Women’s Economic Power Is Expanding – Is Investment Management Keeping Pace?

Women’s Economic Power Is Expanding – Is Investment Management Keeping Pace?
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Women’s Economic Power Is Expanding – Is Investment Management Keeping Pace?

Women are transforming the global economy. The financial services industrymust evolve both to better serve women investors, and to assess the impactthat women’s decisions have on markets worldwide – now and in the decadesto come.

Women represent an increasing economic power in the U.S. and around theglobe. American women account for 47% of the U.S. labor force and areresponsible for starting 41% of new businesses.1, 2 And asbusiness leaders, women make a difference: A 2018 McKinsey study foundcompanies with the most gender-diverse executive teams were more likely tohave above-average profitability than the least diverse companies by 21%. 3

For the first time, American women have surpassed men in controllingprivate wealth, giving them decision-making power over approximately $14trillion.4 On a larger scale, as of 2017, women held 30% of theworld’s wealth (approximately $60 trillion), and estimates call for thatamount to reach $72 trillion by 2020.2

Empowering women

But the financial industry has not been as quick to respond to thisdemographic shift as many of us would hope. Women’s perspectives areessential: There’s opportunity for greater gender diversity in industryleadership, on trade floors and in management roles. More women couldrepresent and make decisions about the trillions of dollars in clientassets our industry manages daily.

Like many investment management firms, PIMCO advocates for gender equalityin our industry and across the broader economy, partnering with influentialorganizations such as Girls Who Invest and The 30% Club to bring more womeninto portfolio management roles. Our CEO, Manny Roman, also recently signedthe UN’sWomen’s Empowerment Principles, underscoring PIMCO’s commitment to equality around the world.

Women as investors

When I started in the financial services industry more than two decadesago, I worked on a groundbreaking research initiative aimed at helpingwomen get more engaged in investing. At the time, demographic factorspointed to the need for women to become more active investors; today thedemographics reveal women’s vast financial power. The groundswell of focusacross the investment management industry to better serve this broad set ofengaged investors is gratifying, but it also underscores the importance ofthe industry flexing to meet women, instead of the other way around.

While women have greater understanding today of the importance of investingin helping them reach their goals, our industry still has work to do tounderstand the wide-reaching impact of this powerful cohort of investors.PIMCO is committed to a research-oriented approach to understanding andmeeting women’s evolving investment needs. Rigorous research is crucial toPIMCO’s investment process, helping us identify and act on major globaltrends affecting the economy and markets over the long term. The insightswe gain from our in-depth study of women investors can help our industrynavigate change and better serve all our clients.

The pursuit of wealth-life balance

With women directing increasing wealth, it is important for the individualsand the firms that will manage their investments to understand women’sobjectives, challenges and expectations. We recently commissioned alarge-scale survey on women’s views of investing, including their goals,performance expectations and investment philosophy. We learned that manywomen see wealth as one component of a balanced, holistic life: the pursuitof wealth, alone, is not enough.

We began our research by hosting small discussion groups, encouraging theparticipants to share their unvarnished impressions of investing. Thesefocus groups highlighted how the financial industry’s traditional frameworkfor helping individuals manage their assets isn’t working for many women.Specifically, we heard this feedback:

  • The financial industry is set up to be complicated and uncomfortable forwomen.
  • Women want power and control over their finances, but they are happy todelegate to quality partners – advisors and managers who share their valuesand employ a transparent, straightforward approach.
  • Advisors assume all investors have a long-term investment horizon, butwomen’s lives and investment goals are more complicated and immediate.
  • Performance is more qualitative than quantitative.

 

Transforming insights into actions

These initial findings confirmed for us that women are a catalyst of changeand opportunity – redefining the rules and setting new expectations for ourindustry. And the great news is that the industry has an opportunity torespond – and empower women to find wealth-life balance. The survey welaunched following these meetings was designed to gather specific dataaround how financial services and asset management needs to evolveto attract, retain and better serve women investors, including specificguidance on strategies and product solutions.

In the months to come, we will share further insights, tools and resourcesto educate ourselves and our industry on how to take action and betterserve women investors. It’s an exciting journey.

Learn moreabout PIMCO’s commitment to gender equality and register to be notifiedwhen we publish our research and key findings on women, investing andthe wealth-life balance.

READ HERE

Cathy Stahlis a managing director and PIMCO’s global head of marketing. She alsooversees the firm’s corporate responsibility platform.

1Source: Pew Research Centerstudy on gender gains and gaps, 15 March 2018

2Source: Boston Consulting Group Global Wealth Market Database 2017. 2017U.S. wealth = $86.1 trillion (40% of global personal growth), 55% of whichis investable assets. 2017 global wealth is $201.9 trillion, 60% investableassets.

3Vivian Hunt, Sara Prince, Sundiatu Dixon-Fyle and Lareina Yee, “Deliveringthrough Diversity,” McKinsey & Company, January 2018

4Source: Cerulli Associates

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Disclosures

The survey results contain the opinions of the respondents and not necessarily those of PIMCO. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. This material is intended for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.