New Heights – Women and Investing

The concept of investment dressing – say, new power stilettos – is old hat. But stereotyping and societal norms have women still walking a financial tightrope. Ladies, here’s how to take your investment portfolio to …

Female empowerment – encouraging women to take control of their professional and personal lives – has made a lasting impression on society, all the way from the corporate boardroom down to the family living room.

But curiously, the concept has failed to gain traction in the world of financial planning. Here, traditional stereotypes still linger, with the majority of men taking a more aggressive approach to investing – gravitating toward the higher-risk, higher-reward world of stocks and mutual funds. Women, on the other hand, generally take the safer route – opting for the less risky GICs or term deposits. The different approaches means men will inevitably score higher returns than women over the long term.

Richa Hingorani, senior manager of Financial Planning Support at RBC, suggests the different approaches can be boiled down to one trait – confidence. Women may be highly adept in their capacity to budget and save for today, but they’re less assured in their ability to invest for the long term. But “there’s a distinction between being good savers and being good investors,” she says.

The safe approach can be understood in light of the unique challenges facing women, says Caroline Dabu, vice-president and head of BMO’s Wealth Planning Group. Women view money as financial security more so than men do, partly because they live longer – 87 years for women who are 65 today versus 84 for men, while the average age of widowhood is 56.

Women also play the major caregiver role for elderly parents and children. And, with 41 per cent of Canadian marriages ending in divorce before couples reach their 30th anniversary, “At some point in their lives, nine of every 10 women will be left with the sole responsibility of dealing with finances,” says Sandy Cimoroni, SVP and COO of TD Wealth. Don’t forget women today still earn less than men, have more intermittent work histories and more part-time work, which can mean less or no RRSP contributions and lower pensions.

It’s not hard to understand why women may adopt a more conservative approach to investments. But the unfortunate result is that they fail to optimize the growth potential of their portfolio. With women controlling almost 55 per cent of the wealth in the Canadian marketplace – representing $1.3 trillion – they can no longer afford to miss out on the gains that can be made by a more aggressive approach.

So what can be done to help change the landscape for women? A two-pronged approach is necessary on the part of both the financial industry and women, who need to make an attitude adjustment to ensure positive change comes about.


Financial institutions must focus on women

A recent Women’s Day study by BMO found that almost two-thirds of respondents believed male clients at a banking institution received preferential treatment. “We feel that there is a tremendous opportunity in our industry to do a better job addressing the unique needs of women investors,” said Richard Mills, co-head, executive vice-president and managing director of BMO Nesbitt Burns. Here are ways banks are responding.

Hiring more female investment advisers

Ending stereotypical assumptions When a couple walks through the door, many advisers often focus on the man. “It’s about training our investment advisers to have conversations with both partners equally and not to assume the man is the decision-maker,” says Dabu.

Understanding the unique needs
of women
“A guy may want to see charts and numbers,” explains Cimoroni of TD, “but a woman prefers to understand the risks to her family. They want someone to know them holistically, to speak to them in their terms, to know their families, not just dollars and cents.”

Encouraging women to be less conservative Hingorani says advisers at RBC are helping women understand the value in both immediate and long-term investment goals as well as specific challenges such as the death of a spouse, divorce and their role as caregiver. “Addressing these questions will impact the mix of investment products and portfolio in terms of what percentage will go toward long-term growth and what percentage must be accessible for short-term needs.”

Women must lean in

While reshaping the way banks do business is a good start, it’s wasted effort unless women do their part. To do this, women must:

Develop a better understanding of their own needs and inclinations and how they translate – whether positively or negatively – into financial choices.

Become financially empowered “Knowledge is power,” says Dabu. Take courses, speak to financial professionals, read the business pages, follow the bloggers. The Financial Consumer Agency of Canada ( has a whole section dedicated to financial literacy.

Be more forceful When walking into a bank, demand to be heard as an equal. If not, go elsewhere. When meeting with bank advisers, ask every question that comes to mind.

Understand the need to change Remain open to the answers and the very real possibility that change may be necessary. And when armed with all the information, push yourself to go beyond risk aversion toward smart strategies. —Elisa Birnbaum