It is time to update some outdated notions about women investors. Many women are highly engaged in financial and investing decisions, they contribute meaningfully to their household income and assets, and they understand their portfolios.
Despite their advances as breadwinners and investors, which was the subject of a recent InvestmentNews cover story, 81% of women say they have personally experienced negative stereotypes about their investment acumen and financial contributions to their household, according to new research by Capital Group, a leading investment management firm and home of the American Funds.
Financial advisers who cling to negative stereotypes about female clients do so at their own peril. Nobody puts Baby in the corner any more.
The survey findings underscore the increasingly dominant role women play in the economy: In the U.S. alone, women control more than $11.2 trillion in investable assets, and the number of women with six-figure incomes is rising at more than three times the rate of men.
The research, part of the American Funds' Wisdom of Experience investor series, is based on an online survey of 1,200 American adults in March 2017. Participants were evenly divided between men and women and represent three generations of investors, including Millennials (ages 21-37), Generation Xers (ages 38-52) and Baby Boomers (ages 53-71).
The report found that although women think of themselves as meaningful contributors to their household incomes and assets, the rest of the world doesn't always view them in the same way.
Most of the women surveyed believe that, as a group, women have more economic power as investors than in the workplace. Despite this financial clout, most said they have personally experienced negative stereotypes, such as they know little or nothing about investing, make less money than their spouse and have a low appetite for risk.
In reality, most women investors are not risk-averse, but they do indicate somewhat higher preference than men for investment approaches that offer protection from market downturns.
Women and men are quite similar in their investment preferences when asked about the investment approach that best aligns with their retirement savings objectives. The top choice overall for 30% of women and 33% of men was a mutual fund with a track record of outpacing the stock market over the longer term.
Women investors also favor a long-term investing approach with a target date fund that adjusts its approach based on an investor's age, with 21% of women choosing target date funds compared to 18% of men.
In addition, women investors want to invest in financially successful companies that give back to country and community.
While nine out of 10 men and women focus equally on the importance of a company's financial performance in terms of revenues, earnings and dividends per share growth, women are more likely than men to prioritize the impact their investments have on key areas of social responsibility.
For example, 84% of women versus 70% of men said it is important that companies invest in the health and wellness of consumers and employees. Similarly, women investors are more concerned than men that companies reduce harm to the environment and support disadvantaged communities.
Women are also much more likely than men to emphasize the importance of investing in companies that put women in senior management and board roles.
The survey found that while a majority of women investors are worried about having enough money for retirement, there are considerable differences based on age, race and ethnicity.
Millennial women are the most confident about their investment decisions, probably because they started investing earlier than older generations. Nearly two-thirds of Millennial women say they began to care about money and investing in their 20s compared to 28% of Gen Xers and 16% of Baby Boomers at that age.
Gen X women are the most worried about the future. Having weathered the collapse of the dot-com bubble and 2008 financial meltdown as well as sluggish wage growth during their formative adult years, two-thirds of Gen X women say that not having enough money to retire keeps them up at night.
Conversely, half of Boomer women showed little concern about having enough money in retirement. Perhaps the wisdom of experience is on their side and as retirement quickly approaches, fear of the unknown gives way to curiosity about the next chapter.