Recently there’s been a lot of talk surrounding the increasing numbers of women having a hand in designing cars. When you think about it, it makes sense. Women buy the majority of automobiles and they influence 80% of all auto purchases. Women want different features in a car than what men want in a car. While men tend to be more performance oriented, women are more interested in safety, design, spaciousness, quality of materials, vehicle color, gas mileage and sustainability of the car.
The other day I came across a group called Women in ETFs and I thought, here’s another women’s group in finance – because yes, we all know women are vastly underrepresented in our industry. As a matter a fact, this topic spurred State Street to launch a new gender diversity index ETF with the ticker symbol SHE (cute). The initial performance has been pretty good.
But the more I thought about it I found myself wondering, will the same lesson that the automobile manufacturers learned be true for the investment industry? Demographers tell us that women live longer than men. According to a recent report from BMO, women control more than half of all U.S. wealth, about $14 trillion, and this is expected balloon to about $22 trillion by 2020.
Academic research shows that women have different risk tolerances than men. And we know women communicate differently than men, if they didn’t, “Men are from Mars, Women are from Venus” wouldn’t’ be a top-selling book. When in comes to investing, women tend to be more goal-directed and trade less. And risk tolerance is a big thing. Women don’t like to lose money.
I was curious about the origin and mission of the Women in ETFs group. I caught up with Deborah Fuhr, one of the co-founders, and I asked what inspired the group:
“The idea was to start a group that would make it easy to connect like-minded women together, to support them in learning and education and inspire them to get into this business and see that they can make a career within the ETF Industry; whether it’s asset management, becoming an investor or using the products.”
Clearly it makes great business sense to include women in the marketing, design and education of ETFs. After all, for the men designing automobiles, it never dawned on them that you needed a place to stash a purse. They were oblivious and assumed everyone consumed automobiles the same way. The same scenario rings true for investing. In automobiles women tend to lean toward reliability. In investing, women tend to be more risk averse. Since ETFs are really the wave of the future due to low cost and flexibility, it only makes sense to build a network of women focused on this market place.
Deborah also said:
“It’s often challenging for people to have a safe and comfortable source of information where you can ask questions, that you might feel … you should know already.”
In just a little over two years, the group has grown to over 2,000 members across seven different countries.
When we think about fact sheets, presentation materials and websites, are we communicating and emphasizing the right thing? If the risk tolerance is different, maybe you should be talking more about your risk aversion? If these priorities are more important, you need to be emphasizing them more. You need to think about which aspects of your product offering resonate with that audience. And you need to be emphasizing those attributes in the way you communicate to that audience. Are you doing any A/B testing that includes women? Focus groups? If you’re not, why not?
Deborah talks about the importance of being more inclusive:
“I think it’s important to make sure that there’s not an artificial impediment, that people deal with biases, they’re made aware of biases they might have… It’s been proven that companies that are diverse perform better than companies that are not.”
It makes great business sense. The automobile industry figured it out. Now the ETF industry needs to follow suit.
We here at Kurtosys think it is incredibly important for men and women to practice financial literacy so that they can invest in a secure future. Your investors matter!
If you know of any other female ETF communities, please Tweet or comment below and let us know!
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