Values-Driven Investing: Women Lead the Pack

In 1966, Geraldine Weiss published a financial advising newsletter that quickly catapulted her to success, all while concealing her gender under the name ‘G. Weiss.’ Weiss, a business and economics grad of the University of California, Berkeley, demonstrated a strong interest in the investing and banking world but gender limited her job prospects to secretary. In this era, Weiss seemingly had to beat the system to achieve well-deserved success.

Fifty-three years later and the world around us is still flocked with gender inequalities and injustices. However, with the Women’s March continuing to gain momentum, the virality of social movements like #MeToo and #TimesUp and a record number of women elected to Congress – women are strategically and unapologetically inserting themselves into the forefront of our economic infrastructure. And the world is paying attention. Ready or not, our communities are recognizing the influence women can and should wield.

By 2020, women in America are expected to control almost $22 trillion in assets. Taking that a step further, women currently make the majority of buying decisions, according to Harvard Business Review: 94% of furniture-buying decisions, 92% for vacations, 91% for homes, 60% for cars, and 51% for electronics.

So what does this mean for the investing and banking world?

Expanded Presence and Power

The role of women in not only personal wealth management but also corporate financial policy is continuing to expand. This growing role includes increased adoption of gender lens investing – a functional investment strategy driven by gender equality. This strategy aims at driving more gender equality in investing, which in turn empowers more women to grow their personal wealth and influence investment policies industry-wide.

But women aren’t the only ones who benefit from their expanded role in banking and investments. Consider the law of diminishing returns – areas where capital is scarce should produce higher returns than areas where capital is abundant. Studies show that companies who include more women in leadership are predicted to experience long-term value creation, lower stock price volatility and higher returns. This demonstrates that the unique values women bring to organizational leadership will continue to reshape corporate culture.

Women are strategically and unapologetically inserting themselves into the forefront of our economic infrastructure.

Values Prioritized in Investment Strategies

According to a study by The Economist Intelligence Unit (EIU), women with more than $5 million in assets reported putting social impact at the center of their financial investments. This study also demonstrated that younger females in Generation Y and Generation X prefer to use their wealth to lift up their communities and promote their values. If you were able to read our blog on millennials and the one-pocket mindset, this trend of values-driven investing from the younger generation comes as no surprise.

“The takeaway, then, is this: investments are a key enabler of women’s wealth, and women’s wealth is a key enabler of societal improvement. To individuals, this is a reminder that goals-based investing can help them meet their personal financial objectives and also support their philanthropic efforts. To advisers, it is a reminder to pay attention to the broader implications of managing clients’ assets and to formulate plans that take a more socially conscious approach into account.” says Angie O’Leary, head of wealth planning for RBC Wealth Management.

Leading the One-Pocket Pack

And because of this increased interest in investing from the female community, a new and seemingly untapped market is opening for advisors. Women are vying for strategic financial advice, and advisors should make themselves readily available to capitalize on these new clients. A study recently released by Fidelity Investments showed 72% of women, both young and old, are planning to “take steps within the next six months to make their money work harder and grow.”

“This trend among women is a massive, if not the biggest opportunity advisors have.” said Kirstin Hill, managing director and strategic performance executive at Merrill Lynch.

So more and more women are expanding their investment portfolios and they are bringing with them a values-driven approach. This is great news for the one-pocket mindset. Female investors and female financial leaders have traversed (and will continue to traverse) the proving ground of one-pocket investing – putting their money where their mouth is and demonstrating that we as individuals do not have to compromise our values in order to gain return from our investments. As we take our cues from women investors, we will continue to see that widespread adoption of a one-pocket approach not only results in individual financial gains, but also strengthens our communities and economy in lasting, durable ways.

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