Women are investing more than ever before but just because their money is the same colour as men’s doesn’t mean they’re the same kind of client.
Recent industry research has found women are confident in being the CFO of their households but they’re less self-assured when it comes to long-term planning and investing.
Confidence isn’t everything, though, as one major U.S. investment firm found women outperform men by 40 basis points, or 0.4 per cent, over a 10-year period.
Sheila Wilson-Kowal, portfolio manager at Cardinal Capital Management, says women tend to focus less on performance and more on the process and connection they develop with their advisor. It’s not that women don’t want their investments to go up in value, but financial planning is more holistic than beating a benchmark.
“It’s making sure you have the right asset allocation, a balance of equities to generate capital growth and fixed income for stability, plus estate planning and tax planning. You want somebody you can trust and who helps you in all aspects of saving for your future,” she says.
Emily Burt, Cardinal’s executive vice-president, agrees. “Investment advisors quite often focus on performance results, and they want to show that it’s meeting expectations or beating a benchmark. If it is, then it should, in theory, feel like what the client pays in fees is worth it. But a client should be paying for so much more than performance. What kind of service are they getting? Do they walk away from meetings feeling sure about their investments or still feeling confused and in the dark? You want an advisor who has the right bedside manner and focuses on what is meaningful to the individual in front of them. That makes a difference with how an investor feels about their portfolio,” she says.
When it comes to money and finances, many clients have the impression that they should know a lot about it. But just because you took calculus in high school doesn’t qualify you as a financial professional.
“Many intelligent people who have multiple university degrees but focused their careers elsewhere are often afraid to ask something they think is basic because they don’t want to sound dumb,” Burt says.
- Nearly 90 per cent of women investors agree that having their money managed by professionals allows them to sleep better at night
- Half of all women investors are more interested in investing since the pandemic started in March 2020
- Nine in 10 women investors plan to take steps over the next year to help their money work harder for them, including creating a financial plan and contacting an investment advisor
- Two-thirds of women investors invest outside of their retirement plans, up from 44 per cent in 2018
- Women are opening up investment accounts at younger ages than ever before. Women aged 18-35 opened their first account at an average age of 21
- Women take on less risk than men and are more likely to remain calm during market volatility
It’s not unusual for many women to let their spouses oversee the family’s investment portfolio but if they get divorced or become widowed, they’ll have to engage with an advisor on their own, quite possibly for the first time.
“It can be a huge change to have this responsibility added to your shoulders,” Burt says, noting 80 per cent of women change advisors after becoming newly single. “A lot of women find it comforting if they can sit down with another woman at a similar life stage and talk about the tough topics, like aging parents and family estates, and maybe hear some personal advice and stories from their own advisor’s experiences.”
A big part of the process at Cardinal is educating clients on its value-driven investment philosophy of buying dividend-paying, industry-leading companies, why it has worked for decades and why it will continue to work for many years to come.
“A greater proportion of female investors tend to see equities as being too risky,” Wilson-Kowal says. “We educate them on the different styles of equity investing—and specifically on our conservative approach—and we talk about how not taking on an appropriate amount of risk can ultimately leave them without a big enough nest egg to retire securely. Given that women statistically will live longer than men, the risk of running out of money is something to consider.”
“People tend to focus on the short term, often just one year, but when we show them the benefits of owning dividend-paying stocks over 20 to 30 years, that goes a long way in the education process and getting comfortable with the investment philosophy,” Wilson-Kowal says.
Burt and Wilson-Kowal know of what they speak as they both grew up around family businesses and witnessed first-hand the blood, sweat and tears spilled to get them off the ground and up and running.
“It’s a perspective you can’t get from a business degree, you have to live it,” Wilson-Kowal says. “It can be stressful when unexpected events occur, but you learn to deal with adversity.”
Burt says Cardinal’s investment approach is in line with that of many business owners so they’re comfortable handing over the reins. “These entrepreneurs were able to impact the profitability of their businesses and set the course for the future without realizing that running your own company is actually a risky proposition. All of your eggs are in one basket. Our approach is more conservative–we’ll help you invest in more than 20 great companies, instead of just one,” she says.
The educational component of client conversations goes a long way with how Cardinal works with its clients, many of whom are second- or third-generation. With five offices across the country, Cardinal manages more than $4 billion in assets for about 3,000 families.
1209 Richmond Avenue, Unit B, Brandon
400-1780 Wellington Avenue, Winnipeg
204.783.0716
Cardinal.ca
