Women Invest Differently, Here’s Why That Matters

An earlier version of this piece was originally posted on artemisavisors.net blog in December 2018.

The ways in which men and women have chosen to use their wealth historically have contributed to the current power and pay gap between the sexes. However, this trend may be shifting. Increasingly, more and more women are considering how they can use their wealth to address some of the greatest global challenges facing our planet today. 

Having worked in financial services for over 30 years, I’ve observed some gendered differences in investing, as well as how individuals think and talk about money (or for that matter don’t talk about money). But it is Susan Chira’s piece, “Money is Power and Women Need More of Both,” in The New York Times from 2018 that, for me, captures the essence of where we really stand today. “Women are running for political office in record numbers. They are challenging the sexual status quo from Hollywood to corporate offices, pursuing power as seldom before,” Chira writes. “But there is one barrier yet to be toppled: Money.” Chira explains how women have long been steered away from an unapologetic drive for wealth and even when women do make substantial money, they often choose to exercise the influence it brings differently.

While women often choose to use their wealth to help others, men tend to use their wealth to enhance their own personal profile and grow their own personal brand (i.e. name of a building, donate to a college, or use their spot on the board of a major institution to help a friend or acquaintance). While men have historically used their money to grow their influence, women today may now be ready to use their wealth in a more traditionally female (and unconventionally profound) way: to address the world’s greatest environmental, social justice, and inequality issues.

The United Nations has identified 17 Sustainable Development Goals (SDGs) as the blueprint to achieve a better and more sustainable future for all. The 17 SDGs address global challenges such as poverty, inequality, hunger, climate change, and peace and justice among others. 

Of course, the UN is not alone — and can certainly not find success alone — in the quest to create a better and more sustainable future for all. To encourage the global community to create a better world through focusing on the SDGs, the UN launched the “Be the Change” campaign, encouraging people to live more sustainably at work and at home by changing consumption patterns and other everyday habits. But for those who are specifically looking to wield their wealth in more powerful and positive ways, there are additional new ways to participate in affecting major change and tackling the SDGs. 

Using Investments to Drive Social Change 

Historically, investing has not been about affecting social change but rather making a healthy return. Today, this is changing. While a healthy return is still an important factor, impact investing is gaining momentum as more and more women gain control of the country’s wealth. 

As Kiersten Barnet, deputy chief of staff and manager of the Bloomberg Gender Equality Index, told Forbes, 

“It’s the first time in history that women in the U.S. control more assets, or are allocating more assets, than men. So, I think the biggest shift will be in client demand and what clients are looking for, and individuals and leaders will adjust their strategies and products to adapt to that.” 

As women gain more control of the country’s wealth, they funnel it toward causes that matter to them. As the Guardian reported, women are investing more and more and choosing companies that have a positive environmental impact. Through investing in ESG (Environmental, Social and Governance) strategies, investors can put their money toward issues and causes that matter on a global level and on a personal level. For instance, if women’s equality is an issue you are passionate about, you may choose to invest in the Pax Ellevate Global Women’s Leadership Fund or the SPDR® SSGA Gender Diversity Index ETF, both of which invest in companies that demonstrate greater gender diversity within senior leadership than other firms in their sector. 

By choosing ESG strategies, investors can help move the needle on SDG issues and in their portfolios. 

No doubt, the growth of impact investing and ESG strategies can be largely attributed to an increase in women’s access to capital, which is due to several shifts over the last few decades including, according to The Economist, the fact that women are better paid today than at any point in history; women’s participation in the job market has grown 23% since 1950; and women are now “inheriting wealth from husbands, who tend to be older and to have shorter lives, or from parents, who are more likely than previous generations to treat sons and daughters equally.” With women using their wealth to make significant impacts on environmental, social, and governance issues, more and more investors are now considering ESG data in their risk analysis and overall judgement of a company’s performance. The beauty of impact investing and ESG strategies is that investors can use their wealth to affect positive change while simultaneously generating a financial return.

So, I want to ask Susan Chira’s question again, “Does the path to power require acting more like men, or can women wield influence in ways that are different but just as effective?” 

At our firm, Artemis Financial Advisors, we believe in the latter: women can use their wealth, influence, and philanthropic tendencies to dramatically change the course of the country and world for the better — and in effect, collaborate as partners with the UN and other social change agents to overcome some of the greatest challenges facing the planet today.