in Listed Derivatives (WILD), which has become well known for its efforts in the advancement of women in the financial industry, brought together another room full of highly accomplished women on Tuesday for a panel on Women and Personal Investing.
Monica Black, chief strategy officer at Dymynd, a “financial empowerment” firm for women, said women have an emotional relationship with money that includes the key messages they were taught as children and their fears about the future (the “bag lady” syndrome). They also have a much broader “care network” – people they feel emotionally and financially responsible for, including not only children but parents, siblings, friends and co-workers.
Some of women’s fear around money comes from the very real obstacles they have experienced in what is still in many ways a man’s world. But, of course, one can overcome those fears. Black’s mother grew up just after the Great Depression and had a lot of anxiety about money, which Black absorbed but then later managed to overcome. She ended up having the wherewithal to keep her childhood promise to a cousin not only to put a roof over her head but to give her an entire apartment and help her get a graduate degree.
Holly Gowalty, co-founder of the Chicago-based K&H Connection and an expert in the branded currency industry (merchant gift and prepaid cards, promotional and loyalty programs), was a precocious child whose mother called her “difficult” because she was always networking – going up to other kids, even ones she didn’t know, and trying to make friends. She carried her outgoing, non-risk-averse nature through her career, eventually quitting her high paying job and, along with a partner, starting her own consulting firm. She now works with merchants in FinTech and loyalty/reward programs.
“Banks are creating a lot of technology, and fintech companies are creating a lot of technology for banks,” she said. “This is a great time in fintech for women – it’s so early, no one really knows everything yet.”
She said the hardest part of starting her own firm was worrying about it before she actually started doing it.
The panelists, Khloe Karova, Julie Shechtman, Patricia DeChant, and Mary DiChristafano were all investment advisors and had some sage advice on what questions to ask an investment advisor and how to find a good one.
These women created their own success and are attempting to share that experience and knowledge with other women. Khloe Karova, the owner of Modern Capital Concepts, an independent registered investment advisor, bought a house in Logan Square when she was only 24. She had only $8,000 in income and, as a single woman applying for a mortgage, she was rejected by 8 banks before finally getting the loan. She urged women, “Don’t be afraid of the struggle!”
One of the biggest mistakes women make with money is thinking too much about their “care network” and delaying taking care of themselves – socking away that 16% for retirement.
Some women will bankrupt themselves for their children, said Carolyn Leonard, the CEO and co-founder of Dymynd.
“[The children] can borrow money for college,” she said. “You can’t borrow money for your retirement.”
When it comes to investment advisors, women should not be afraid or embarrassed to ask questions, said Mary DiChristafano of Morgan Stanley Private Wealth Management. Two of the biggest obstacles for women in working with an advisor are not asking enough questions and being too conservative in their investment strategies.
Of course, money and investment strategy changes depending on the stages in one’s career. When you’re young, DiChristafano said, start early doing the obvious things – check your credit and pay bills on time so you can buy that real estate that will appreciate over the years. And take advantage of your 401k in your 30s and 40s, because “the multiplier is unbelievable!”
Separating out your assets from others’ – particularly significant others – is crucial as well, awkward as it may be to think about or discuss. Women need to make sure any assets they inherit are kept separate from their husband’s. Have a prenup, even! And learn how to take title to assets.
Dechant said, “Always be organized! Know where everything is held and how it’s titled. Know how to access everything before things go bad!”
Another piece of advice was not to get out of the working world when you have kids. Sadly, it can be too hard to get back in, Shechtman said.
In looking for a financial advisor, women should interview at least two or three people and make sure to choose one they are comfortable with, DeChant said. Make sure they listen and react to what you want. “Or tell them your financial plan and ask what they would do differently,” she said.
Shechtman said people do business with people they like and trust and feel a personal connection with. She advised women to “Make sure the person you feel a connection with when you meet is the same one who will be on the other end of the phone when you call.”
“If you find an advisor you trust, you can take more risks,” said Leonard.
Shechtman also suggested asking the advisor how she invests her own money. Does she invest it the same way she is advising you to invest? Also, is the advisor passionate about what she does for a living?
“They should be excited about the tax law changes!” she said.
Other questions to ask are how they got into this field, what are the company’s resources and staff, and what is their area of expertise. A good advisor should listen, ask questions about the client’s specific situation, and respond to what the client needs.
Values are important, too. Karova says she tells her clients she didn’t vote for Trump.
There are a great many advisors out there, so there is no need to be stuck with one who is wrong for you, DiChristafano said.