We are delighted today, on International Women’s Day, to host a blog from Georgie Loxton. I first connected with Georgie when she commented on my blog about women in the funds industry on this day, last year. Little did I imagine back then that, one year on, Georgie would become a friend, a neighbour and a collaborator and that I would become an avid reader of her thoughtful and insightful blog. As a woman, an investment manager with 14 years’ experience managing other people’s money and as someone who is passionate about making investing more accessible to women, Georgie is extremely well positioned to talk about women and money. Enjoy.
For us humans, both men and women, money is still a taboo subject, one that is not easily discussed amongst even the closest family members, spouses included. It’s emotional and messy. But I think for women, there is an added layer of complexity, for a few different reasons. The elusive world of finance, money and investing has always been dominated by men and testosterone (I mean, just think about the jargon – bull and bear for example – very alpha-male terms). Traditionally women looked after the kids and the household and men looked after the finances. Take this fact; it was only in 1974 that the Equal Credit Opportunity Act was passed in the US. Before then, banks required single, widowed or divorced women to bring a man along to cosign any credit application, regardless of their income. 1974!
Perhaps it is partly this that explains why so few women go into the world of investment management. Only 16% of CFA designations are held by women. A Morningstar study in 2015 found that less than 9% of fund managers in the US were women and less than 2% of industry assets were overseen solely by women. Those are pretty shocking statistics given that we make up half of the population and 57% of college graduates. What’s interesting though is that several studies have shown that we make better investors than men (some may argue that the jury is still out), but we feel far less confident in our abilities. Men tend to be overconfident in their investing abilities which leads them to trade far more than women. Over and over again, excessive trading has been shown to reduce long-term returns. In their 2001 paper ‘Boys will be Boys’, Barber and Odean found that men trade 45 percent more than women! They reported that the overtrading accounts for an almost one percent per annum reduction in returns for men versus women. A study by the University of California showed the return generated by men to be 1.4 percent lower than women, again because they traded more often. That’s a big deal over the long-run.
It’s also a shame that women are so woefully represented in investment management because it’s such a fantastic career choice for anyone wanting to balance work with family life. I started my career as a Trainee Investment Manager at Rathbone Brothers in the City of London, straight out of Oxford University, aged 23. I had other friends go into investment banking, corporate finance, law. They worked painfully long hours, as I am sure many of you reading this have done or still do. I on the other hand (somewhat smugly), never had to pull an ‘all-nighter’. My entire team had generally left the office by 5.30pm. In fact when I was studying for my CFA exams, I could easily find myself alone on a floor of one hundred investment managers at 6.30pm in the evening. Investment management is a continuous journey of learning, but it doesn’t suffer from the time-critical nature of law, accounting or investment banking. You can be researching an investment idea, or reading an annual report, but rarely does it have to be done by 8am the next morning. It’s a profession where you get as much out as you put in and it really lends itself to flexible working arrangements. It really is possible to be successful and still have a family life. Take the example set by Helen Morrissey – one of the most powerful investment managers in the City – she has nine children.
Writing this has really made me reflect on my career so far as a woman in investment management and financial advice. It hasn’t always been easy. The old boys network is alive and strong – of that there is no doubt. The unconscious biases are very real. Female investment manager bonuses in the UK were recently shown to be 70% lower than their male colleagues (and we know that’s not due to investment performance). Financial advisors have the biggest pay gap of any profession (according to a report by the Institute for Women’s Research titled ‘The gender wage gap by occupation 2016’). Female financial advisors earn a little over half of their male counterparts. I once had a prospective client say to me ‘but Georgie, you just don’t look like an investment manager/financial advisor’. Oh right, yes, I am blond, a woman and in my 30s. My world is dominated by white men in their 50s. When I go to conferences in the US, I stick out like a sore thumb.
Perhaps the thing that I have found the hardest is the constant pressure on me to prove my competence. I don’t believe the men in my industry generally feel that same pressure – for them I think there is more of an assumption that they are competent (that’s the old boys network). Given all the studying I have done to get where I am today and the continuous emphasis I place on learning, it can feel tough and it can certainly be exhausting sometimes. However, in recent years I have managed to take my uniqueness and turn it into my brand. I have shown people that I think about money and life differently, more thoughtfully than most. I use my emotional intelligence (a predominantly female trait) both in my relationships with my clients and in my investing.
What would I love to see change? Certainly I would love to see more women holding the CFA designation and managing money. Although it is a competitive industry, women have some amazing qualities that mean that there is the potential to do really well. We need to work on attracting young women to this profession that is intellectually and emotionally rewarding, this profession where you can earn a very good living, whilst balancing it with a family. Let’s get the secret out!
Georgie Loxton is a Wealth Manager and Financial Planner in the Cayman Islands. Georgie spent the first ten years of her career managing European equity funds in London and Cayman. She graduated from Oxford University in 2002 with first class honours and is a CFA charterholder. She is a long-time Cayman resident and has three young children, Poppy, William and Jacob. She blogs at http://georgieloxton.ky/insights-events/or on Facebook at Women, Wisdom, Wealth.