By Marlena John
As a woman entering the finance world, the title of the session at the Slow Money National Gathering, Female Investors: The Most Important Change Agents on Earth, certainly sparked my interest.
Don Shaffer, President & CEO of RSF Social Finance started by telling the story of when he was a golf caddy in New Jersey, slinging golf clubs for Wall Street traders and bankers. Back then, women were not allowed on the golf course, which reflected the situation of most of Wall Street and the finance industry as a whole. The few women who did work in finance got paid a lot less than the men.
Fast-forward twenty or so years. There are a lot more females in the field, taking leadership in investment opportunities, and playing golf. The Equal Pay Act of 1963, signed by President Kennedy, prohibited pay differences based on sex. Great! But, if you think that everything is hunky dory, then you’d be wrong. As it turns out, women are still making less money than men on average, and this is particularly true on Wall Street. Shaffer claims that females on Wall Street make 55-62 percent as much as males do, though I’ve seen statistics that claim it is as high as 77 percent. Even if the 77 percent stat is accurate, women in finance are experiencing a significant, and unwarranted, pay gap.
So, women are getting paid less, and that’s not cool. We also have many more men than women investing and working in finance. But why should we care how many women investors there are? Don Shaffer laid it out well. He noted that female investors see investments as a whole, understand them as a system and their implications. Thus, we (women) are more likely to be able to see the short- and long-term outcomes of investments.
In studies done by John Coates, evidence indicates that the connection between testosterone and risk taking leads to irrational exuberance. To add to that, Jim Cramer claims that many men see investing as a sport, as a game. To really top it off, former U.S. Secretary of the Treasury, Timothy Geithner, stated that “most financial crises are caused by a mix of stupidity and greed and recklessness.”
I’m starting to see some connections here. We need more women investors so that we can level out the playing field, level the amount of risk that is taken on Wall Street and in investments in general, and help to create a more stable economy.
We need more women to see the long-term value of making investments in sustainable food systems in order to help push that movement forward. RSF Social Finance could be a glimpse into this future, as two-thirds of its investors are women. In Shaffer’s experience, women are more long-term, disciplined planners and are more likely to take fewer risks and stick with an investment strategy. He also cites that over 20 studies show that in the long-term, female investors outperform male investors. It’s because of this, that he estimates that in the next decade, women will control two-thirds of consumer and investor wealth in the U.S.
I don’t know about you, but if these statistics are in fact true, I want a woman representing my money.